Tuesday

25th Jul 2017

Opinion

Conflict minerals: EU can save lives and boost profits

It’s not always fashionable to talk about Brussels wielding power. To many, the inner workings of the European Union seem far-removed from day-to-day life, and in particular, corporate power.

But on Thursday (4 December) in the first European Parliament hearing on trade in “conflict minerals”, MEPs will be discussing landmark legislation that could impact European businesses and some of the most fragile and conflict-affected states in the world.

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As a former business leader at the second biggest mining company in the world, I feel like I have no choice but to make sure that at this critical juncture, an industry voice is heard.

Europe is a key player in the trade in minerals - responsible for almost a quarter of the global trade in tin, tantalum, tungsten, and gold. These minerals - worth over €123 billion - end up in products like mobile phones, laptops, cars and aeroplanes.

But the world’s largest economy has no legislation in place to make sure this trade is not inadvertently funding conflicts, human rights abuses, and modern-day slavery.

We know this isn’t just a risk: In countries, such as the Democratic Republic of Congo, Colombia, and the Central African Republic, the trade in minerals has helped fund conflicts that have killed tens of thousands of people and displaced millions of others.

The US and a dozen African countries have responded by drawing up measures that require companies to investigate and clean up their supply chains. Big US-listed brands, such as Tiffany’s, Intel and Apple, all have to comply.

This makes good business sense. As a former senior executive in the resources sector, I know that supply chain due diligence - whereby companies identify, mitigate, and report on risks along their supply chains - is vital to any successful and sustainable business.

It helps companies discover previously unknown risks, learn more about their supply chains and build in innovations. It also enables them to position themselves as ethical brands to consumers and investors alike.

And of course, companies don’t have to do it on their own.

When companies together commit to due diligence, by sharing information and ideas, it creates new business opportunities in many of the regions that need sustainable and responsible investment the most. This is an opportunity, not a challenge.

But don’t just take my word for it: At Walk Free, I now work with the world’s leading businesses to ensure their supply chains are slavery-free.

In the UK, at a recent parliamentary hearing on the draft Modern Slavery Bill, Swedish retailer Ikea said ethical supply chains are “absolutely” more profitable, while Tesco said a good reputation “more than pays for itself.”

Red tape is red herring

And yet, at the hearing in Brussels on Thursday, you will hear a different argument.

Some MEPs will defend the EU’s paltry conflict minerals proposal - which is not only voluntary, but also estimated to cover only a meagre 0.05 percent of European companies involved in the trade.

Some will even argue that Europe can’t handle mandatory regulation and speak of unnecessary “red tape”.

Conversely, binding legislation has proven to be an effective force in getting companies to take responsibility for their operations and supply chains. It is analogous to workplace safety - a process initiated by some leading brands and then encouraged upon laggards by legislation.

The mining industry had unbelievably high worker injury and mortality rates until the 1980s and 1990s, when companies recognised that looking after their workers had the potential to increase productivity and so profitability.

Now, it is unthinkable not to have health and safety precautions.

We know business can be boosted by doing the right thing.

I’m glad to hear that investors representing more than €855 billion in assets under management have joined the call for binding conflict minerals legislation - which is estimated initially to cost companies just 0.014 per cent of annual turnover, falling still further in subsequent years.

Brands must comply

But, we also need to be clear about who this proposal should cover: the brands that place the consumer products on the market need to comply, as well as those importing the minerals in the form of raw ores and metals.

This is about working together to ensure we are creating the strongest and most sustainable business relationships from source to store.

This brings us back to Brussels.

Right now, MEPs have a rare chance to shape the future of the trade in conflict minerals.

They can help companies source responsibly from some of the most fragile states on earth and ensure that the lives of millions of people are better off as a result.

Of course, there will be dissenting views and I welcome debate.

I just hope those talking on behalf of businesses remember one thing on Thursday: Strong conflict minerals legislation in Europe is a business opportunity that we can not afford to miss.

Peter Nicholls is a former vice-president in the Rio Tinto Group and the head global business authentication at Walk Free, a British-based foundation

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