3T-Best-practice-overview-Day1-3TGKigali2013

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Presentation by the OECD on the key elements of the 3T Best practice draft paper on risk management for fraud, unknown or incomplete provenance information.

Day 1 of the 6th ICGLR-OECD-UN GoE Forum on responsible mineral supply chains, 13 November 2013.

Visit: http://mneguidelines.oecd.org/icglr-oecd-un-forum-kigali-2013.htm

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  • the first actual time the OECD began looking at this dates back to 2002-3, when the UN Panel of Experts on the illicit exploitation of natural resources in the Great Lakes Region alleged (see their 2002 Final Report) that a number of OECD-based companies were acting inconsistent with the OECD Guidelines for Multinational Enterprises in their operations and trade in the DRC (3T and gold focus). This led to a number of OECD “specific instances” begin filed in Adherent countries. The OECD investment Committee then began interacting with that group, and the UN Security Council, and decided first to develop the Risk Awareness Tool.  In the end, that tool didn’t provide enough specific detail, so in response to the 2008 UN GoE DRC report, the Executive Secretary of the ICGLR wrote to the OECD Secretary General and asked for more cooperation on due diligence guidance for minerals. This was reinforced by the G8, and the 2009 UN SC Resolution.The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas was developed to help companies respect human rights, avoid contributing to conflict through their mineral sourcing practices, and to cultivate transparent mineral supply chains and sustainable corporate engagement in the mineral sector.The Guidance is the result of a multi-stakeholder process with in-depth engagement from OECD and African countries, industry, civil society, as well as the United Nations. Three consultations were held in Paris in December 2009 and April 2010 and a joint ICGLR-OECD consultation in Nairobi in September 2010 (see meeting links below). As a result, the Guidance is a practical approach to due diligence implementation with an emphasis on collaborative constructive solutions to complex challenges.This project was undertaken in response to calls from the international community:the 2009 L’Aquila G8 Summit encouraged the OECD to co-operate with the International Conference on the Great Lakes Region and “engage with key stakeholders to further develop practical guidance for business operating in countries with weak governance”the International Conference on the Great Lakes Region asked for co-operation and assistance from the OECD to curb the illegal exploitation of natural resourcesthe 2007 G8 Heiligendamm Declaration on Growth and Responsibility in the World Economy endorses the OECD Guidelines for Multinational Enterprises and the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones, supporting their wider understanding in the mining sectora UN Security Council Presidential Statement stressed the importance of the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones for promoting responsible business conduct and avoiding the illegal exploitation of natural resources in countries in conflictThis work contributes to G20 efforts on combatting financial crimes linked to the exploitation of natural resources. The project was managed by the OECD Investment Committee and the OECD Development Assistance Committee, in collaboration with non-OECD partners. See an overview of the project (PDF).  
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • Problem-solving and information-sharingBring stakeholders together to address challenges to implementation and derive common and coordinated solutionsFor example, we have been asked to develop clearer process for commercial risk, and for existing stocks, to determine reasonable level of due diligence. We have also been asked to look into challenges ofovercoming confidentiality and balancing with the recommendations on disclosure by companies of informaiton in their supply chain. This activity has been slow to pick up this summer but we hope to have made progress in time for our Nov meeting CollaborationWorking with other initiatives to encourage consistency and harmonisation of due diligence expectations – e.g. ICGLR already mentioned, but also multple industry programmes… iTSCi, WGC, DMCC, LBMA, etcPeer-learning and other implementation activities:3T Pilot completed in January 2013Gold implementation programme launched this year –Gold training webinarsPromotion and disseminationdevelop sector-specific or geographic-specific tools, for example we worked with the ICGLR to develop this simplified guide on how private sector particpants can carry out OECD Due Diligence and work to ecome certified under the RCM. This is available in English, French, Mandarin, Lingala and Swahili (although I have heard that the Swahili version could be improved…) This document can be updated, and we can work with the ICGLR to further refine it further, to enable broader dissemination. It is already available on our website.ALSO undertake workshops and training seminars (DUBAI, EUROPE AND INDIA ALREADY – CHINA IN 2014) - we at the OECD stand ready to work with all the ICGLR Member Governments to support or conduct due diligence training seminars, together with the ICGLR, to support the implementation of the Regional Certification Mechanism – because if the private sector is carrying-out due diligence, then it will be easier for them to get certified…. IF THERE IS ANY INTEREST FOR THE OECD TO come and assist in ICGLR training by raising awareness of the DDG, please let me know. We are ready and willing.ICGLR-OECD-UN GoE Forum - In-person meeting hosted by the OECD, ICGLR and UN in May and November each year. The next Forum is planned for 13-15 November, and stakeholders have all agreed that it would be good to have the Forum in the GLR. We are discussing with the ICGLR to finalise the exact location. Regardless of where it will be help in the GLR, we would like to rely on you all to ensure it’s a success and well-attended. If you have any ideas on invitees or topics for the Forum, please let me know.
  • 3T-Best-practice-overview-Day1-3TGKigali2013

