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Speaker: ADAM B. GREENE
Vice President, Labor Affairs and Corporate
Responsibility
Virtual Town Hall Meeting Series on
3rd Party Ecosystem Risks in a Changing Climate of Regulations and Activism
Why Ignorance of
OECD Due
Diligence Rules for
Conflict Minerals is
No Excuse.
presents
UNITED STATES COUNCIL FOR
INTERNATIONAL BUSINESS
Why Ignorance of OECD Due Diligence
Guidelines for Conflict Minerals is No Excuse
RiskWatch Virtual Town Hall on Conflict Minerals
July 30, 2013
Adam B. Greene
Vice President, Labor Affairs & Corporate
Responsibility
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
July 30, 2013
Global
Network
RiskWatch Virtual Town Hall on Conflict Minerals
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 UNDP Human Development Index: 187 out of 187
 Fund for Peace Failed State Index: 176 out of 177
 World Bank Doing Business: 181 out of 185
 Transparency International: 160 out of 174
 Freedom House: “Not Free”
 Save the Children: World’s worst place to be a mother
 Global Hunger Index: bottom
 Population:
– 88% below absolute poverty line
– 70% lack access to adequate food
– 2.7 million internally displaced
DRC ranks near the bottom on most indices
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 In a word – no.
 The main causes stem from political, ethnic, tribal and
territorial disputes
 1994 Rwanda genocide: ~ 800,000 killed in 100 days
– Had nothing to do with minerals or other resources
 DRC has resource-rich areas with no conflict
 Many other funding sources: “taxes”, timber, robbery
 Major armed groups don’t control any mines
– M23 rebels get direct funding and military support from
neighboring countries
Are minerals causing the conflict?
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 No hearings, no amendments, DRC not consulted
 Basic elements of the law:
– Do your products contain tin, tantalum tungsten or gold?
– If so, did any of those metals originate in the DRC or an
adjoining country? If yes, conduct (OECD) due diligence.
– If so, did the sourcing of those minerals finance or benefit
any armed groups?
 Zero-defect approach (vs. risk-based due diligence)
 Imposes significant regulatory and financial burdens on
any sourcing from the DRC – responsible or not
Dodd-Frank Act Section 1502:
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 Increased attention on the conflict…
– But with significant negative unintended consequences:
 Resulted in a de-facto embargo:
– No systems in place can ensure zero-defects
– Huge costs of trying to map highly complex supply chains
– Much easier to source elsewhere than to comply
 Exports have plummeted, smuggling has surged
– 3T export markets limited to China, Vietnam and Indonesia
– Penalized legitimate enterprises in the DRC
– Reduced the earning capacity of millions of workers
Impact of Dodd-Frank
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
Global Supply Chains
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 OECD founded in 1960
– Successor to the Marshall Plan
– 34 member countries
 Good-government forum for
the leading free-market
democracies to:
– Compare experiences
– Address common problems
– Identify best practice
– Coordinate policies
Organization for Economic Cooperation & Development
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
 Internationally recognized framework
 Developed through a multi-lateral, multi-stakeholder
process:
– Governments: OECD, ICGLR, UN Group of Experts
– Industry: Gold / jewelry; 3T Upstream, Downstream:
electronics, automotive, aerospace, manufacturing
– Civil society: International & DRC organizations
 Promotes responsible sourcing of minerals from the
DRC
 Risk-based due diligence: focus on actors vs. minerals
OECD Due Diligence Guidance
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
OECD 5-Step Framework
1. Establish strong company
management systems
2. Identify and assess risks
in the supply chain
3. Design and implement a
risk mitigation strategy
4. Conduct independent
third-party audits
5. Report annually on supply
chain due diligence
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
Current options being considered:
1. No action
2. Voluntary approach: ask EU enterprises to voluntarily
apply the OECD Due Diligence guidance
3. Require due diligence by companies placing minerals (or
products) on the EU market for the first time
4. Require public disclosure by EU-listed and large
companies to demonstrate due diligence
5. Prohibit imports of minerals into the EU market when
operators fail to provide evidence of supply chain due
diligence
EU Regulation on Conflict Minerals
July 30, 2013
RiskWatch Virtual Town Hall on Conflict Minerals
Thank You
Adam B. Greene
Vice President, Labor Affairs & Corporate Responsibility
United States Council for International Business
1212 Avenue of the Americas, Suite 2100
New York, NY 10036 USA
Email: agreene@uscib.org
Office: +1-212-703-5056
Mobile: +1-917-318-1795
www.uscib.org
July 30, 2013

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Adam Greene of USCIB.org speaks on Why Ignorance of OECD Guidelines on Conflict Minerals is No Excuse

