IPC Joins European Industry Group on Responsible Sourcing of Minerals

By Chris Mitchell, vice president, global government relations and Ken Schramko, senior director, North American government relations

On an issue of long-running concern to the electronics industry, IPC has joined the European Partnership for Responsible Minerals (EPRM) as part of its continuing efforts to help IPC members avoid undue regulation and navigate the challenge of responsible minerals sourcing.

The EPRM is a multi-stakeholder partnership aiming to break the links between minerals extraction, conflict, and human rights violations and to increase the proportion of responsibly produced minerals in in conflict and high-risk areas (CAHRAs), especially the Democratic Republic of Congo (DRC). For years, the United Nations has reported that serious violations of human rights are widespread in the DRC, including acts of violence by government forces, criminal networks, and other armed groups that derive illegal revenues from smuggling and taxation of minerals from DRC mines.

In response, the EPRM is building partnerships and sharing knowledge about due diligence related to four minerals – tin, tantalum, tungsten and gold (3TG) – which are used in many electronic components in key sectors such as automobiles, health care, ICT, aerospace and defense.

The group is especially focused on assisting small and medium-sized enterprises with their due diligence requirements. Specifically, the EPRM is preparing to launch an initiative in November called “Due Diligence Ready,” through which companies will be able to access information, tools, and training materials to prepare for new EU rules coming into effect in 2021.

IPC decided to join the EPRM at the urging of members of our European Government Relations Committee. The choice was clear: The electronics industry could put its head in the sand and ignore the issue; or it could work voluntarily with peers and stakeholders to encourage the responsible sourcing of minerals. The committee chose the latter course for two reasons. First, electronics companies, as consumers of these minerals, want to avoid any association with these conflicts and human rights abuses. Second, by engaging with policy makers and influencers, the industry hopes to avert and minimize undue regulatory burdens on industry. Our members’ actions, however strenuous, cannot fix the root causes of conflict in these regions.

IPC has been involved in the conflict minerals dialogue for years, representing our members in proceedings and negotiations with policymakers; developing standards and guidance to promote industry compliance; and participating in the Organization for Economic Cooperation and Development (OECD) as it developed international guidance.

For example, after the Dodd-Frank legislation was signed into law in the United States, and the U.S. Securities and Exchange Commission (SEC) finalized its conflict minerals regulation, IPC and its partners developed and released IPC-1755, a standard that helps industry suppliers and customers share conflict-minerals data along the entire global supply chain. Currently, this standard is undergoing revision to be better aligned with the OECD guidance, with a new version expected in early 2020. The IPC E-31H Conflict Minerals Data Exchange Task Group is conducting the revision process, and one of its co-chairs, Environmental Compliance Manager Nikki Johnson of Total Parts Plus (TPP), is serving as IPC’s representative to EPRM.

Going forward, IPC will be working closely with EPRM members including Intel, Apple, Samsung and HP to implement supply chain practices that promote support responsible sourcing channels for minerals. EPRM is working to achieve this goal through four main objectives:

• Develop and operate a knowledge platform to inform stakeholders on due diligence;
• Educate SMEs in Europe about the importance of responsible mineral sourcing;
• Facilitate connections between upstream, midstream, and downstream actors; and
• Align “mining intervention strategies” and expand resources to support artisanal and small-scale mines to improve their practices and access global markets.

Our focus is on making sure that our industry demonstrates its commitment to meaningful voluntary approaches because we have heard directly from European Commission officials and Members of the European Parliament that mandatory reporting requirements are being contemplated.

U.S. Policy Direction in Suspense

Meanwhile, in the United States, IPC continues to believe that collaborative, industry-driven approaches like those favored in Europe would be more effective than the current U.S. regulations, which were issued in 2012 under Section 1502 of the Dodd-Frank financial regulation law.

In 2014, a federal court ruled that a portion of the SEC rule violated the First Amendment. In April 2017, the SEC’s Division of Corporation Finance issued new guidance indicating a lighter approach to enforcement. That said, the rule remains on the books, and the SEC could still initiate enforcement action if companies did not report on their due diligence as required.

Earlier this month, the U.S. Government Accountability Office issued a mandatory annual report on the issue, concluding that little has changed since 2017:

• In 2018, 1,117 companies filed conflict minerals disclosures—roughly the same number as in 2017 and 2016.
• An estimated 56% of companies were able to report whether the minerals in their products came from the DRC or neighboring countries. That number rose significantly between 2014 and 2015 and has since leveled off.
• Of the 56% who were able to report, 38% of companies reported their minerals came from a covered country, and 61% reported they could not definitively confirm the source of the minerals in their products, with both figures about the same as in prior years.
• Approximately 94% of companies required to conduct due diligence reported conducting it, and of those, 89% reported using the OECD’s due diligence framework.
• Violence continues to be prevalent in the regions of concern.

The GAO notes that as of June 2019, a revision of the SEC rule was on the agency’s long-term regulatory agenda, “which means— according to SEC staff—that any action would likely not take place until after March 2020.”

Please contact Ken Schramko if you have questions about responsible sourcing of minerals, IPC’s advocacy programs on this issue, or our membership in EPRM.

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