sharing in governance of extractive industries

2015 Wrap up for responsible sourcing and conflict minerals

We recently started a series of gossip calls with one of our clients – swapping stories from responsible sourcing before getting down to business. It’s been fun, illuminating and interesting – so we thought we would share the picks of the bunch that suggest where the sector is moving over the next year. 

OECD, EU and China regulatory update

The OECD is slowly but surely expanding their Due Diligence Guidance to jurisdictions around the world. Adoption of the guidance as either a voluntary or regulatory program is expanding from Colombia to Turkey to the EU itself acknowledging OECD DDG as a basis for their program. While the EU rule is still a couple of years out – China (CCCMC) is launching an OECD based guidance of its own – you can access the English version of the draft guidance here. The guidance also looks to establish an audit program, initially focused on smelters and refiners, to be launched in 2016. Michele and Bowen will be in Beijing 2-3 December to join the OECD and CCCMC hosted 2015 International Workshop on Responsible Mineral Supply Chains.

The OECD has also quietly changed the guidance to refer to ALL minerals. Likewise, the Chinese regulations seem set to refer to minerals and commodities beyond 3TG. We are also seeing more interest among our clients on other minerals and commodities. This year saw us do work on Aluminium, Coal, Cobalt and Copper, even Fish! While the falling price of minerals has seen budgets shrink and less money for responsible sourcing programs, the trend is unmistakable.

Finally, the OECD will be conducting an alignment assessment of audit programs to see how close in alignment they are with the OECD Guidance. The biggest impact this will have is on the Conflict Free Sourcing Initiative (CFSI) – which has some work to do to bring itself and its audit protocols in line with the guidance.

US Court ruling slows adoption

The big news out of the US is that the court ruling on conflict minerals has taken the wind out of the sales of company reporting and audits. Many other blogs have discussed the ruling, so I won’t do so here, but its worth noting that already we are hearing of a significant drop in interest in IPSA audits as companies decide to wait another year (or two) before reporting conflict free. Companies from some sectors (I’m looking at you the Auto and Aerospace), will use this as an excuse to not do much at all, however, companies in the electronics sector supply chain are still going to have to adopt processes and procedures due to the widespread adoption and leadership by major brands.

In this same vein, the downstream companies we are working with are increasingly look at quality of the data they receive from suppliers. We are seeing increased interest in the work we are doing validating supplier reporting through audits and training.

Responsible gold

We spoke at the responsible gold forum held in Vienna in October - as an ancillary to the LBMA Gold forum. The news is that there isn’t much news. Outside of the LBMA members there still remain hundreds of refiners that are refining gold and not part of the LBMA or CFSI systems which continues to present a significant challenge to responsible sourcing for the industry as a whole.  Additionally, there are only three! responsible gold schemes in operation in the DRC + 9 countries – two of which have just started. We expect a lot more interest in gold from both regulators and NGOs in 2016 on the back of reports by Enough on the illegal Congolese gold trade, the Berne Declaration on smuggling of African Gold to Switzerland, and Human Rights Watch on children diving for goldin the Philippines.

What are your predictions for 2016?

Let us know your predictions or if you want to join our gossip calls! 

This post was originally written by RCS Global's Director Harrison Mitchell on 10th of November 2015 and is available on our blog.

RCS Global is a leading firm working on responsible raw materials supply chains, providing advisory, audit, research and technical assistance services - everywhere.  If you would like to find out more about Responsible Sourcing, contact Harrison Mitchell at harrison@rcsglobal.com 

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