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The impact of introduction of compulsory conflict minerals checks

Published: 26 May 2015 - 09:28 - Marianne Evans

Lorax Compliance is welcoming the European Parliament vote to introduce compulsory supply chain checks for minerals sourced from conflict zones.

The draft law places responsibility on all EU businesses which import, process and use so-called ‘conflict minerals’ - tantalum, tin, tungsten and gold - to ensure disputed materials are not being used across manufacturing processes. This will potentially affect 880,000 EU businesses.

Manufacturers should not underestimate the impact the legislation will have across European manufacturing, warns Lorax chief executive and compliance specialist Graham Margetson.  “Robust supply chain due-diligence will be vital to manufacturers to ensure that the EU doesn’t become a trading hub for conflict minerals. The legislation due to be introduced by Brussels requires manufacturers to police their supply chains more effectively and provide evidence of the steps they take to identify and address potential risks in their usage of the minerals and metals concerned.”

It is likely that once the legislation is fully developed, manufacturers will be required to formally demonstrate legal compliance. From experience in the U.S. where similar legislation exists, this can be exceedingly complex to achieve across an extended supply chain, and as with other EU compliance legislation such as Extended Producer Responsibility (EPR), the financial penalties and potential reputational damage of non-compliance can be very costly.

“We urge businesses to stay ahead of the game by developing a conflict minerals compliance plan and reporting process,” Margetson continued. “By investigating the best fit solution for their businesses now, firms will be seen as an early adopter on compliance processes and have the opportunity to enjoy the CSR benefits this will deliver.”

In 2013, the EU was responsible for almost 25% of global trade in imports of tin, tantalum and tungsten – the trading of which has the potential to fund conflicts that have killed tens of thousands of people in the Democratic Republic of the Congo (DRC) and neighbouring countries. For instance, this includes the import of more than 100 million laptops into the EU – all of which contain some of these materials. Indeed, these materials can be found in nearly all electronic products we use in our everyday lives.

The move by the European Parliament follows the introduction of US legislation implemented as part of the 2010 Dodd-Frank Act, which requires public companies to track the use of minerals in their products and make compulsory annual disclosures. Voluntary conflict minerals guidelines have been in place for some years in Europe but have experienced little take-up by businesses.

 

Source: CIE
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