The Evolution of Responsible Materials: Session Recap, AIAG’s Responsible Materials Conference

Tolga Yaprak, principal and founder, Vitruvian Consulting, presented a session called “The Evolution of Responsible Materials” at AIAG’s Responsible Materials Conference in September. In case you missed it, here’s his overview of the evolution of conflict minerals including requirements.

It’s easy to lose sight of the basics when you get caught up in the evolution of a mature topic like conflict minerals compliance vis-à-vis responsible sourcing. It’s important to filter out the noise and continue on your due diligence journey. At the same time, there are many opportunities for cost-saving and cross-value creation across your company; it just requires doing your homework and keeping your eyes and ears open.

Here are four key things to know about the evolution of responsible materials.

1. Fickle Circumstances: A variety of factors play a role in responsible sourcing, specifically regarding conflict minerals compliance. Legal challenges in court and political statements seem to indicate that compliance requirements are easing up (e.g., during U.S. President Donald Trump’s first term, a memo leaked about potential requirement changes, but ultimately nothing happened). Other factors include the introduction of a new regulation from the EU, as well as rulings in the Appeals Courts for the aforementioned challenges that seem to indicate compliance requirements are increasing. However, what matters is adherence to the law, not who said what.
2. Reporting Formats: Reporting formats are the unsung hero of the issue. It’s the system of roads and highways that we need in order to use our cars. The IPC-1755.xml format is the ultimate unsung hero. Proposed changes to existing report declaration documents didn’t account for IPC-1755, which could’ve created a data exchange nightmare. It’d be like losing access to the internet and trying to figure out who to send faxes and mail letters to without knowing any other information and just hoping they end up in the right place. Without IPC-1755 as a uniform standard, all other data exchange mechanisms wouldn’t be able to talk to each other.
3. Proximity to Other Issues: “Conflict Minerals” are more than just conflict minerals. There’s a direct tie-in with gold because not only is gold used in the manufacture of electronics and components, but it is also a financial instrument with strict international banking regulations. It’s also a commodity and used heavily in C2C jewelry. To complicate things further, gold is ridiculously easy to melt down and recycle, making it one of the easiest items to smuggle and extremely difficult to properly trace. Gold can be connected to financial crimes, DIY jewelry businesses, international banks, and exchanges — nearly everything.

Technically, at least according to the US SEC, cobalt isn’t a conflict mineral, but for all intents and purposes, it is. It’s critical in the production of EVs, which are at the forefront of the global trade wars we keep finding ourselves in.

Moreover, conflict minerals can be tied directly to sanctioned entities. They were caught up in Russian election tampering (the first time) and are a focal point in discussions around sanctioned entities from China vis-à-vis Uyghur forced labor.

Lastly, these minerals are used in the production of batteries (as aforementioned with cobalt), which have their own new regulation from the EU.

4. Conflict Minerals+: Up to about eight years ago, the responsible sourcing “field of operations” paradigm was based on one primary fact: You can measure some things and not others. You can measure how polluted air is, you can measure how contaminated water is, but you can’t measure how much slave labor is in something. It either is or it isn’t — and if it is, then what? Is a product made with two slaves in one hour better or worse than a product made with one slave in two hours?

Conflict minerals was the first “real,” tangible issue that fell into measurable and non-measurable categories at the same time. You can measure mass, refined output from smelters, and the proportion of a product that is composed of a mineral. However, if you can’t verify that it’s conflict-free (which is vague in and of itself), then you enter into the sphere, “How much of it is affected?” etc.

In recent years though, a natural convergence of issues has made itself apparent. For example, deforestation in Brazil connects directly to greenhouse gases, but also the illegal seizure and destruction of indigenous land, polluting the Amazon and its tributaries, and even a rise in illegal gold mining and smuggling.

As we face mounting pressure from regulators, customers, and stakeholders, it’s important to understand responsible materials. Look out for future articles recapping AIAG’s Responsible Materials Conference on AIAG’s website and reshared in the AIAG Beyond Compliance newsletter.