What would you do if the headlines reported that your company has been indirectly sourcing gold from drug cartels? What if word got out that you were funding mines fueled by slave labor and human rights violations? Is that a brand hit you’re prepared to absorb?
If your company has invested time, effort and resources into producing a detailed, accurate conflict minerals report, you may believe you’re clear of reputational risk associated with gold sourcing — but you’d be wrong. By surveying for conflict minerals alone, you’re only addressing a portion of your risk areas.
If you’re ever caught in this scenario without a proactive corporate social responsibility (CSR) compliance program already in place, it won’t matter much what you do next. Your stakeholders will already know you haven’t taken action to prevent these atrocities from being financed by your company’s dime.
Take a proactive stance on supply chain due diligence. Leverage Assent’s Corporate Social Responsibility Suite and protect your brand from a broad range of risks.
How Risk Can Worm Into Your Supply Chain
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act refers to gold sourced in the Democratic Republic of the Congo and its adjoining areas, but this isn’t the only area of risk for companies that use it in their products.
Since the U.S. has cracked down on the import of cocaine and other narcotics over the past two decades, Latin American drug cartels have turned to illegal gold mining as an easy way to maintain profits and launder money. The mines they control are a horror show of human rights abuses and modern slavery. Furthermore, operations in these locations are typically carried out using chemicals that poison the rain forests and watersheds surrounding them.
In the past, gold produced in these indefensible working conditions was sold into American markets through NTR Metals, a Miami-based gold refinery. NTR was a subsidiary of a major U.S. gold refinery that supplied companies such as Apple, Tiffany & Co. and 67 other Fortune 500 brands. Now that this injustice has been exposed, companies that cannot show proof of due diligence are the first mentioned in media reports — even though many of them have robust conflict minerals programs.
CSR Due Diligence: Beyond Conflict Minerals
Conflict minerals regulations are becoming more numerous, but on their own, they don’t address the full spectrum of risk that could be lurking upstream. Your company’s due diligence strategy should satisfy more than one regulation. If you’re responding to human rights abuses in the supply chain reactively, instead of proactively, you will always be one media report away from watching your company’s stock fall.
You can stay ahead of reputational damage by taking a broad approach to risk. You’re probably already performing due diligence to comply with conflict minerals regulations. Why not widen your net to address all the nefarious activity that could be occurring just outside the scope of the Conflict Minerals Reporting Template?
Looking to expand your CSR due diligence strategy beyond conflict minerals? Register for our webinar, Combating Human Trafficking & Slavery in Your Supply Chain, and receive guidance from the experts.
How Due Diligence Can Protect Your Brand
While many suppliers have named NTR Metals on their conflict minerals disclosures, companies downstream are scrambling to address additional risk areas raised by government enforcement against NTR. As a result, they’re burning more resources than they would have had they implemented critical evaluation of their supply chain as a common practice. Meanwhile, companies named in NTR media coverage are singled out not just for their failure to uncover the behaviour, but for their lack of effort to do so.
Stakeholders are more forgiving of companies that deploy reasonable safeguards. Though some wrongdoing will continue to be discovered through investigations by enforcement agencies and NGOs, such as that of NTR, a complete CSR program can demonstrate efforts to understand your supply chain, its practices and the impacts. Not every risk issue can be prevented before it occurs, but those who perform due diligence proactively are in a better position to issue a quick response and further mitigate the unethical practices associated with violations once they’re exposed.
Assent’s Corporate Social Responsibility Suite helps your company assess and mitigate risk of negative impacts. Companies that leverage the full suite, as opposed to just the Conflict Minerals Module, benefit from unparalleled brand protection, adding comprehensive, budget-friendly efficiency to their compliance programs, and protection from any potential oversights in the supply chain.