In this five-part podcast series, sponsored by Assent Compliance Inc. (Assent), I explore market impacts of emerging regulations on supply chain compliance and the supply chain professional. During the course of this series, I visit with several members of the Assent team to introduce the topic, look at Human Trafficking and Slavery (HTS), supply chain risk management programs, Corporate Social Responsibility (CSR) value propositions, the current state of responsible mineral sourcing and where all of this is headed. In this fourth episode, I visit with Jared Connors, senior CSR subject matter expert (SME), on the current state of conflict minerals/responsible minerals.
We began by focusing on the moniker ‘conflict minerals’ which has now changed to ‘responsible minerals’. Connors related that this is an area where he has been working on since before the legislation in the Dodd-Frank Act became law. He is therefore well suited to relate the transition from conflict minerals to responsible minerals. The intent of conflict minerals legislation was to identify the material sources of origin and demonstrate a chain of custody that those materials are not tampered with along the way. It was this basic premise which has led to the more encompassing name of responsible mineralsbecause the desire is to make sure that a company is sourcing responsibly. Connors noted he is “very proud” of his work in this area.
Connors went on to relate that the transition from conflict minerals to responsible minerals means that organizations are now looking at a variety of different risk issues. “You see this most clearly taking shape with additional metals that are coming into the responsible mineral space. The original legislation was about tin, tantalum, tungsten and gold and that remains unchanged. However now you see organizations such as a responsible steel group, you see the aluminum stewardship initiative, you certainly see the cobalt institute; all of these organizations are engaging in their respective industries to look at a variety of topics from environmental issues to labor rights.” Connors concluded, “it is no longer simply about the true conflict minerals nature of where did I get this from and was there a conflict. It’s grown well beyond that. And it’s something that I’m personally very proud to see.”
All of this has shown the true power of the original Dodd-Frank provision around conflict minerals. While there was significant push back against the “conflict” part of this legislation; the business purpose of understanding your sourcing underlying the law has become more critical. It is significant for not only reliable supply of raw materials and products but also in this age of increased awareness by consumers and employees it is important that a company demonstrate its adherence to ethical sourcing. This means knowing your minerals were not stolen or extracted using slave or child labor. It also means know that your products were not constructed in sweat shop conditions.
Connors took it a step further, saying that the real intent of the original Dodd-Frank legislation was “supply chain transparency. This is one of the initial elements that we have seen in legislation requiring companies to open their eyes to their upstream suppliers. This is no more true in current years when we see a or a recent months when we companies now realizing that some of their upstream sources in which they have no direct business interest are actually under OFAC [Office of Foreign Assets Control]sanctions.” It is through the concepts laid out in conflict mineral legislation, and then responsible mineral sourcing; that companies understand they need visibility both up and down their supply chain.
This need for transparency has literally exploded in the business world. It has gone beyond supply chain and other compliance professionals. It is not simply a requirement from a business process or even a risk management perspective. It has become a key element for customers and employees. These basic concepts are something that every company is going to have to incorporate in the way they do business going forward.
Connors said, “it’s a huge deal. It’s a big deal now for investment companies, when you see a letter from the CEO of Blackrock to other CEOs talking about being a good corporate citizen. It’s all through the concept of transparency. Do you have transparency into the activities that are going on within your four walls or outside of your four walls and certainly well upstream of you as your organization gathers in these materials?” He added that while many of “us are very excited about the technology that we have right in front of us now on our desk or in our cars and the cost of those technologies being cheap, comes at a cost. As consumers, we need to make sure that without sacrificing the ability for us to get goods and services, that we can continue to get those elements of technology and do it responsibly.”
We concluded with a look into the veiled land of 12 months or so into the future. What do you think are going to be some of the key issues and responsible mineral sourcing going forward for the next 12 months and perhaps beyond? Connors sees three issues: (1) Country of origin information, which he believes companies may have become lax on; (2) Due Diligence and its two parts including downstream due diligence and upstream due diligence; and (3) The addition of new or other metals into the your overall production process and how you are accounting for this in your supply chain?
Join us tomorrow where we wrap us this series on emerging regulatory areas in a conversation with Jonathan Hughes. You can check out more about Assent Compliance Inc. by clicking here.