    1. 1. 3T Best Practice Paper 13 November, 2013 DRAFT for review
    2. 2. 3T Best Practice paper - Context • Outlines strategies for implementing the OECD Due Diligence Guidance with reasonable and good faith efforts as agreed by Forum participants • Key principles: – Do not penalize good faith efforts in sourcing, but good faith efforts not an excuse for ineffective and inadequate due diligence – Failure to detect risk on one instance does not mean the due diligence systems of the companies are not generally effective – Identifying, assessing and disclosing risks can help demonstrate reasonable and good faith efforts – Due diligence entails complementary responsibilities of all actors in the supply chain; other stakeholders (e.g. governments, civil society) have a role in enabling and supporting due diligence. – Encouraging sourcing from conflict-affected and high-risk regions • A living document
    3. 3. Challenges addressed • Risks identified after initial due diligence was performed and the minerals are now further downstream in the supply chain (risks “after the fact”) • Existing stocks at mine sites or trading hubs
    4. 4. Goals • Feedback on draft Best Practice paper • Gain support for approach to existing stocks during this Forum meeting • Advance a common approach to risks discovered “after the fact” • Forum could adopt proposal on Day 3 or via written procedure in the next months
    5. 5. Recommended steps 1. For Stocks only: Segregate and secure all minerals of unknown of insufficient information together, and by origin if known 2. Seek to collect any additional available information on risk, origin and chain of custody or traceability information 3. Identify and assess the risk associated with the minerals and related supply chains – – Collaborate with central and local authorities, civil society and other affected stakeholders and seek their agreement on the level of risk 100% certainty may not be necessary; robust risk management measures will be recommended to ensure improvements 4. Put in place requisite risk response systems and disclose actions
    6. 6. Types of risk identified Type of risk Level of risk Description Type 1 Low Sufficient evidence through formal documentation to determine chain of custody. Low risk that upstream companies are contributing to conflict Type 2 Indeterminate Origin and chain of custody of minerals cannot be determined. However there is also no evidence to suggest reasonable risk of upstream companies contributing to conflict. Type 3 Mitigation Evidence identifies no reasonable risk that upstream companies are sourcing or linked to parties committing serious abuses or supporting armed groups. But there is reasonable risk that companies are sourcing from to parties associated with fraudulent information on origin and chain of custody Type 4 Risks of contributing to conflict Reasonable risk that upstream companies are sourcing from or linked to parties committing serious abuses or providing indirect support to non-state armed groups – including if discovered after the fact
    7. 7. Suggested response by risk level Response – high level points Type of risk Type 1 – low risk • • • • Type 2 – indeterminate risk • • • • • • Accept or dispatch any segregated minerals. Continue to monitor the supply chain. Collaborate with upstream participants and other stakeholders to strengthen due diligence Publicly report on due diligence in accordance with Step 5 of the Guidance. Work with stakeholders to implement stronger chain of custody or traceability systems Accept or dispatch segregated minerals if relevant Improve internal due diligence systems Support efforts of national authorities to improve governance of the mineral sector Consider applying a share of mineral sales to help finance implementation of due diligence programmes Publicly report on due diligence in accordance with Step 5 of the Guidance
    8. 8. Suggested response by risk level Response – high level points Type of risk Type 3 Mitigation • • Same risk response as Type 2 Alert authorities and national, multi-stakeholder or industry due diligence programmes of the risk Type 4 Risks of contributing to conflict • Suspend or discontinue engagement with the supplier for a minimum of three months Alert authorities and national, multi-stakeholder or industry due diligence programmes of the risk Work with stakeholders to implement stronger chain of custody or traceability systems, risk assessments and on-going monitoring Improve internal due diligence awareness and capacity Support other efforts of national authorities to improve governance of the mineral sector Publicly report on due diligence in accordance with Step 5 of the Guidance. If minerals are segregated and secured by the upstream company already in accordance with paragraph 1 above, [sell minerals to authorities at cost for later sale with profits used to finance implementation of due diligence, through nationally, multistakeholder or industry programmes • • • • •
    9. 9. Suggested response by risk level Response – high level points Type of risk Type 4 Risks of contributing to conflict • If minerals are stocks, sell minerals to authorities at cost for later sale with profits used to finance implementation of due diligence, through nationally, multi-stakeholder or industry programmes • If the identification of type 4 risks occurs after the mineral has been traded downstream and initial due diligence performed, consult with central and local authorities, civil society and other affected stakeholders to see if any further risk management measures are expected ─ Measures to identify the minerals downstream associated with type 4 risk should not be undertaken if good faith and reasonable due diligence had been performed ─ As a result of risk management outlined herein, all companies further downstream are no longer deemed to be sourcing from, or linked to risks of contributing to conflict
    10. 10. For downstream companies Downstream companies are encouraged to consider the social and economic effects on developing countries when implementing risk management: • Remain willing to accept minerals dispatched by upstream companies using reasonable and good faith efforts to identify, mitigate and prevent the risk of contributing to conflict • Report on any efforts to support upstream due diligence and avoid potential impacts of disengagement from suppliers in conflict-affected and high-risk areas • As a result of risk management outlined herein, all companies further downstream are no longer deemed to be sourcing from, or linked to risks of contributing to conflict • Integrate the principles and standards of the OECD Guidance and this Best Practice Paper into industry or other multi-stakeholder smelter/refiner audit programmes
    11. 11. For seized minerals Minerals may be seized by national authorities, for reasons linked to implementation of due diligence or not - this issue is a matter of national law Authorities are encouraged to collaborate with stakeholders to determine the risks and appropriate mineral disposal response: • Determine the ownership of seized minerals • For minerals with clear source and ownership, return them to the owner • Minerals associated with Type 4 risks (risks of contributing to conflict), may be handed over or sold to authorities. Authorities could warehouse and sell such minerals with proceeds used to finance implementation of national, regional, multi-stakeholder or industry due diligence programmes
    12. 12. Conclusions • Companies downstream in the supply chain of minerals affected by the risks outlined in the Best Practice paper, would not be contributing to conflict under the OECD Guidance if they follow the recommended steps • Multi stakeholder agreement and support is a crucial component of risk management and assessment • Underlying assumption: Good faith and reasonable efforts were carried out in the first instance, and accepted by stakeholders • If this is not the case, companies would suffer the commercial consequences

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