The OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals
and its implementation programme
Austrian Federal Economic Chamber
Vienna, May 23
Louis Maréchal Policy adviser on extractives OECD Investment Division
Conflict financing and serious abuses of human rights
Globally, non-state armed groups or public security forces, sometimes:
• Illegally control mine sites, transportation routes, or dealers in minerals
• Illegally “tax” or extort money or minerals from artisanal miners, mineral traders and exporters
• Illegally “tax” or extort money or minerals at mine sites, transportation routes, or points where minerals are traded
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Artisanal gold from the Democratic Republic of the Congo
• Informally and/or illegally mined
• Estimated annual ASGM output: ~10 tonnes (low estimate)
• Market value: $380 million
Source: WGC & IPIS (2014)
Objectives, method, scope & key features
Objective
Developed through a multi-stakeholder process to provide clear, practical guidance for companies to ensure they do not contribute to conflict or human rights abuses through their mineral and metal production and procurement practices
Method and scope
5-step risk-based due diligence process, applies to all companies throughout the mineral supply chain that produce or potentially use minerals from conflict-affected or high-risk areas
Applicable to all minerals, on a global scope
Key features
One set of expectations : a common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users
Risk-based approach:Intensity of due diligence proportional to risk Progressive approach: promotion of constructive engagement with suppliers in order
to gradually affect change Reasonable and good faith efforts: Not 100 % compliance overnight
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Structure of the Guidance – 3rd edition
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Supplement on 3Ts
Supplement on gold
Appendix on artisanal and small scale mining for gold
Annex I: description of 5-step approach Annex II: model supply chain policy Annex III: principles for risk mitigation
“Whole of supply chain” due diligence e.g. simplified mineral supply chain
“Downstream” companies:
• Identify “choke points” in supply chain (e.g. metal smelter or refiners)
• Collect information on their upstream due diligence (e.g. both through individual efforts and industry auditing)
• Use collective industry leverage to encourage improvement of upstream due diligence
“Upstream” companies:
• Establish traceability or chain of custody to mine of origin
• For “red flagged” supply chains, undertake on-the-ground assessments of mines, producers & traders for bribery, conflict, serious human rights impacts in
• Collaborative engagement with local gov’t, CSOs, local business to prevent & mitigate impacts, monitor
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Industry programmes in the Due Diligence Guidance
The OECD Guidance encourages collaboration and cooperation of
companies and the setting up of due diligence initiatives
Some advantages of collaborative initiatives:
• Cooperation builds capacity on due diligence, common risks and mitigation strategies
• Cost-sharing when programmes take on specific due diligence tasks
• Coordination between programme members on risk assessment and mitigation for those who share suppliers or operate in the same areas
• Increased cooperation between upstream and downstream, smaller and larger, experienced and less experienced companies
• Building partnerships with civil society organisations, government agencies and international organisations
While companies can outsource some due diligence tasks or use industry programmes, they retain individual responsibility for carrying out adequate due diligence!
Significant uptake by all stakeholders supports global implementation
Implementai
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Global implementation of OECD Guidance
Cooperation with the EU
► March 2014 – Draft EU initiative and legislation released:
Based on OECD Due Diligence Guidance
Initially a voluntary self-certification scheme for importers of 3T and gold into EU common market
Significant amendments by MEPs on 20 May, but OECD Guidance still the basis for the Regulation
Accompanying measures
► Amended text currently examined by EC, Council and EP through the trilogue process
EU initiative on responsible mineral supply chains
EU is the main funder of the OECD implementation programme
OECD Secretariat is actively supporting the EU Institutions to help ensure maximum alignment with the OECD Guidance, and develop accompanying measures
EU funded Alignment Assessment project Objective and deliverables
The objective of this project is to assess:
• The alignment of industry programmes’ standards and systems with the OECD Due Diligence Guidance
• The alignment of the industry programmes’ implementation efforts with the OECD Due Diligence Guidance
Deliverables (to be published by early 2017):
• Methodology (assessment tool and narrative / instructions)
• Pilot assessment of following programmes:
Alignment Assessment and the EU draft regulation
Assessment of industry programmes against the OECD Guidance may be useful for EU regulation:
A government & stakeholder-backed framework for recognizing credible industry schemes, using internationally agreed standards
A learning process and baseline assessment to inform potential EU recognition of industry programmes
To extent the EU regulation aligns with OECD Guidance, methodology and findings could be directly used
Lessons learnt from the pilot assessment could lead to adjustments of the methodology for EU needs, with broader government & stakeholder buy-in
Challenges:
• Individual company responsibility for adequate due diligence versus relying on company participation in industry programmes for assessing compliance with (specific aspects of) the EU regulation
• Government oversight of compliance versus supporting industry cooperation & limiting audit duplication
MOFCOM designated the China Chamber of Commerce Metals, Minerals and Chemicals (CCCMC) as key partner to work with the OECD on responsible business conduct in minerals
OECD and CCCMC signed a Memorandum of Understanding (MOU) on responsible mineral sourcing in October 2014, including due diligence outreach in China and a tool to help Chinese companies operationalise the OECD Guidance
OECD and China sign Programme of Work including cooperation on responsible mineral supply chains in July 2015
Chinese Due Diligence Guidelines, based on the OECD Guidance published in December 2015
Audit frame work / protocols developed in 2016
Working with China
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• OECD Guidance applicable to all minerals
• MRH intends to support companies in their prioritisation and risk-based approach of due diligence in mineral supply chains by providing information that will help enterprises identify the risks of non-financial adverse impacts related to the production and trade of minerals
• MRH will cover the risks arising along the entire supply chain from upstream to downstream actors
• Deliverable will:
– provide contextualised information on the cross-cutting risks identified in Annex II of the Guidance
– and for each of the mineral resources selected basic information on main industrial uses, structure of the supply chain, world production, trade and consumption data, etc.
MRH does not intend to create specific tailored recommendations for mineral supply chain due diligence
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Mineral risks handbook project (MRH) (1)
Depending on human and financial resources, MRH will cover a list of 15 to 20 mineral resources. In addition to 3TG sectors, the following are currently proposed :
• precious metals: platinum, palladium, silver
• precious and semi-precious stones: diamonds, tourmaline, jade, sapphire, lapis-lazuli (ruby, sapphire and others have been suggested)
• base metals: cobalt, copper, iron ore, chromite, molybdenum,
• energetic mineral resources: coal, oil and gas
• industrial minerals: sand, cement minerals, mica
Meeting held on May 10 suggested adding nickel, lead, and zinc
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Mineral risks handbook project (MRH) (2)
OECD Implementation Programme
Over 500 organisations involved
– Started in 2012
– Governments (OECD and non-OECD), international organisations, business, civil society and other experts
Information-sharing and promotion of due diligence
– Tools, workshops, webinars and training
– Outreach: Africa, China, Colombia, India, Middle East ,Turkey
– Peer learning
Collaboration and problem-solving
– Coordinated solutions
– Harmonisation and mutual recognition of industry programmes
– Promotion of responsible mineral sourcing from conflict-affected and high-risk areas
Forum and workshops on Responsible Mineral Supply Chains 16
Thank you
For further information on the OECD’s work on Responsible Business Conduct
http://mneguidelines.oecd.org/
http://www.oecd.org/corporate/mne/mining.htm
[email protected]; [email protected];
[email protected]; [email protected]
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