Historically, conflict minerals legislation has primarily focused on the source of origin for tin, tantalum, tungsten and gold (3TGs), particularly with regard to sourcing from the Democratic Republic of the Congo (DRC). But, as calls for a more broad approach to responsible mineral sourcing grow, legislators are taking note.
Set to take effect on January 1, 2021, the European Union (EU) Conflict Minerals Regulation maintains a focus on 3TGs, but the guidance around the regulation emphasizes the global nature of conflict minerals concerns.
In response, companies in scope or those voluntarily reporting on this new regulation should be prepared to adjust and update their conflict minerals due diligence processes accordingly.
Download our whitepaper, The Supply Chain Implications of the European Union’s Conflict Mineral Landscape, to learn more about your responsibilities under the regulation.
Responsible Minerals Are a Global Concern
The European Commission recently launched its Due Diligence Ready initiative to support small and medium-sized enterprises (SMEs) as they develop responsible minerals programs, though the guidance can support any company with minerals or metals in its supply chain. The initiative is intended to help SMEs understand and implement the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Guidance (DDG) for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
The DDG emphasizes that conflict minerals are a global concern. To demonstrate this concern, the Due Diligence Ready initiative provides information about conflict-affected and high-risk areas (CAHRAs), which shifts conflict minerals reporting away from any single location, encouraging companies to more deeply engage their supply chain to gather accurate country of origin information. Companies that have not already adopted this approach should start immediately in order to be ready to report in 2021.
Additional Minerals Could Be Regulated
Though it will launch with a specific focus on 3TGs, the EU Conflict Minerals Regulation will likely expand to include other minerals of concern. The regulation’s legal text allows for an expanded scope following an assessment that will occur no later than January 1, 2023.
The Due Diligence Ready initiative notably mentions 3TGs as well as “all other minerals and metals such as battery raw materials.” This seems to imply companies should begin including cobalt in responsible minerals programs. Given recent high-profile lawsuits over child labor in cobalt mines, as well as continued pressure to expand conflict minerals legislation, authorities could soon incorporate additional metals into future regulations.
Preparing Due Diligence Programs
While existing conflict minerals reporting programs may provide a baseline to work from, the EU Conflict Minerals Regulation moves away from an audit standard and requires deeper supply chain engagement. Due Diligence Ready specifically mentions the OECD guidance as a starting point for responsible mineral sourcing efforts. Under this guidance, companies must:
- Identify smelters and refiners used in their supply chain, assessing their due diligence systems against the OECD DDG.
- Map identified smelters and refiners on a supply chain transparency system.
- Use this system to record due diligence processes, communication and decisions made during this process, including the reasoning behind the decisions.
- Clarify the chain of custody.
- Take efforts to understand the circumstances around mineral extraction, trade, handling and export.
- Identify and assess risk, closely monitoring identified risks.
These steps require active data collection throughout the supply chain, assessment against accepted standards and proactive work to mitigate their risk. This is a time-consuming process that is nonetheless necessary for compliance with evolving conflict minerals regulations.
The Assent Compliance Platform enables companies to efficiently collect, manage and analyze their supply chain data through automation. This drives transparency into material source of origin, providing insights into the risks a company faces. For more information on how Assent can help you implement or expand your responsible minerals program, contact us today.