This article first appeared in Ethical Corporation.
Promising Chinese guidelines for sourcing minerals from high-risk and conflict-affected areas are open to public comment for a final week. Global Witness is encouraging participation by companies and other stakeholders to help devise robust and workable guidelines.
The initiative, from a Chinese Ministry of Commerce-affiliated Chamber of Commerce (for Minerals, Metals and Chemicals Importers and Exporters, CCCMC), is a welcome attempt to ensure Chinese companies are given clear direction at the national level for sourcing responsibly from around the world and avoiding serious misconduct and links to conflict and serious human rights abuses.
The development of the guidelines by a Chinese body is critical. Global Witness has documented particular links between Chinese companies and mineral supply chains originating in conflict-affected areas and how both local communities and companies can consequently be at risk. Putting strong guidelines into practice will help Chinese companies ensure their activities are no longer associated with serious abuses, as well as helping to build more secure supply chains and comply with related host country and international laws and standards.
The guidelines reflect a growing recognition within industry and government in China that business overseas needs to and can be done better, and also that companies in a supply chain share responsibility for preventing their purchases from causing harm.
Companies can accelerate the development of responsible practice by learning from existing successful models. The Chinese guidelines reflect established initiatives in other jurisdictions that oblige companies to undertake risk-based due diligence whereby companies put systems in place to undertake regular checks along their supply chains, identify and respond to particular risks and transparently and publicly report on their efforts to do so.
A handful of progressive Chinese companies already participate in international responsible supply chain schemes, in part due to their business relationships with US-listed companies which are subject to legislation on the trade in conflict minerals. The hope is that CCCMC’s initiative will inform and incentivise a greater number of Chinese companies to practice due diligence.
Building on over two decades of work to break the links between conflict and the minerals trade, Global Witness is working alongside Chinese and international institutions to draw on best practice to create a standard that is fit-for-purpose.
Key elements of the draft guidelines include:
- Alignment with the 5-step risk-based supply chain due diligence guidance developed by the Organisation for Economic Co-operation and Development and recognised as international best practice. This includes companies having individual responsibility for carrying out their supply chain due diligence, conducting a third party audit of important parts of the supply chain, and publishing their related policies and practices, including risks identified and what they have done to deal with these.
- Applicability to all Chinese companies who are extracting or using minerals and mineral products at any point in the supply chain.
- Applicability to all mineral resources, with an initial focus on gold, tin, tungsten and niobium-tantalum minerals.
- Wide geographical scope, not limited to a particular country or region.
- Optional checks reflecting wider social and environmental concerns outlined in CCCMC’s 2014 Guidelines for Social Responsibility in Outbound Mining Investments.
- Optional certification in which certain elements of a company’s due diligence is validated by an independent oversight body.
Such due diligence is no miraculous fix. Factors driving conflict, instability and abuses against individuals or the environment are often complex and deep-rooted. However, having companies play their role in ensuring trade and investments are conducted responsibly is a vital ingredient towards stability and development in some of the world’s most fragile places.
The draft guidelines will be available until 7 November for review.
They can be accessed via the Global Witness website in English, French and Chinese.