5 step reporting - 7th Multi-Stakeholder Forum on Responsible Mineral Supply Chains

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This presentation by the OECD was given at the session on "Public reporting and due diligence" during the 7th Multi-Stakeholder Forum on Responsible Mineral Supply Chains held on 26-28 May 2014 in Paris.

Find out more at: http://mneguidelines.oecd.org/icglr-oecd-un-forum-paris-may-2014.htm

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5 step reporting - 7th Multi-Stakeholder Forum on Responsible Mineral Supply Chains

  1. 1. Step 5 Reporting in the Due Diligence Guidance 7th Multi-stakeholder forum on responsible mineral supply chains 27 May 2014 - Paris, France
  2. 2. Reporting in the Guidance Step 5 of the OECD Due Diligence Guidance says: Companies should publicly report on their supply chain due diligence policies and practices They may do so by integrating into their sustainability, corporate social responsibility or annual reports to cover additional information on mineral supply chain due diligence  More detail on reporting expectations for upstream, refiners/smelters and downstream in the 3T and Gold supplements  Slight differences in reporting expectations between the 3T and Gold supplements 2
  3. 3. Confidentiality and competitive concerns Annual public reporting is a clear expectation under Step 5 But concerns around confidentiality and competition between commercial entities mean that not all information must be made public:  3T: Price information and supplier relationships  Gold: Price information; supplier identities and relationships (however the identity of the refiner and the local exporter located in red flag locations should always be disclosed except in cases of disengagement); transportation routes; and the identity of information sources and whistle-blowers located in conflict- affected and high-risk areas, where revealing the identity of such sources would threaten their safety. But all information should be disclosed to a third party, described as “any institutionalised mechanism, regional or global, once in place with the mandate to collect and process information on minerals from conflict-affected and high-risk areas” 3
  4. 4. Upstream reporting
  5. 5. Report section 1 Introduction: The Company This section should serve as an introduction to the company and its activities so that the reader can understand the context of the following sections on the company’s supply chain due diligence activities. Suggested components of this section:  Name of company that is being reported on, registration number, contact details of due diligence manager  Brief overview of company structure: sub-entities, joint ventures, holding companies etc.  Company’s activities, such as:  location of operation (countries, provinces, areas)  type of operation and licences/permits (mining company, mineral trader, treatment unit, local exporter etc.)  Reporting period and the scope of the report 5
  6. 6. Report section 2: Company management systems Components of this section: The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:  Set out your company’s supply chain due diligence policy  Explain the management structure responsible for due diligence, including who is directly responsible  Describe your company’s control systems over the supply chain, how the system operates and what data/information it has yielded  Describe your company’s record keeping system and methods of disclosing suppliers down to the mine of origin to downstream actors  Disclose information on payments made to governments in line with EITI criteria and principles 6
  7. 7. Report section 3: Risk Assessment Components of this section: The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:  Publish the risk assessment (with due regard to business confidentiality and competitive concerns).  Outline the methodology, practices and information yielded by the on-the-ground assessment.  Outline the methodology of your company’s supply chain risk assessment 7
  8. 8. Report section 4: Risk management Suggested components of this section: The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:  Describe the steps taken to manage risks, including a summary report on the strategy for risk mitigation in the risk management plan, capability training and – if any – involvement of affected stakeholders.  Describe your company’s efforts to monitor and track performance of supply chain risk management. 8
  9. 9. Report section 5: Annex or Appendix If the company wishes to provide supporting evidence or examples of key policies, templates or risk assessments, it may wish to do so in an annex or appendix to the main report. Example section 5: Annex Super Export company wishes to draw attention to a number of annexes to this annual report on our supply chain due diligence policies and activities: • Annex A: Conflict minerals policy (full text in French) • Annex B: Supplier agreement, including due diligence requirement and reference to conflict minerals policy. • Annex C: Supplier Inspection template • Annex D: Examples of supplier inspections carried out during the reporting period: Site A, Site B, Site D and Site M 9
  10. 10. Gold supplement ‘additions’ (1/2) The following components are specific to the Gold Supplement: Company management systems  Describe your company’s record keeping system and methods of identifying all suppliers down to the mine of origin and the methods for sharing information about DD throughout the supply chain. Risk Assessment  Explain how your company identified red flag operations or red flags in their supply chains, including the verification of supplier representations proportional to risk.  Describe the red flags identified in the gold supply chain.  Describe the steps taken to map the factual circumstances of those red flag operations and red flagged supply chains.  Outline the methodology, practices and information yielded by the on-the-ground assessment team, including whether and how your company collaborated with other upstream companies and how your company ensured that all joint work duly takes into consideration circumstances specific to your individual company.  Disclose the actual and potential risks identified; companies should not report risks identified for potential suppliers with whom they have not done any business. 10
  11. 11. Gold supplement ‘additions’ (2/2) Risk management  Describe how your company’s internal control systems (such as chain of custody or traceability systems) have been strengthened to collect and maintain reliable up-to- date information on red flagged gold supply chains.  Describe your company’s efforts to monitor and track performance of supply chain risk management, including all instances and results of follow-up after 6 months to evaluate significant and measurable improvement.  Disclose the number of instances where the company has decided to disengage with suppliers and/or supply chains, consistent with Annex II. 11
  12. 12. Refiners / Smelters
  13. 13. Smelter and Refiner Reporting in the Due Diligence Guidance In addition to the upstream reporting requirements, smelters / refiners should: 3T Supplement (Step 5, Section A2): Publish the audit reports of smelters/refiners with due regard taken of business confidentiality and other competitive concerns. Gold Supplement (Step 5, Section A2): Publish the summary audit reports of refiners with due regard taken of business confidentiality and other competitive or security concerns. The summary audit report should include: a) Refiner details and the date of the audit b) The audit activities and methodology, as defined in Step 4(A)(4), where an Industry Programme or Institutionalised Mechanism in conformance with this Guidance and as defined in Step 4(B)(2) has not published these details c) The audit conclusions, as defined in Step 4(A)(4), as they relate to each step in this Guidance 13
  14. 14. Downstream
  15. 15. Downstream Reporting in the Due Diligence Guidance Company management systems: • Set out your company’s supply chain DD policy. • Explain the management structure responsible for DD, including who is directly responsible. Risk assessment and management: • Describe the steps taken by your company to identify smelters/refiners in the supply chain and to assess their DD practices, including the published list of qualified smelters/refiners through industry validation schemes conforming to DD processes in this Guidance. • Describe steps taken to manage risks. Audit: • Publish audit reports of their DD practices with due regard to business confidentiality and other competitive concerns and responses to identified risks. 15
  16. 16. Gold supplement ‘additions’ The following components are specific to the Gold Supplement: Management systems:  Describe your company’s control systems over the gold supply chain, explaining how this operates and how it has strengthened your company’s DD efforts in the reporting period  Describe your company’s database and record keeping system. Risk assessment:  Describe the assessment of their [refiners?] DD practices.  Explain the methodology of your supply chain risk assessments.  Disclose the actual or potential risks identified. Risk management:  Describe your company’s efforts to monitor and track performance of supply chain risk management, including all instances and results of follow-up after 6 months to evaluate significant and measurable improvement. 16
  17. 17. Example reports* Metachem Sprl African Barrick AngloGold Ashanti Barrick Gold Fields IAMGOLD Kinross New Gold Primero Argor-Hereaus New Boliden Krastsvetmet Hewlett Packard Intel GE * The OECD makes no claims to the quality of the reports suggested above. These reports are included only to give companies illustrations of their peers activities and approaches to reporting 17

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