The paper provides a recommended five-step framework for companies operating in mineral supply chains. The guidance aims to identify and mitigate the risks of human rights violations, conflict financing, and other ESG concerns associated with mineral sourcing in conflict-affected or high-risk areas.

The guidance first recommends companies to establish strong company management systems, including policies for responsible supply chain due diligence. Companies should engage with all stakeholders in the supply chain to assure compliance and should consider conducting periodic risk assessments.

The guidance then outlines a five-step framework for supply chain due diligence that includes:

• Establishment of company management systems for responsible supply chain due diligence.
• Identification and assessment of risks in the supply chain.
• Development and implementation of strategies to respond to those risks.
• Independent third-party audits of the due diligence.
• Public reporting on the performance of due diligence practices.

In step two, companies are recommended to conduct risk assessments to identify potential risks of human rights violations, conflict financing, or other ESG concerns associated with mineral sourcing in conflict-affected or high-risk areas.

Step three outlines the strategies for companies to mitigate identified risks including due diligence, developing risk mitigation plans, and establishing monitoring, control, and reporting systems. The guidance calls on companies to engage in industry-wide efforts to develop responsible supply chains and to support capacity building efforts in the sector.

Step four recommends that companies commission independent third-party audits of their due diligence practices to assure compliance with due diligence policies and report recommendations for improvement. The guidance outlines criteria for auditors to evaluate the performance of due diligence practices.

Finally, step five recommends public reporting on the performance of a company’s due diligence practices, including information for all stakeholders in the supply chain.

The framework offers finance professionals a valuable way for responsible supply chain due diligence and management. Adherence to the guidance is essential to ensure compliance with ethical, social, and governance (ESG) responsibilities in mineral sourcing and supply chains.