Hardware

US tech giants failing to report on conflict minerals says report

Some of America's largest technology firms are among those criticised for not doing enough to comply with a US law aimed at cutting funding for wars that have killed millions in Africa.


conflict-minerals-mining.jpg
Mining in Mwenga territory, South Kivu, DRC.
Image: Global Witness

Some of the world's largest tech companies are not doing enough to check whether their products contain conflict minerals from Central Africa, a report by human rights groups has claimed.

Conflicts in and around the Democratic Republic of Congo have killed more than 5.4 million people since 1998. Helping to fund the violence has been the sale of gold and the minerals used to produce tin, tantalum, and tungsten. These metals are used inside electronic components in phones and laptops, as well as in vehicles and jewellery.

In a bid to cut funding to armed groups involved in these conflicts, the US recently introduced a law to compel firms to be more transparent about where they source raw materials from.

Amazon, Google, IBM and Oracle are among the 79 percent of five US firms that have not met the requirements of this US conflict minerals legislation, the analysis by Global Witness and Amnesty International claimed.

"Most of America's biggest corporations have blind spots in their supply chains - leaving them oblivious to whether the products they sell contain minerals that have funded conflict," writes Dr Denis Mukwege in the report.

"The numbers are staggering: around 85 percent of companies had not contacted the smelters or refiners that processed their minerals; only 16 percent of companies said they knew which country their minerals came from."

Under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, companies listed on the US stock exchange are required to disclose the use of conflict minerals sourced from the Democratic Republic of Congo (DRC) or its neighbouring countries.

The act is aimed at breaking the links between the mineral trade and armed groups in the DRC.

For many firms the complexity and length of their supply chains are such that they long claimed they were opaque, but the Dodd-Frank act requires them to at least attempt to do so.

Under the rules firms must disclose the use of conflict minerals sourced from the DRC or its neighbouring countries. Where they source from the region, they must report on their efforts to determine the mine or location of origin to ensure that armed groups are not benefiting from the trade of these minerals.

As required under Dodd-Frank, more than one thousand companies listed on US stock exchanges filed their first conflict minerals reports with the US Securities and Exchange Commission (SEC) last year. Global Witness analysed 100 of these reports for compliance with the "minimum requirements of the law".

"Very few of the reports contained detailed information about the steps companies had taken to source minerals responsibly," the report states.

"This suggests that many of these companies made little effort to understand their supply chains and to take steps to ensure that they are not contributing to harm."

Identifying the origin of potential conflict minerals is important to avoid funding an ongoing human rights abuses in eastern DRC, according to the report.

"Despite the collapse in late 2013 of the most well-organized rebel movement in eastern Congo (a Rwandan-backed group known as M23), the violence continues today. Dozens of armed groups, homegrown and foreign, operate in the area."

Mining helps supports many artisinal miners in the DRC and Global Witness isn't recommending companies stop purchasing from the region. Instead it wants them to undertake a detailed analysis of their supply chain to ensure that sourcing decisions they do not benefit armed groups.

For large firms it can be a challenge to find smelters that are certified as conflict-free and that still source within the Congo. HP, the world's largest server maker, and a firm that was rated as having made the second most progress towards tackling this issue of any electronics manufacturer in the world by the Enough Project in 2012, said that of the just over 200 smelters it deals with only about 60 are certified as conflict-free. And of these 60 conflict-free smelters, only four or five source minerals from inside the DRC.

Global Witness recommends that firms should demonstrate compliance with each of the five steps of the OECD Due Diligence Guidelines for Responsible Supply Chains of Minerals, which provides recommendations for how companies can respect human rights and avoid contributing to conflict when sourcing minerals.

Specifically, the report says firms should improve information on their suppliers' supply chains, directly engage with smelters and refiners, provide specific examples of risks of humans rights abuses in their supply chain and develop robust management processes to mitigate these risks.

Just over 20 percent of the firms Global Witness examined were able to meet the minimum requirements of the Dodd-Frank act - including Cisco, HP, Intel and Microsoft. The report says their progress demonstrates compliance "is possible" among companies with complex supply chains.

Among the companies Global Witness identified as having failed to comply with the requirements of the law there was a great variability in the quality of their reports. Some firms - generally less well-known companies - provided very scant detail, while other, generally larger companies, provided a most of information required but failed to satisfy one or two key areas, such as how they assessed risk in their supply chain.

The SEC has not commented on the quality of the conflict minerals filings it has received and has taken no action against firms in regard to these filings. Similar to other filing requirements, the SEC has the power to delist a company from the stock exchange, but this is used extremely rarely, with fines being more common.

Firms will have to file their second conflict minerals reports by June this year, and Nathaniel Dyer, campaign leader for the DRC at Global Witness, said it was important they improve on their initial reports.

"There is a crisis still going on in eastern Congo. There are many different armed groups, some of which rely on the control of mines and mining trade routes in order to earn funds.

"European and American companies have an obligation to ensure they are not bankrolling armed groups overseas and the best way to to do that is to properly implement supply chain due diligence."

Google and Oracle refused to comment and Amazon had not responded at the time of going to press.

An IBM spokesman said the firm "expects our direct suppliers and, in turn, their upstream suppliers to adhere to the Electronic Industry Citizenship Coalition (EICC) code of conduct and procure minerals from responsible sources".

About Nick Heath

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

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