  • 1. Speaker: ADAM B. GREENE Vice President, Labor Affairs and Corporate Responsibility Virtual Town Hall Meeting Series on 3rd Party Ecosystem Risks in a Changing Climate of Regulations and Activism Why Ignorance of OECD Due Diligence Rules for Conflict Minerals is No Excuse. presents
  • 2. UNITED STATES COUNCIL FOR INTERNATIONAL BUSINESS Why Ignorance of OECD Due Diligence Guidelines for Conflict Minerals is No Excuse RiskWatch Virtual Town Hall on Conflict Minerals July 30, 2013 Adam B. Greene Vice President, Labor Affairs & Corporate Responsibility July 30, 2013
  • 3. RiskWatch Virtual Town Hall on Conflict Minerals July 30, 2013 Global Network
  • 4. RiskWatch Virtual Town Hall on Conflict Minerals July 30, 2013
  • 5. RiskWatch Virtual Town Hall on Conflict Minerals  UNDP Human Development Index: 187 out of 187  Fund for Peace Failed State Index: 176 out of 177  World Bank Doing Business: 181 out of 185  Transparency International: 160 out of 174  Freedom House: “Not Free”  Save the Children: World’s worst place to be a mother  Global Hunger Index: bottom  Population: – 88% below absolute poverty line – 70% lack access to adequate food – 2.7 million internally displaced DRC ranks near the bottom on most indices July 30, 2013
  • 6. RiskWatch Virtual Town Hall on Conflict Minerals  In a word – no.  The main causes stem from political, ethnic, tribal and territorial disputes  1994 Rwanda genocide: ~ 800,000 killed in 100 days – Had nothing to do with minerals or other resources  DRC has resource-rich areas with no conflict  Many other funding sources: “taxes”, timber, robbery  Major armed groups don’t control any mines – M23 rebels get direct funding and military support from neighboring countries Are minerals causing the conflict? July 30, 2013
  • 7. RiskWatch Virtual Town Hall on Conflict Minerals July 30, 2013
  • 8. RiskWatch Virtual Town Hall on Conflict Minerals  No hearings, no amendments, DRC not consulted  Basic elements of the law: – Do your products contain tin, tantalum tungsten or gold? – If so, did any of those metals originate in the DRC or an adjoining country? If yes, conduct (OECD) due diligence. – If so, did the sourcing of those minerals finance or benefit any armed groups?  Zero-defect approach (vs. risk-based due diligence)  Imposes significant regulatory and financial burdens on any sourcing from the DRC – responsible or not Dodd-Frank Act Section 1502: July 30, 2013
  • 9. RiskWatch Virtual Town Hall on Conflict Minerals  Increased attention on the conflict… – But with significant negative unintended consequences:  Resulted in a de-facto embargo: – No systems in place can ensure zero-defects – Huge costs of trying to map highly complex supply chains – Much easier to source elsewhere than to comply  Exports have plummeted, smuggling has surged – 3T export markets limited to China, Vietnam and Indonesia – Penalized legitimate enterprises in the DRC – Reduced the earning capacity of millions of workers Impact of Dodd-Frank July 30, 2013
  • 10. RiskWatch Virtual Town Hall on Conflict Minerals Global Supply Chains July 30, 2013
  • 11. RiskWatch Virtual Town Hall on Conflict Minerals  OECD founded in 1960 – Successor to the Marshall Plan – 34 member countries  Good-government forum for the leading free-market democracies to: – Compare experiences – Address common problems – Identify best practice – Coordinate policies Organization for Economic Cooperation & Development July 30, 2013
  • 12. RiskWatch Virtual Town Hall on Conflict Minerals  Internationally recognized framework  Developed through a multi-lateral, multi-stakeholder process: – Governments: OECD, ICGLR, UN Group of Experts – Industry: Gold / jewelry; 3T Upstream, Downstream: electronics, automotive, aerospace, manufacturing – Civil society: International & DRC organizations  Promotes responsible sourcing of minerals from the DRC  Risk-based due diligence: focus on actors vs. minerals OECD Due Diligence Guidance July 30, 2013
  • 13. RiskWatch Virtual Town Hall on Conflict Minerals OECD 5-Step Framework 1. Establish strong company management systems 2. Identify and assess risks in the supply chain 3. Design and implement a risk mitigation strategy 4. Conduct independent third-party audits 5. Report annually on supply chain due diligence July 30, 2013
  • 14. RiskWatch Virtual Town Hall on Conflict Minerals Current options being considered: 1. No action 2. Voluntary approach: ask EU enterprises to voluntarily apply the OECD Due Diligence guidance 3. Require due diligence by companies placing minerals (or products) on the EU market for the first time 4. Require public disclosure by EU-listed and large companies to demonstrate due diligence 5. Prohibit imports of minerals into the EU market when operators fail to provide evidence of supply chain due diligence EU Regulation on Conflict Minerals July 30, 2013
  • 15. RiskWatch Virtual Town Hall on Conflict Minerals Thank You Adam B. Greene Vice President, Labor Affairs & Corporate Responsibility United States Council for International Business 1212 Avenue of the Americas, Suite 2100 New York, NY 10036 USA Email: agreene@uscib.org Office: +1-212-703-5056 Mobile: +1-917-318-1795 www.uscib.org July 30, 2013