Apple sets example for supplier responsibility of conflict minerals

IDC Manufacturing Insights has paid close attention to the regulation of conflict minerals since before the US law to regulate them passed in August 2012 (Section 1502 of the Dodd-Frank Wall Street Act). Essentially, the act requires publicly...

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IDC Manufacturing Insights has paid close attention to the regulation of conflict minerals since before the US law to regulate them passed in August 2012 (Section 1502 of the Dodd-Frank Wall Street Act).

Essentially, the act requires publicly traded companies, subject to regulations by the SEC, to report on the use of conflict minerals (tin, tungsten, tantalum, and gold) that are necessary to the functionality or production of products they manufacture or contract to manufacture (for more details on the act and some of the IT suppliers that are providing technology to maintain compliance, subscribers can visit our recent report, Perspective: Meeting Compliance Requirements for Conflict Minerals, here).

Last year was the first of reporting mandates and on May 31, 2014 the first reports to the SEC are due, so the topic has become front and center for manufacturing supply chains that rely on these minerals. The highest impact is being felt across electronics, appliances, jewelry, aerospace and automotive. While many manufacturers have quietly been submitting required documentation, there are several noteworthy companies that have chosen to emphasize their response to the Act, and how it is part of wider sustainability efforts.

The most notable recent activity highlights Apple's corporate responsibility efforts, and it can be seen an example for other manufacturers on supplier responsibility. Earlier this month, the company announced that its suppliers are no longer using the mineral tantalum sourced from conflict regions. This announcement came as part of Apple's publication of its annual Supplier Responsibility Progress Report, and included for the first time the publishing of its Supplier Responsibility Standards, which includes more than 100 pages of requirements Apple places on its suppliers as part of doing business with the company.

Apple is still working on having its suppliers of tin, tungsten, and gold also verified to be conflict-free. It is important to note that as part of this announcement, Apple released for the first time a list of smelters and refiners in its supply chain that are still sourcing minerals from conflict regions. Apple consciously chose to do this to raise the pressure for compliance throughout its supply chain. The company seeks to gain a critical mass of suppliers verified as a means of influencing the demand situation and making a positive change with regards to conflict minerals.

This announcement follows on the heels of another high-profile electronics manufacturer announcing in January that it has manufactured the "world's first conflict-free processors." According to statements, in the early 2010s, Intel began related supply chain efforts through the development of an audit and verification system at smelters where raw ore is refined into metals. To date, the company has visited more than 70 smelters and it announced the successful manufacture of microprocessors that are validated as conflict-free.

Other manufacturers in the electronics industry and beyond, including Sony and LG Electronics have also raised visibility for their efforts around conflict minerals, and a look at a number of companies' sites yields statements about conflict minerals and insight to compliance levels. In every case, they are part of wider corporate responsibility efforts and sustainability initiatives. The bar is being raised, and while some of the largest companies are taking the lead in raising visibility and compliance, there still remain tens of thousands of smaller companies in the extended supply chain that are struggling to meet the reporting deadlines.

IDC Manufacturing Insights expects there to be continued attention paid to conflict minerals and regulatory compliance efforts this year, as manufacturers ramp up efforts to respond. The more the conversations happen in public light, the more likely the Dodd-Frank Act will have its intended positive impact on eliminating support for conflict zones.

Where is your supply chain in this process? Please feel free to share.

Posted by Heather Ashton

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