Forced labor and human trafficking remains a massive problem in the global supply chain. According to Deloitte, roughly 21 million people are trapped in forced labor to help produce conflict minerals like gold, tungsten, tin and tantalum. These practices can go unnoticed because they happen in countries far away from organizations that produce final goods. However, the government and the public have started to pay more attention, which makes removing conflict minerals from your supply chain both an ethical and strategic initiative.
Government Action Against Forced Labor
In 2010, Congress passed the Dodd-Frank Act, which created new reporting standards on minerals for publicly-traded businesses, according to the Securities and Exchange Commission (SEC). Businesses are supposed to file a report to the SEC on where their suppliers get minerals to confirm whether they were linked to conflict areas. While reporting is still voluntary, the law has propelled some businesses toward paying more attention to unethical practices within their supply chains.
Success With SEC Reporting
The results of SEC reporting have been encouraging. Deloitte reports that in 2015, 81 percent of organizations included a conflict minerals report with their filings. There is still room for improvement, however, because only 40 percent of filings had a list of refineries and smelters for their minerals. This a crucial step in tracking because the smelter is usually the last chance to figure out the point of origin for minerals. As this report becomes more common, these numbers should continue trending upward.
Apple and Intel are two major corporations that have recently made their supply chains 100 percent conflict-free, according to Bloomberg. Apple in particular had some serious work to do because, in 2013, only 44 percent of their smelters and refineries faced third-party audits. In 2016, Apple brought that figure up to 100 percent in response to both internal and external pressure.
Steps Your Organization Can Take to Improve
If your organization wants to do more to prevent human trafficking in your supply chain, there are a few steps you can take. When you meet with suppliers, let them know your intention to avoid conflict minerals. Include a notice in your contracts going forward that you only want to use conflict-free sources. You can also only look for certified conflict-free suppliers to stay on the safe side.
You should also push to make your supply chain more transparent. Negotiate for the right to audit your suppliers throughout the year to make sure they're following anti-human trafficking standards. You can create a track-and-trace survey that determines the country of origin for your minerals to avoid getting minerals from conflict areas. Finally, include anti-human trafficking as part of your training for employees in purchasing so they're aware that they should only buy from conflict-free suppliers and that they need to be part of your compliance efforts.
Benefits of Improving Your Supply Chain
It's smart to get ahead of this issue now as it becomes more of a priority for the government and consumers. By cleaning up your supply chain proactively, you can avoid damaging your reputation and potentially facing legal problems. If your enterprise works as a government contractor, this should provide even greater motivation because using minerals from conflict sources can block you from making future bids of government contracts.
Every year, you can report your progress to your shareholders on preventing human trafficking in your supply chain. This can help keep you accountable while also enhancing your organizational reputation through these efforts. There is still a lot of work to do to stop human trafficking, but if organizations refuse to use conflict minerals, suppliers should eventually get the message and change their practices for the better.
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