OECD Responsible Mineral Supply Chains Forum: reflections

The Kumi team attended the OECD’s annual Forum on Responsible Mineral Supply Chains, held on 23-26 April 2019 in Paris. Here are some of the team’s reflections on the conference:

Andrew Britton, Managing Director

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Having attended this event most years since 2011, a particularly obvious take-away from this year’s Forum is that interest in responsible mineral supply chains continues to significantly grow each year. This year it was encouraging to see a steady increase in the range of companies participating and the range of minerals that are discussed. That said, there remains a need for much more engagement in this area from certain critical actors in minerals value chains (e.g. the finance community).

There also remains a long way to go for effective due diligence to be the norm. Whilst there are undoubtedly pockets of excellence, unfortunately many companies are still relying on box-ticking compliance measures rather than the comprehensive due diligence and supplier engagement that the OECD Guidance envisages. The responsible sourcing of metals and minerals has such great potential to power socio-economic development in developing economies, but for this potential to be realised we really need to see more companies step forward, embrace the challenges and ‘own’ their role in the supply chain. Everyone has a part to play!

Martin Christie, Senior Adviser

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To hear at the OECD meeting that the UK Church of England Pensions Board and the Sweden’s Public Pensions Funds Council on Ethics, with a combined €1.1 trillion under asset management, are working for a global public classification that monitors the safety risk of mining company tailings dams is very reassuring. Why now? Sadly because 287 people perished resulting from the failing of the Vale dam in Brumadinho, Brazil. There has been much promised by investors in terms of the requirement for ESG compliance in the mining sector. The monitoring of tailings dams is a response to a ‘crisis’. There have been other systemic issues in the sector that have run for many years. The time to deliver is now through robust due diligence.

Vittoria Franchini, Manager

Large-scale mining companies, traders and OEMs have been testing models for sourcing from ASM in some of the world’s largest, and most challenging, mineral producing countries such as the DR Congo and Colombia. Despite the positive results, companies leading this work remain a handful. Most enterprises stave off opportunities to engage with ASM due to the belief that the sector is too risky from a reputation standpoint and resources should rather be invested in alternative livelihoods and local development projects. Recognising that the presence of ASM is driven by commercial factors, i.e. favourable commodity prices and downstream demand, companies should view ASM engagement as a commercial opportunity, not a philanthropic one.

Companies can work with governments and civil society stakeholders to support formalisation ASM workers, providing legitimacy and legality to the sector. Supporting good health, safety, environmental and community engagement practices has also proven to have far-reaching impacts for managing key risks, such as human rights abuses and poor working conditions, and supporting local development. It is time to scale up these models, and companies should not shy away from leading the change.

Luke Smitham, Senior Consultant

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In Paris I saw and heard from consumer brands (cars, electronics) who are tracing their supply chains and delivering due diligence, from Tier 1 all the way down to the very bottom of the supply chains. With gold, silver, gems, diamonds and mica all being staples of the fashion industry, and being discussed at length at the conference, it seems to me that leading fashion companies should be attending. However, I only bumped into one luxury fashion brand whilst I was there.

The fashion chain is complex, maybe more complex than minerals. However, it offers enormous potential for improvement, positive opportunities for engagement and an important next step in responsible sourcing. The historic focus on Tier 1 means there is a long way to go to understand (let alone address) salient risks and improve the lives of workers and communities all the way down its supply chains. However, if electronics and car companies can do it, so can fashion.

Tim Perkin, Consultant

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It was clear through the panelled discussions last week that due diligence can reduce business and legal risks, provide access to new markets, and improve a company’s reputation. What I felt was missing from some of the discussions, however, was a focus on economic and social development.

Due diligence not only heightens commercial success and reduces adversities, but it also provides an opportunity for companies to understand the livelihoods and living conditions of those working upstream. I found these issues were particularly addressed in discussions around ASM but there is an opportunity here to mainstream development issues and bring them to the forefront of other due diligence conversations. Livelihoods and human rights must be at the heart of a company’s motivation to conduct due diligence, and not just a secondary outcome.

If you are interested in learning more about the support Kumi provides to clients in developing and implementing responsible sourcing practices, don’t hesitate to contact us.