Attendees to AIAG’s 7th Annual Conflict Minerals Industry Briefing on June 12, 2018, got a clear message from many of the speakers: Many companies in the automotive industry have moved beyond reporting for compliance and have taken a stance on responsible mineral sourcing as part of an overall corporate responsibility policy.
By law, publicly traded companies are required to report annually to the U.S. Securities and Exchange Commission (SEC) whether the products that they either manufacture, or contract to be manufactured, contain "conflict minerals" specifically, tantalum, tin, tungsten, and gold. The intent of the legislation is to drive company efforts to better understand their supply chain and increase transparency and eliminate potential sources of funding for armed conflict in the Democratic Republic of Congo and surrounding countries, where majority of the world's supply of conflict minerals is mined.
Also known collectively as 3TG, these minerals are used in numerous automotive components with various applications. AIAG’s annual Conflict Minerals Industry Briefing is developed by industry for industry to assist automotive CR professionals to stay updated on current initiatives, future trends, and stakeholder engagement activities in conflict minerals around the globe.
While the auto industry’s conflict minerals effort began as a response to requirements, it has steadily evolved to impact individual company policy and processes. Collaboration has helped the industry make great strides in improving the development of common industry approaches, messaging, supply chain engagement and risk-identification all while benefiting the lives of those affected by conflict mineral mining around the world.
“Hopefully, if we can improve people’s living conditions, they will be less likely to get on a boat for Europe and possibly drown at sea,” said speaker Betsy Orlando, economic and commercial affairs officer at the U.S. Department of State.
Because much of the mining is done by children, Orlando shared some website tools, like ILAB Comply Chain (https://www.dol.gov/ilab/complychain/), that can help companies address child labor in their supply chains. “Especially with cobalt, this is a child labor issue more than a conflict mineral,” she said.
“With a solid human rights policy, you are saving someone’s life in those countries,” Orlando added. “When I buy or sell something, I want to know that I’m doing the right thing, that I’m doing something to make a difference. Not many U.S. laws can say they’ve changed the world. Do what you need to do with passion, and know that it makes a difference.”
Speaker Hilary Amster, senior program manager at the Responsible Minerals Initiative (RMI), calls it the Theory of Change. “When companies expand their responses to these issues, they are asking, ‘Is this making a difference?’ Companies sourcing responsibly do so because they want to make a positive impact on the ground.”
However, Amster advised the audience to make sure that their companies have the leverage to make an impact in whatever area of social responsibility they choose to put resources in. “Otherwise, it may not be reasonable for your company to focus effort on things where you can’t make a difference,” she said.
Speaker Benjamin Harrison, senior trade advisor, Delegation of the European Union to the United States, said “trade folks don’t always step easily into compliance and human responsibilities,” but he is seeing similar policy shifts in Europe, where new regulations call for mandatory due diligence on conflict minerals beginning January 1, 2021.
“Many companies now want to expand and go beyond the regulations,” Harrison said.
“Companies should expand their human rights policy to include language on conflict minerals,” DENSO International America’s purchasing program manager, Kenneth Edwards, told the audience in his presentation. “Add language to your supplier terms and conditions that reflect your human rights policy. Every company has to define what that means to them.”
“Industries are very good at identifying the problem, but we also have to identify the solution,” reminded Amster. “It’s important to protect human rights in the supply chain, and that starts with understanding what’s going on in your supply chain and mitigating the risks. That’s the minimal.
“But now, companies are going beyond that because it’s about human rights,” she added. “It’s about your company culture and policy, not just compliance.”
In collaboration with its members, AIAG has taken progressive steps in recent years to demonstrate its commitment to the conflicts minerals issue. For example, AIAG has developed resources to assist with the conflict minerals compliance process, including a web-based reporting tool, training, case studies, and other materials.