Today, the Responsible Sourcing Network (RSN) released a study measuring large cap company performance on a major human rights risk and ascertained the industries both leading and lagging when it comes to conflict minerals reporting.
To conduct the pilot study for the report, Mining the Disclosures: An Investor Guide to Conflict Minerals Reporting, RSN worked with Sustainalytics, a leading provider of environmental, social and governance research, to develop a research tool that offers insights into the quality of corporate conflict minerals disclosures.
While the Information Technology sector has elicited the most activist concern over conflict minerals, the RSN study found that many IT companies are leading the pack — Intel, Qualcomm and Apple were all top performers. Energy equipment, containers and packaging, and healthcare equipment sectors scored much lower. The report calls on investors to encourage lagging sectors to engage in industry-wide schemes and take a more proactive approach to their due diligence efforts.
“While some companies took the initiative to provide robust conflict minerals reports, too many took the easy way out by fulfilling only the most minimal compliance requirements,” said Patricia Jurewicz, founder and director of RSN and co-author of the report. “As companies see their peers adopting leading practices, we expect more transparency and greater depth in conflict minerals reporting.”
In 2014, 1,315 companies submitted their inaugural conflict mineral disclosures to the U.S. Securities and Exchange Commission as required by Section 1502 of the Dodd-Frank Act. Reporting on conflict minerals is central to the strategy adopted by stakeholders across sectors and continents to help free the minerals trade in the Democratic Republic of Congo and the broader Great Lakes region of Africa from the grip of armed groups.
“We applaud the authors of this report for digging deeper into the topic of conflict minerals reporting,” said Jackie Sturm, VP of Global Supply Management at Intel. “We share their view that you cannot have true accountability without transparency. Intel started our work to achieve a conflict-free supply chain in 2009, and it was a proud moment when we reached that goal for our microprocessors in 2014. Now we are on track to make all of our products conflict-free starting in 2016.”
The study examined a pilot pool of 51 companies across 17 industries with high exposure to conflict minerals. The transparent methodology was designed to encourage higher-quality reporting, incentivize companies to support in-region conflict-free certification efforts, and set a precedent for comparing social performance.
“Qualcomm is proud to be recognized as a leader in the effort to ensure industry supply chains aren’t supporting groups that commit human rights violations in the Democratic Republic of the Congo or adjoining countries," said Roawen Chen, SVP of Operations at Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated. "But this is not a single company or industry effort — cross-industry collaboration, engagement with non-industry stakeholders and support for projects on the ground are critical to our effort to promote the responsible sourcing of raw materials.”
There has been a recent push in developing tools to help companies track and remove conflict minerals in their supply chains. Last fall, UL introduced a platform to help companies identify conflict minerals sources and put mandated comprehensive, audit-traceable reporting procedures in place quickly and cost-effectively. And earlier this month, the Conflict-Free Sourcing Initiative (CFSI) published a new Conflict Minerals Reporting Template, a multi-industry tool designed to facilitate transfer of information throughout the supply chain in support of conflict-free sourcing.