Before the Dodd-‐Frank Act came into play, the Electronic Industry Citizenship Coalition (EICC) began conducting research for and developing a program aimed at ridding conflict minerals from their supply chains. I believe the cotton industry could benefit from some valuable insights and lessons learned by the EICC’s experience.
I had the pleasure of welcoming Bob Leet of Intel and Co-‐Lead of the EICC Extractives Working Group when he presented the EICC's Conflict-‐Free Smelter (CFS) Program at a sustainable biofuels workshop in Brussels, sharing his experiences with other industries. Mr. Leet made some interesting observations during his presentation at the biofuels workshop. I am highlighting some key points below, which are worth noting for how they might apply to the cotton industry.
Once United Nations reports (from 2001, 2008 and 2009) began to state that minerals trade directly contributes to funding the war in the Democratic Republic of the Congo, numerous non-‐governmental organizations (NGOs), as well as the media were quick to focus on conflict minerals issues.
Two industry associations, the EICC and the Global e-‐Sustainability Initiative (GeSI)) were already focused on responsible sourcing. They came together to address the issue of conflict minerals in 2007. The industry conducted research into the operations and connections in their supply chain and worked with external stakeholders to design a CFS program. The program focuses on banning conflict minerals from entering the roughly 200 smelters that mix and convert ore or recycled material into manufacturing grade for the four conflict minerals: gold, tantalum, tin and tungsten. The CFS audits are designed to ensure that conflict minerals are not in the “mine to refined raw material” stage of the supply chain, which is the stage that removes the identity of the minerals’ origin. It is worth noting that most commodity supply chains can have many thousands of initial processors, which would pose a significant challenge to the institution of an industry-‐wide audit program.
The CFS program is supported by many global electronics brands (and thus the majority of the market for some minerals, such as tantalum and tungsten). This industry-‐level approach motivates suppliers to participate in the program (for fear of losing their market if they don’t) and allows multiple companies to rely on one set of CFS audits. In addition, individual brands can focus their due diligence efforts on more direct suppliers (e.g. component and product manufacturers).
Mr. Leet stressed the importance of engaging a variety of committed stakeholders to achieve success in areas of mutual interest. While each stakeholder plays a role, not every stakeholder needs to be engaged in each aspect of the wider effort. NGOs and governments can bring credibility to the work being done by the industry, which can, in turn, lead to investments. NGOs can be advocates, activists or implementers, they can be opinionated, fair or unfair, and they are unlikely to change their position. Governments often need to be educated on the issues and possible solutions (and they may not agree with your perspective). It is important to engage them early in the process because regulations are more difficult to modify once established.
The actors along the supply chain must be fully engaged. This involvement is essential for industry-‐wide efforts that aim to improve conditions at the raw material stage of supply chains. There will be some conditions that the industry can affect more easily than others. More creative solutions can be developed with supportive suppliers and industry leaders. Brands and retailers must recognize the value that these actors play and avoid treating them as commodities. An even trickier issue lies in how to collaborate without putting proprietary information at risk and violating anti-‐trust laws.
Mr. Leet proposed that quality initiatives of global scale are developed over time through the following stages:
- Program development (1 to 5 years): Lots of learning, engaging motivated and passionate members
- Industry harmonization (5 to 8 years): Efficiency gains, common suppliers, customers and expectations
- International standards (10 plus years): Established and accepted by multiple industries
Some of Mr. Leet’s comments were particularly helpful in thinking about key issues for the cotton industry. I’d like to take the time to break out some of those issues, which include, specifically, UN oversight of and concern about conflict minerals, the fact that some industry agencies were already working on ways to source the raw materials, and the importance of engaging stakeholders along the way. And, when we look at the industry over all, we need to keep in mind how tough it can be to introduce checks and balances (or a system) that make certain standards the standard for the whole industry. But, if key players are able to take the time to get these standards in place, such a universal standard will benefit the industry’s supply chain and materials sourcing overall.