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© firebrandphotography-dreamstime.com Analysis | October 29, 2013

Sourcing of minerals could link EU companies to violent conflict

The large majority of European companies do not conduct due diligence to ensure that their products are free from ‘conflict minerals’. They therefore risk being linked to violent conflict and grave human rights abuses.
International standards have outlined the responsibility of companies to conduct such due diligence and the European Commission is currently developing an initiative on responsible sourcing of minerals from conflict affected and high-risk areas. “But unless required by law, most companies do not address this issue at all”, says Tim Steinweg of the Center of Research on Multinational Corporations (SOMO).

SOMO investigated the efforts of 186 European stock-listed companies that make use of conflict minerals. While US listed companies are required to report on their use of conflict minerals from the Democratic Republic of Congo (DRC) under Dodd Frank 1502, no such legislation is currently in place in Europe.

Contrary to the assumptions often made by policy makers, SOMO’s briefing paper shows that very few European companies are currently conducting their due diligence on this issue. Only 12% of the companies who are only listed in Europe – and are not directly affected by Dodd Frank 1502 – refer to conflict minerals on their website. When looking at specific sectors, companies in the healthcare equipment, aerospace and defense sectors are lagging behind, as less than 10% report on the issue.

In total, only 34 of the 186 investigated companies make any mention of conflict minerals on their website.

SOMO’s research concludes that legal requirements act as an important driver for companies to conduct due diligence on the sourcing of their minerals. SOMO has therefore joined up with 58 other civil society organizations in a call to the European Commission to develop a legal framework. Such a framework should be based on existing international standards and have a broad geographical and material scope.

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