News

EU takes step towards conflict-free supply chains

Source: Global Witness

27th January 2012 - Global Witness and CCFD-Terre Solidaire welcomed a commitment today by EU Trade Commissioner De Gucht and Development Commissioner Piebalgs to make supply chains more transparent, a move that will help prevent natural resource-fuelled conflict. The two groups called on the Commission to swiftly roll out regulation requiring companies sourcing minerals to do checks – known as due diligence – on their supply chains.

Abusive armed groups in eastern Democratic Republic of Congo (DRC) have illegally used proceeds from the minerals trade to fund their fight in a brutal civil war that has lasted for over 15 years. These minerals – tin, tungsten, tantalum and gold – are used in products sold to European consumers, but few companies actually carry out checks on their supply chains to find out whether their purchases are causing harm.

The EU Trade and Development Communication follows a move by the US Congress to address the dire humanitarian situation in eastern DRC by introducing legislation on conflict minerals. The law, which forms part of the July 2010 Dodd Frank Act, requires US listed companies to carry out supply chain due diligence on minerals sourced from DRC or neighbouring countries and report to US regulators and the public on the measures they have taken.

“The Communication is an encouraging first step towards conflict-free supply chains in Europe and beyond. The EU must now follow the US example and introduce regulation obliging companies to do due diligence and make sure their business activities aren’t funding war – in DRC or elsewhere,” said Annie Dunnebacke from Global Witness. “It’s no longer acceptable for companies to be allowed to claim ignorance about where their products come from and how they’ve been produced.”

Today’s announcement states that the EU will advocate greater use of the due diligence standards published last year by the Organisation for Economic Cooperation and Development (OECD). The OECD guidance applies to companies sourcing minerals from conflict zones and areas at high risk of conflict. The standards include comprehensive recommendations for users of tin, tantalum, tungsten and gold supply chains, but could be applied to other supply chains also.

“The OECD guidance is essentially a blueprint telling companies how to carry out supply chain due diligence. It already commands broad support from governments, companies and civil society organisations, and should form the basis of any EU regulation,” said Dunnebacke. “European consumers and investors have a right to know if their purchases are financing conflict and human rights abuses. The reality is that if the EU doesn’t make the OECD recommendations compulsory, many companies won’t do the checks, thereby undercutting those firms that do try to do the right thing.”

Certain European firms will be obliged to comply with the requirements of the Dodd Frank Act. An EU law on supply chain due diligence would level the playing field and ensure that all companies in Europe are meeting the same requirements. Moreover, it would guard against EU businesses finding themselves at a disadvantage in a global market in which buyers are increasingly demanding conflict free materials.

Zobel Behalal from CCFD said: “Today’s statement also makes an encouraging commitment to provide support to developing country partners’ efforts to strengthen natural resource governance. The Congolese government’s recent introduction of a directive making compliance with the OECD guidance mandatory in DRC is precisely the kind of initiative the EU should encourage.”