Sean Ansett, who recently joined the Fairphone team (Yeah!, more about that in another blog), and I just got back from Paris where we were attending an international Forum on Due diligence practice on Tin (for soldering parts), Tantalum (in the capacitors of our phones), Tungsten (vibrators) and Gold (connections). In other words:
Downstream Implementation of the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
I expect this needs some explanation. To start with, the OECD Organization for Economic Cooperation and Development has created industry guidelines intended for companies to ensure they respect human rights and do not contribute to conflict through their supply chain activities.
The guidelines are (among other things) intended to help companies put in place a due diligence process that can help them meet disclosure requirements under national laws, such as Section 1502 of the U.S. Dodd-Frank Act, which requires U.S.-listed companies to disclose whether they use “conflict minerals” (tin, tungsten, tantalum, and gold), and whether these minerals originate in the Democratic Republic of the Congo (DRC) or in an adjoining country. The Guidance clarifies how companies in the supply chain operating beyond U.S. borders can develop due diligence processes for satisfying the reporting requirements under Dodd-Frank.
There has been much debate if section 1502 will have the effect it is intended to have; to stabilize the area and cut-off possible economic activities from the armed groups. Great intentions, but one of the problems is that on the short term companies do not want to deal with all the hassle involved in tagging and tracing the minerals from mines that are not related to the conflict, but are situated in the official conflict region. The Dodd Frank act effectively creates a disincentive for economic activity in the area, as minerals mined from outside the DR Congo and adjoining countries are not submitted to strict guidelines.
As a result export from the area has declined and many people who were making a living out of mining are left without a job. Even worse… there have been reports about unemployed artisanal miners joining the armed forces due to the loss of income.
The meeting was intended to deal with this situation among other things. All stakeholders had in one way or another to do with a supply chain originating in the DR Congo or in a neighboring country. The goal was to reflect on the bottlenecks after a year of implementation of the guidance and come to practical solutions.
So why is this interesting for FairPhone?
Also present at the forum were stakeholders involved in several pilot programs on finding economic solutions for the area. These pilot programs are very interesting for FairPhone as they are in line with our mission to get to conflict free phone, without bypassing the DR Congo and contributing to sustained economic development of local communities. Also, these pilots are practicing a highly traceable and transparent supply chain system.
We’d already joined the Conflict Free Tin Initiative (read more about it). The initiative aims at creating a controlled supply chain from mines from conflict areas in the east of Congo. Many participants both form upstream (smelters, mineral traders, local governments and NGO’s) and downstream (component manufacturers, original design manufacturers and product brands like FairPhone) were present. A good moment for us to get to meet all the stakeholders in person.
The initiators of the “Solutions for Hope Project” (Motorola Solutions and AVX with support from Pact and Resolv) were present. We were already discussing with them how to participate in this project. Solution for Hope was the inspiration for the Conflict Free Tin Initiative. It creates a traceable supply chain for the production of tantalum capacitors made from conflict free coltan from the DRC. A solution for hope, as it provides an income to artisanal miners in an area where people mostly rely on artisanal mining of a minerals that is highly associated with conflict. We are in discussions and have high hopes on getting these capacitors in the first batch of FairPhones, but there is still a great deal of work to do to get it lined up with the production of the phone. We are learning by doing.
Fairtrade/ Fairmined is a partnership between Fairtrade International and the Alliance for Responsible Mining who jointly deliver the certified gold. Representatives from stakeholder organizations were present at the OECD meeting and we are exploring the possibilities to use the gold for the production of the phone.
Gold is the best material to use for the little connectors that connect the various parts of a cell phone together. Fairtrade and Fairmined certified gold comes from artisanal and small-scale mining (ASM) organisations that meet the Fairtrade and Fairmined gold standard. There are currently limited supplies and traditional multinational companies largely don’t want to the premium price to ensure good social and labor standards.
This means the gold has been responsibly mined and that the miners have received a Fairtrade Minimum Price and Premium, which assists social, environmental and economic development in the communities. This goes a step further on social and environmental standards than the initiatives on the conflict free mining. It will be a huge challenge, but if we succeed to be able to use the Fairtrade/ Fairmined gold for the FairPhone it will be the first electronic device with certified Fairtrade components. Even if we succeed scaling up will be a challenge.
So we’re looking back to what for some people might be experienced as an abstract high-level meeting, but I can say we are encouraged with the efforts being taken by NGO’s, companies and public entities who are to raise the bar, with practical on the ground initiatives.