Introduction

The guide provides practical steps for companies to establish and implement a responsible minerals sourcing programme. It focuses on aligning with international frameworks such as the OECD Guidance, the SEC Final Rule, and the EU Minerals Regulation. These frameworks aim to prevent the use of minerals that contribute to conflict, human rights abuses, and environmental degradation.

OECD Step 1: Establish strong company management systems

The first step involves adopting and committing to a supply chain policy for responsible mineral sourcing from conflict-affected and high-risk areas (CAHRAs). This includes establishing internal management systems, ensuring transparency in the supply chain, and engaging suppliers to support due diligence efforts. Companies are advised to publicise their responsible sourcing policies and communicate these expectations to their suppliers.

OECD Step 2: Explore risks in the supply chain

This step requires companies to identify and assess risks in their supply chains, particularly regarding the sourcing of minerals from CAHRAs. The guide recommends leveraging industry-wide initiatives and third-party audit reports to gather necessary information. Companies should assess their suppliers’ due diligence practices and implement risk management strategies to address identified red flags, such as minerals originating from conflict zones or suppliers with unethical practices.

OECD Step 3: Design and implement a strategy to respond to identified risks

Once risks are identified, companies should design and implement strategies to mitigate these risks. This may involve continuing trade with measurable risk mitigation, temporarily suspending trade, or disengaging entirely from suppliers where mitigation is not feasible. The guide emphasises the importance of reporting findings to senior management and continuously monitoring and tracking the performance of risk mitigation efforts.

OECD Step 4: Carry out independent third-party audits

To ensure the effectiveness of due diligence practices, companies are encouraged to conduct independent third-party audits of smelters and refiners (SORs) in their supply chains. These audits help verify that SORs are adhering to responsible sourcing standards. Participation in industry programmes that audit SORs can also fulfil this requirement.

OECD Step 5: Report annually on supply chain due diligence

The final step involves publicly reporting on the company’s due diligence efforts. This includes providing details on the company’s supply chain policies, risk management strategies, and the outcomes of independent audits. Compliance with the SEC Final Rule and the EU Regulation is also discussed, with recommendations for preparing conflict minerals reports (CMR) that align with OECD guidelines.

EU Conflict Minerals Regulation

The EU Conflict Minerals Regulation mandates that EU importers of minerals and metals must comply with strict due diligence obligations. These include adopting a clear supply chain policy, maintaining records for at least five years, and conducting independent third-party audits. The regulation applies to importers of minerals like tin, tantalum, tungsten, and gold (3TG), particularly when sourced from conflict-affected and high-risk areas (CAHRAs). Downstream companies are encouraged, though not required, to report on their due diligence efforts.

Stakeholder expectations

Stakeholders, including NGOs and industry groups, have developed frameworks and tools to evaluate and rank companies’ mineral sourcing practices. The OECD Monitoring and Evaluation Framework, for instance, assesses the implementation of due diligence by companies, helping stakeholders scale up effective practices. The Responsible Sourcing Network’s “Mining the Disclosures” ranks companies based on their conflict minerals policies and public disclosures, urging greater transparency and commitment to ethical sourcing.

Emerging issues

The European Commission’s Corporate Sustainability Reporting Directive (CSRD) is set to enhance transparency in sustainability reporting across the EU, affecting around 50,000 companies. This directive, expanding upon the Non-Financial Reporting Directive (NFRD), requires detailed sustainability reports that are audited and digitally tagged for accessibility. Additionally, the EU Battery Regulation highlights the importance of batteries in the transition to a climate-neutral economy, necessitating compliance with strict environmental and sourcing standards.