1. OECD Due Diligence Guidance for Responsible Mineral Supply Chains
Hannah Koep-Andrieu
Policy Adviser, Extractives
Responsible Business Conduct Unit

2. Demand for responsibly produced minerals
Consumer
Consumer and civil society campaigns (e.g. Amnesty Int’l, Global Witness, Partnership Africa Canada, Enough Project, etc.)
Industry: EICC (electronics), AIAG (automotive), AIA (aerospace) LBMA, RJC & WGC (gold & jewellery), CCCMC (China)
Political
Legal
G8/7
UN Security Council Resolutions on DRC (2009, 2010) and Ivory Coast (2013)
ICGLR Heads of States endorsement (2010)
OECD Council Recommendation (2011) EU
EU Parliament
CSR strategy
Commissioners statement on raw materials
China-OECD Programme of Work
Section 1502 of US Dodd-Frank Act - conflict minerals reporting
EU legislation on responsible mineral supply chains
Legal requirement in DRC, Rwanda and Burundi
Relevant legislation on forced labour, child labour (e.g. UK & US) and due diligence expectations (France)
The UN Panel of Experts on the illegal exploitation of natural resources of the DRC reports that natural resources finance conflict. Alleges that 85 OECD-based companies were acting inconsistent with the OECD Guidelines for Multinational Enterprises in their operations and trade in the DRC 3T, gold, timber, wildlife, fisheries, cocoa and coffee
2006
ICGLR adopt Protocol against the Illegal Exploitation of Natural Resources (Minerals, flora and fauna, fishery products and water )
2007
G8 Heiligendamm Declaration endorses the OECD Guidelines and the OECD Risk Awareness Tool and supports their wider understanding in the mining sector
2008
UN GoE on the DRC report on 3T and gold financing conflict
2009
ICGLR launch “Regional Initiative against the Illegal Exploitation of Natural Resources”. ICGLR seeks support from OECD to develop due diligence guidance for the mining sector
G8 Summit encouraged the OECD to co-operate with the ICGLR and “engage with key stakeholders to further develop practical guidance for business operating in countries with weak governance”
OECD approves project on developing practical due diligence guidance for mining in areas of conflict; 1st OECD consultation held determines focus should be on 3T and gold supply chains
UN Security Council Resolution calls on UN GoE DRC to develop due diligence with support from other fora, covering “mineral products”, but later emphasis on 3T and gold

3. Objective and scope Goals Objective
To provide clear, practical guidance for companies to ensure they do not contribute to conflict or human rights abuses through their mineral and metal production and procurement practices
Method and scope
5-step risk-based due diligence process, applies to all companies throughout the mineral supply chain that produce or potentially use minerals from conflict- affected or high-risk areas
Applicable to all minerals, global geographic scope
Role of stakeholders
Companies: Implement due diligence and the 5-step framework, possibly through industry associations or initiatives
Governments: Create the enabling environment for responsible mineral supply chains
Civil society: Monitor mining sector governance and company activities throughout the global mineral supply chain
Background
The Due Diligence Guidance was developed in 2009 through a multi-stakeholder, consultative process in partnership with non-OECD economies, notably Africa’s Great Lakes region. Business has been actively involved, characterizing the practical nature of the Guidance and leading to its strong buy-in by business. It is, the de-facto international standard on responsible sourcing of minerals from conflict areas
the Guidance was developed to provide clear, practical guidance for companies to help them ensure they do not contribute to conflict or abuses of human rights through their mineral and metal procurement practices. It applies to all companies throughout the entire mineral supply chain, and has a global scope of application. It is a very practical guide, designed for business, and entails recommendations that are tailored to the mineral considered, and to the position of any given company in the supply chain. Its recommendations are also applicable to all minerals produced in conflict zones or high risks areas, even though to date specific supplements have only been developed for the tin, tungsten, tantalum and gold value chains.
Goals
Enhanced positive impact of due diligence in conflict-affected and high-risk areas
Increased transparency and accountability globally in mineral supply chains
Improved understanding & awareness of natural resource-connected conflicts, informal economy & role of private sector beyond 3TG

4. So how?

5. 5-Step Framework for Due Diligence
Establish strong management systems: Policy, internal capacity, supplier & business partner engagement, internal controls, data collection, grievance mechanism
Identify, assess and prioritise sourcing risks: map operations, business partners & supply chains, prioritize based on severity of harm (sector, counterparty, and site for high-risk issues)
Manage risks : inform senior management, fix internal systems, build leverage individually or collaboratively, use existing networks to manage risk (e.g. industry, workers reps, non-traditional partnerships), build internal and business partner capacity
Audits at refiners and smelters: where relevant, monitor medium-high-risk operations, products or services, after change of circumstance, undertake audits, assurance, etc.
Communicate and report on due diligence: with due regard for commercial confidentiality and competitive concerns 1 2 3 4 5

