[UPDATE] Not On Our Watch: EU Adopts Binding Conflict Minerals Law

[UPDATE] Not On Our Watch: EU Adopts Binding Conflict Minerals Law

In the early hours of this morning, the European Commission adopted a new binding regulation on mineral imports from conflict-affected zones. Effective in January 2021, the new rule obliges EU importers of tin, tungsten, tantalum and gold (3TGs) to undertake due diligence to ensure their supply chains are not fueling armed conflicts in the Democratic Republic of Congo (DRC) and surrounding countries of the Great Lakes region in Africa.


Here’s What You Need To Know:

  • The new regulation will take effect on January 1st, 2021
  • Due diligence will be mandatory, not voluntary
  • There will be thresholds (de minimis) standards for 3TGs and ores designed to cover at least 95 percent of imports
  • There will be an independent third-party auditor requirement for EU importers
  • ~600 to 1,000 EU importers will be directly affected
  • ~500 3TG smelters and refiners globally will be impacted
  • Big manufacturers will need to disclose exactly how they plan to survey their supply chains to ensure compliance and submit their adopted practices for approval
  • EU member states will be responsible for enforcement of the rule in their own jurisdiction  

 


Click here to watch our webinar: ‘The Planned EU Conflict Minerals Regulation and Its Implications for Your Business’



What Will Compliance with the EU Rule Look Like?

The rule states due diligence will need to be in line with the Organisation for Economic Co-Operation and Development’s (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (hereafter, ‘the guidance’). The steps laid out in the guidance are intended to help companies identify, mitigate and prevent the risks associated with the extraction, handling, manufacturing and sale of conflict minerals throughout their operations.

The guidance requires EU importers of 3TGS to:

  • Establish strong company management systems to support supply chain due diligence
  • Identify and assess risk in the supply chain through comprehensive surveying
  • Design and implement a strategy to respond to the risks identified
  • Carry out independent third-party audit of supply chain due diligence at various points in the supply chain
  • Report on efforts made toward supply chain due diligence policies and practices as an integral part of their wider sustainability and corporate social responsibility (CSR) programs
“[The EU has] put its foot down on the issue of the corporate responsibility of multinationals.”


Expansions to Conflict Mineral Rules Expected

Within one day of the EU Parliament adopting this rule, advocacy organizations were already anticipating vast expansions of the rule. Amnesty International expects the EU to further strengthen this regulation in the near future by adding other problematic minerals, like cobalt, to the list (the extraction and smelting of which has also been linked with grave human rights violations).

This announcement comes as the U.S. Administration considers changes to its own conflict minerals rule under the Dodd-Frank Act, signalling that irrespective of possible regulatory revisions across the pond, the EU is determined to “put its foot down on the issue of the corporate responsibility of multinationals”, according to European Parliament member Emmanuel Maurel. This sentiment bolsters the clear global consensus on the importance of corporate accountability for human rights, environmental and other impacts in the pursuit of profit.


Due Diligence in Practice

While the precise details of reporting requirements will be for individual member states to announce, the requirements outlined in the OECD guidelines dictate that companies will be obliged to conduct thorough supply chain surveying, data collection, data analysis and reporting to comply with the rule. Industry experts conclude this is best achieved through the use of the Conflict Free Sourcing Initiative’s (CFSI) Conflict Minerals Reporting Template (CMRT), which is in wide use by companies around the world.

Assent Compliance’s regulatory experts are closely following developments in the EU’s conflict mineral regulatory landscape. Our Regulatory Resource Center has a wide range of eBooks, whitepapers, webinars and more to help you learn more about other major EU regulations, such as the REACH regulation.

Contact us at info@assentcompliance.com with any additional questions or for more information.

 

This blog was originally posted on March 17th, 2017, but was updated on April 3rd to reflect the European Commission’s final adoption of the EU Conflict Mineral Rule. 

 

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