Private sector’s role in reducing the use of ‘conflict minerals’

By Dunstan Hope
August 9, 2010

DRC

A view of a traditional gold mine, near the eastern Congolese town of Kamituga, a mining town.

The following is a guest host by Dunstan Allison Hope, managing director of BSR’s Information, Communications, and Technology Practice. He is also co-author of “Big Business, Big Responsibilities.” The opinions expressed are his own.

Buried in the 2,300-page U.S. financial reform bill that President Obama signed on July 21 is a little-noticed provision taking aim at a very different type of market: the international trade in so-called “conflict minerals” from the Democratic Republic of the Congo (DRC).

These minerals — tantalum, tin, and tungsten — are found in everyday products from cell phones and computers to aircraft engines and cutting tools, and this first-of-its-kind legislation will require publicly traded companies using the minerals to file an annual report with the Securities and Exchange Commission to declare if they, or companies in their supply chain, are sourcing from the DRC or an adjoining country.

With so many industries and high-profile brands using these minerals, it’s not surprising that the U.S. government is targeting global business and their supply chains to address the challenge of conflict minerals. No one likes the idea of using products containing conflict minerals — especially if you remember similar issues with “blood diamonds.” Given the choice, we would buy elsewhere.

But for those of us who are working with corporations to tackle big global problems, the financial reform bill’s provisions raise three important questions:

1.     What change are we seeking to achieve?
2.     How can we achieve that change?
3.     What is the responsible role of the private sector?

First, and importantly, the end goal is not to eliminate minerals sourced from the DRC. It is to end the conflict, eliminate suffering in the region, and create a sustainable economy. For many companies, the instinctively attractive position is one of avoidance: Screen out minerals originating from the DRC and source from somewhere else.

But a ban would not end the conflict, nor would it create a sustainable regional economy. More likely, it would deprive the local miners and traders who do not contribute to the violence of an important income source.

So, if banning DRC minerals isn’t going to solve the problem, what will?

One approach is to find a way for companies to verify that the minerals they are sourcing from the region are conflict-free, and there are a number of programs being created to help companies do so. The problem is that auditing these programs can be resource intensive and suppliers learn how to cheat the system. These “top down” certification programs need to be complemented by “bottom up” efforts that bring minerals to market from locations where the benefits of mining are shared with the local community.

But let’s not kid ourselves: These initiatives may help us buy with a cleaner conscience, but they’re not going to bring peace to the region. It is only through government-led diplomacy and collaborative strategies that seek to create a sustainable economy in the region that we will collectively achieve the change we want to see.

DRC

Which takes us to our last question: What, then, is the role of the private sector? Is a “clean” supply chain the limit of corporate responsibility, or can big businesses make a broader contribution?

A number of important private-sector efforts, especially by the electronics industry — which has taken a lead in developing new assurance mechanisms — have emerged in recent years to address the issue of conflict minerals. However, these efforts are mainly driven by purchasing departments seeking supply chain solutions.

That’s necessary but it’s not sufficient. Companies should collaborate to explore more holistic strategies: supporting stronger international diplomatic efforts to broker a peace deal involving all regional players; calling for increased aid budgets in the region; redirecting a portion of their philanthropy budgets to community-based efforts focused on local development; and finding ways to provide the basic governance infrastructure, such as IT systems, that are the pre-requisites of sustainable trade.

The role of the private sector in helping bring peace to the DRC illustrates some broader themes about the role of business in society. Big companies rely on the DRC for key product inputs and clearly have an interest in the sustainable supply of these minerals from the region.

Just as companies share in the risk inherent in the conflict, so, too, must they share in the responsibility to address that risk. But we must also remember what we are seeking to achieve — peace in the region, not the disassociation of specific companies and brands from the conflict — and work together as companies, civil society, and governments to achieve that goal.

Photo caption: A miner with body scars works at Gecamines concession near the centre of Lubumbashi in the Democratic Republic of Congo, in this recent file photo. Thousands of artisanal miners feed off the mine, selling copper and cobalt compounds to local and foreign owners of furnaces, earning less than a dollar per 50 kg (110 lb) sack of copper compounds.

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Thanks Dunstan. Big companies – major electronics and jewelry companies in particular – should also help set up a Miners Livelihood Fund with donors, for any miners who might be disaffected in the interim period while proper tracing, auditing, and certification is being set up.

They are also critical to ensuring that any certification systems include independent oversight/monitoring.

For more information, see http://www.cnn.com/2010/OPINION/08/03/co ngo.conflict.minerals/index.html Thanks

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