6. ‘Whole of supply chain’ due diligence
Appendix on Artisanal and Small-Scale Mining
Choke point: Refiners and Smelters
“Upstream” companies:
Establish traceability or chain of custody to mine of origin
For “red flagged” supply chains, undertake on-the- ground assessments of mines, producers & traders for conflict, serious abuses, bribery, tax evasion, fraud, money-laundering
Collaborative engagement with local gov’t, CSOs, local business to prevent & mitigate impacts, monitor
“Downstream” companies:
Identify “choke points” in supply chain (e.g. metal smelter or refiners)
Collect information on their upstream due diligence (e.g. both through individual efforts and industry auditing)
Use collective industry leverage to encourage improvement of upstream due diligence
Explain what choke point means

7. How is this relevant to you?

8. Jewellery supply chain due diligence
OECD Due Diligence Guidance is applicable to all minerals, globally
Supplement on Gold but the same 5-step due diligence process applies to all other materials
Focus in EU regulation on gold has brought about increased awareness by authorities and law enforcement bodies:
New rules on cash imports into the EU will include gold
More law enforcement and customs investigations into gold

9. Significant uptake by all stakeholders supports global implementation
Whole of the supply chain approach means implementation of the Guidance takes many different shapes.
While the ultimate responsibility for DD rests with each company, industry initiatives have helped operationalize the Guidance. We are also seeing increasing efforts to align and mutually recognize between different initiatives.
They estimate that approximately 90% of all refined gold, 95% of smelted tantalum and 75-85% of smelted tin produced every year is covered by industry audit programmes designed to implement the Guidance, although some of these programs have limited geographic scope.
iTSCi estimates that its programme provided market access to an estimated 80,000 artisanal and small-scale miners in Africa’s Great Lakes region, who support an estimated 400,000 dependents.
The Alliance for Responsible Mining and its Fairmined label today have 10 gold mining organisations that are certified, employing 1,531 miners in Peru, Colombia, Mongolia and Bolivia, indirectly benefitting some 3,780 people. 109kg of gold were sold in 2015 under Fairmined conditions, generating an additional income of approximately 445,000 USD in Fairmined Premium, invested in continuous improvement of the mines and their communities.

10. Thank you
For further information on the OECD’s work on Responsible Business Conduct

11. Step 1: Set up company management systems
Adopt a policy on minerals from conflict- affected and high-risk areas
Communicate the policy to suppliers and incorporate due diligence expectations into contracts
Learn about due diligence and conflict minerals
Appoint a knowledgable staff member to be in charge of due diligence
Keep records related to mineral purchases and risks
Establish a transparency system over the supply chain: Use chain of custody or traceability tracking system for minerals

12. Step 2: Identify and assess risks
Upstream:
conflict risks at mines
conflict risks along transport routes and at trading centres
conflict risks associated with suppliers
Risks within chain of custody or traceability scheme (corruption, fraud etc.)
Downstream:
Use best efforts to identify smelters / refiners
Assess risks by evaluating whether smelters undertake due diligence (eg reviewing audit participation and audit information)
 Greater risk of fraud = more monitoring!

13. Step 3: Respond to identified risks
Report findings to senior management
Devise, adopt and implement a risk management plan, that includes:
STOP sourcing from or engagement with suppliers that are:
Committing serious abuses
Providing direct or indirect support to non-state armed groups (ex: rebel or militia groups)
CONTINUE sourcing but MITIGATE RISKS for all other risks
Risk mitigation
Make a plan for how to eliminate the risks you identified
Monitor supply chain with support from stakeholder networks
Main point: Guidance advocates working with suppliers to solve the problem and improve the situation
(e.g. elimination of child labour, through alternative livelihoods, human rights protection, e.g. through MOUSCO, rapid resaponse when armed groups are in mining areas (technologies??), training of armed forces and mine police on conduct, formalisation of security arrangments with FARDC for security, ASM formalisation)
What kind of mechanisms (existing CSO networks and platforms for reporting incidents, etc)?

14. Step 4: Independent third-party audits of smelter/refiner due diligence
For the OECD Due Diligence Guidance, the focus is on audits at the smelter and refiner level
Audits usually happens outside the producing region
Can be carried out by industry programmes, such as:

15. Step 5: Report annually on supply chain due diligence
Every year companies should write a report on the due diligence they have carried out, including:
Due diligence and conflict minerals policy
Examples of communication with suppliers regarding due diligence expectations
Name of the person responsible for due diligence in the company
Description of the chain of custody or traceability system
How the company complies with DRC and ICGLR requirements
Company risk assessment and risk management
Summary audit reports of smelters/refiners with due regard taken of business confidentiality and other competitive or security concerns
Describe whether and how relying on industry programmes/collaboraiton, and how to ensure that risk assessments taken out on individual supply chain circumstances?
Always responsible for own due diligence