How Global Supply Chains Tackle Ethical Sourcing Challenges

Sourcing minerals from the Democratic Republic of Congo (DRC) is deeply intertwined with ESG challenges.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, a US law passed in 2010, has transformed how companies manage these challenges, far beyond American borders.

Its Section 1502 targets conflict minerals - resources that often fuel human rights abuses and environmental destruction - and requires publicly listed US companies to disclose their use of these materials.

These regulations have reshaped the supply chains of industries dependent on tin, tantalum, tungsten and gold (3TG), including major technology players like Apple.

Conflict minerals and ESG concerns

Conflict minerals are essential to global industries such as electronics, automotive and construction, but their extraction in the DRC and neighbouring countries is frequently linked to forced labour, child exploitation and hazardous working conditions.

Unregulated mining has caused widespread deforestation, soil degradation and water pollution, while profits from these operations often fund armed groups, exacerbating violence and instability in the region.

To address this, Section 1502 mandates that companies trace the origin of 3TG minerals used in their products and report their findings annually to the US Securities and Exchange Commission (SEC). This has placed mining operations under intense scrutiny and driven demand for traceability and compliance systems.

For companies like Apple, these requirements extend across their supply chains. The tech giant’s conflict minerals programme exemplifies how far-reaching these standards have become.

In 2019, Apple reported that all identified smelters and refiners in its supply chain were audited by third parties to verify compliance. This rigorous approach has set a precedent, influencing suppliers and manufacturers worldwide, not just in the DRC.

The global reach of responsible sourcing standards

The Organisation for Economic Co-operation and Development (OECD) developed due diligence guidance for responsible mineral supply chains, setting global benchmarks for ethical sourcing. These guidelines support the implementation of Section 1502 and have shaped mining practices well beyond the US.

Apple’s efforts highlight this trend. Suppliers must adhere to stringent standards, regardless of location, to maintain partnerships with the company.

In 2023, Apple removed 14 suppliers for failing to meet its responsible sourcing requirements. This demonstrates the company’s commitment to transparency and compliance but also underscores the complexities of ensuring that all suppliers conform.

The Responsible Minerals Initiative (RMI), established in 2008, has become a critical tool for navigating these challenges. Its Responsible Minerals Assurance Process (RMAP) evaluates smelters and refiners for compliance, helping businesses identify ethical suppliers.

RMAP certification is now a key benchmark for companies aiming to align with global standards, making it a virtual necessity for access to certain markets.

Barnabas Ngoga, who has worked as a Legal Advisor on Rwanda's Mining Board, highlights the revolutionary impact of technology such as blockchain when applied to these challenges: "Currently, tracking minerals from their origin to end-users is a complex process involving multiple intermediaries.

"This lack of visibility makes it difficult for companies to ensure that their supply chains are free from conflict minerals or unethical practices," he says.

"By implementing blockchain-based supply chain solutions, companies can create an immutable record of every transaction along the supply chain. This enables them to verify the authenticity and ethical sourcing of minerals at each stage."

Expanding regulatory influence

The Dodd-Frank Act has inspired similar legislation worldwide. In 2021, the European Union implemented its Conflict Minerals Regulation, applying to importers of 3TG materials into the EU. This law mirrors the US approach, ensuring that due diligence practices become a norm across continents.

The EU regulation has encouraged other nations to explore similar frameworks, further embedding responsible sourcing into the global mining landscape. While some argue that Section 1502 has led to an unintended embargo on DRC minerals, impacting local economies, it has also opened new opportunities.

Ethical mining operations that meet these standards can gain a competitive edge, as businesses increasingly prioritise ESG compliance in their purchasing decisions.

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