The OECD Due Diligence Guidance for Conflict-Free Mineral Supply Chains

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1 The OECD Due Diligence Guidance for Conflict-Free Mineral Supply Chains Tyler Gillard Legal Expert OECD Investment Division

2 Background OECD began work on due diligence for conflict-free supply chains in Oct 2009 Developed with the assistance of a multi-stakeholder working group: OECD and African Countries (e.g. Belgium, Canada, DRC, Germany, Rwanda, UK, USA); International Organizations (e.g. ICGLR, MONUSCO, UN Group of Experts on the DRC, World Bank); Industry and Trade Groups (e.g. EICC, GeSI, ITRI, Responsible Jewellery Council, World Gold Council, LBMA, International Council on Mining & Metals); Companies (e.g. Ford, Intel, Apple, Rand Refinery, Thaisarco, Malaysia Smelting Co., AngloGold Ashanti) Civil Society and other experts (Amnesty International Global Witness, Revenue Watch, Enough Project)

3 Background Final Due Diligence Guidance has widespread support: Adopted by 41 OECD and non-oecd countries that pledged to ensure that companies operating in or based in their borders use the Due Diligence Guidance Supported by the UN Security Council Endorsed by 11 African countries (ICGLR) and integrated into ICGLR Certification Mechanism Referenced by U.S. SEC in draft rules for section 1502 Integrated into, referenced and/or relied on by many existing industry programs (e.g. EICC-GeSI, itsci, LBMA, RJC, World Gold Council)

4 General overview of the OECD Due Diligence Guidance Objective: To provide clear, practical guidance for companies to ensure they do not contribute to conflict or abuses of human rights through their mineral and metal procurement practices Method: 5-step risk-based due diligence process Scope: Applies to all companies throughout the entire mineral supply chain that potentially use 3T and gold from conflict or high risk areas

5 General overview of the OECD Due Diligence Guidance Structure: Due Diligence Guidance includes: 1. A 5-step risk-based due diligence framework for all minerals from conflict-affected and highrisk areas (Annex I) 2. A model supply chain policy (Annex II) 3. Principles for risk mitigation (Annex III) 4. Supplement on Tin, Tantalum and Tungsten 5. Supplement on Gold (recently finalised)

6 Implementation Programme Bring stakeholders together regularly to address challenges to implementation and derive common and coordinated solutions: Working with other initiatives to help ensure consistency and harmonisation of due diligence expectations Peer-learning: 3T Pilot underway Gold implementation programme being launched next month! Promotion and dissemination

7 Update on 3T Pilot Purpose: The pilot implementation phase of the OECD Guidance is intended to test and assist with the implementation of the Guidance s 3T Supplement, share information and discern best practices, tools and methodologies for implementing the Guidance. Methodology: Confidential reporting from participating companies to OECD in 3 cycles over 12 months. Findings aggregated into one upstream and one downstream report for each cycle. Participation: 100 participants in the pilot (67 upstream, 33 downstream)

8 Update on 3T Pilot: Upstream Varied levels of implementation of the Guidance upstream, attributed to lack of buyers in the region, varied levels of awareness and capacity. Industry programmes like itsci are leading implementation work Preliminary findings from 2 nd cycle report however show real progress: Major increase in awareness of due diligence expectations Majority of comptoirs report that they have now adopted a policy. Slow convergence of on-the-ground initiatives.

9 Update on 3T Pilot: Preliminary findings from 2 nd cycle downstream report The majority of participants have a policy in place Most of the respondents have begun or completed the identification of Tier 1 suppliers and/or products containing 3T&G. The most commonly referenced data collection method cited is the EICC& GeSI Common Reporting Template and Dashboard. Most participants have begun to engage with their suppliers at some level, but there is variation in the way suppliers are selected and prioritized for communication and data collection.

10 Update on 3T Pilot: Preliminary findings from 2 nd cycle downstream report Most pilot participants do not have direct relationships with smelters. They are relying on industry processes rather than engaging directly with smelters to obtain information and undertake due diligence Pilot participants are using contractual clauses and terms & conditions to ensure compliance to data disclosure and/or required policies as a requisite/pre-requisite to doing business. A majority of the respondents are still working with their suppliers to overcome the issue of confidentiality, both individually and as an industry

11 Upcoming Gold Implementation Programme Two activities proposed: 1. Reporting programme with participating companies or industry associations 2. Help to create mine to market secure, transparent and verifiable pipelines of artisanal gold Upcoming meeting on 2-3 May to discuss the proposed activities, agree on Terms of Reference and launch implementation programme

12 Thank you! For further information on this project and to download the Due Diligence Guidance: