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Leveraging the Pinch-Point to Avoid Conflict Minerals

By Pamela J. Gordon, Technology Forecasters Blog

Feb 14, 2014

It sounds easy at first: Simply ensure that the metals within your brand's electronics are conflict-free. In other words, make sure that none of your gold, tantalum, tin, or tungsten is sourced from mines that fund armed conflict in or around the Democratic Republic of Congo.

That's the latest directive in a continuing string of environmental-and-worker-responsibility supply-chain requirements from regulators, customers and — in the case of conflict minerals so far — the U.S. Securities and Exchange Commission.

If you're tasked with meeting this requirement — with the first reporting deadline of May 31, 2014 — your initial response might be, "OK, give me the names of these conflict mines, and we'll buy the minerals elsewhere."

However, your brand company rarely buys these minerals directly. Instead, it's your contract manufacturer that buys from components manufacturers — which buy from materials processors, which buy from distributors, which buy from smelters, which buy from middlemen who buy from individual mines.

It's not so easy after all

The first time I heard about the Conflict-Free Sourcing Initiative (CFSI)'s efforts to certify smelters as "conflict-mineral free," I thought the approach was brilliantly efficient. Address the "pinch-point" of a couple hundred smelters through which the four conflict minerals coalesce from a multitude of mines, then are distributed out to myriad supply-chain players (materials, components, manufacturers, and distributors).

And with the Electronics Industry Citizenship Coalition (EICC)'s recent announcement about the CFSI having validated conflict-free smelters or refiners of all four conflict minerals for the first time in the initiative's five-year history, I foresaw an easing of the confusion and struggle that electronics companies having been enduring in their sluggish and confusing journey to comply with the 2010 Dodd-Frank Act's Conflict Minerals requirement.

In fact, I thought it natural that the CFSI's efficient approach would swiftly be adopted by every electronics company struggling to ferret out whether their suppliers' suppliers' suppliers were purchasing minerals from those militia-run mines in the Congo that fuel not only the electronics industry, but also murder, rape, slavery, conscription of child soldiers, and ongoing violence.

Last month at the Consumer Electronics Association's giant Consumer Electronics Show, Intel's CEO Brian Krzanich promised that every Intel microprocessor will be conflict-free. Intel is manufacturing the world's first microprocessors validated as conflict-free for gold, tantalum, tin, and tungsten. Intel's website defines "conflict-free" products as those "manufactured with metals from smelters that have been validated by the EICC and GeSI CFS program, or other country of origin determination and due diligence, to be ‘DRC conflict free,' as that term is used in law."

Flextronics Senior Director of Environment Health and Safety Bruce Klafter says, "The CFSI announcement is a milestone for sure, but there's so much work to be done and a lot of companies are deep into the preparation of their Year-One reports." Klafter served on the EICC Board of Directors, and is the one who in early 2012 explained to me EICC's smart "pinch-point" approach — implementing Conflict-Free Smelter and Due Diligence programs to verify conflict-free minerals all the way to end products.

In my recent GreenBiz article, see an interview with EICC's Director of Communications & Stakeholder Engagement Julie Schindall. We discussed why some tech companies (Intel, Flextronics, Kemet, Ericsson, etc.) and nearly 150 others are signed onto CFSI's pinch-point approach, and the thousands of other electronics companies — who may be leveraging the CFSI's reporting template — are not yet signed on as members.

Going for the (Conflict-Free) Gold

Not every executive realizes that economic, socio-political, and environmental drivers are only further forcing product designers and producers to systemically track their products' substances and the origin of those substances — as Intel's CEO Brian Krzanich must know based on Intel's recent Conflict-Free announcement. And even fewer realize that getting ahead of regulations with sound Design-for-Environment training creates organizational efficiencies, customer preference, and lower product costs.

So, to every executive running his/her company's supply chains and environmental/social responsibility, I say to take a proactive position on your company's compliance and beyond-compliance competitive advantages (covering RoHS, WEEE, REACH, Conflict Minerals, Rare-Earth Minerals, and Design-for-Environment)–with vision and appropriate budget. Create sufficient and well-designed internal organizations that holistically manage supply-chain compliance and beyond. And reward successes at least as well as you do for other strategic risk-reduction and competitive objectives.

I think that leveraging CFSI's pinch-point approach for Conflict Minerals is a component of this critical strategy.






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