The OECD (Organization for Economic Co-operation and Development) suggest ‘recommendations’ on how to properly source minerals in conflict-related supply chains. Will companies actually adhere to these ‘recommendations’ and can they impact real change?
The OECD recommendations
The OECD recommends that companies implement their own supply chain policies to ensure corporate oversight and responsibility, as well as accountability. There are five primary recommendations: to establish strong company management systems, identify and assess risk in the supply chain, design and implement a strategy to respond to identified risks, carry out independent third-party audit of supply chain due diligence at identified points in the supply chain, and report on supply chain due diligence.
Some degree of this is dependent on what they call ‘a company-level grievance system,’ where anybody involved in the supply chain report unlawful or unethical practices to the company or an external body.
This ensures that ethical violations cannot be hidden by lack of policy or through internal measures.
Many companies deal in 3TG (Tungsten, Tin, Tantalum and Gold, the four primary conflict minerals) as well as cobalt. This means that governance in the supply chain should be a priority. The problem, at its core, is that some of these companies remove themselves from responsibility when it comes to their minerals sourcing, by identifying themselves as too far down the supply chain to responsible.
Others like Apple, for example, despite being at the end point of their logistics chain, take responsibility and accountability for their supply chains. Apple does this by incentivising responsible and community mining practices, as well as rehabilitating habitats, such as in their ‘Salmon Gold‘ program.
How will this motivate companies?
As more companies adhere to these recommendations, others will follow. Companies will (and many already do) source ethically and sustainably not only out of moral responsibility, but because it improves their reputation and allows them to advertise on a public level that they responsibly source their minerals. In the long term, this can also mean increased value and profit. Therefore, responsibly sourcing helps companies on more than one level.
Responsible sourcing needs to be a core policy in supply chain management to ensure the longevity of the mining industry in general. At Blockhead, we’re creating blockchain-enabled software to make this even easier. Blockchain ensures permanence, transparency and easy auditability.