After more than two years of discussion, EU officials have reached a “political understanding” on a new law intended to clean up the European minerals trade. They are presenting the deal as “a first step for the EU to make a real difference for people on the ground.” It is certainly a welcome step in the right direction, but when a giant leap is sorely needed, and is there to be taken, it also looks to us like a missed opportunity.
The law is intended to make sure European companies behave more responsibly when sourcing minerals that may be linked to conflict and human rights abuses. While there is much more the law could — and should — have done, it will put some EU companies on the road to becoming more responsible and transparent when sourcing some key minerals.
What is good about the deal? Companies that import tin, tantalum, tungsten, and gold ores and metals into the EU will now be required — for the first time — to check their supply chains for risks, and to publicly report on what they have done about them. This is an important improvement on the Commission’s original proposal, which would have made even these basic checks entirely voluntary. This follows sustained advocacy from civil society organisations and a strong mandate from the European Parliament, where progressive voices have consistently called for a strong law.
The agreement also pledges to respect the leading international standard for responsible business in mineral supply chains. This standard has been developed by the OECD and forms the basis of laws in the US and the Great Lakes Region of Africa, as well as guidance developed for Chinese companies. Yet despite committing to promote this standard and the level playing field it offers European companies, previous drafts of the EU law actively undercut it by proposing lower standards for some companies. Delivering on the commitment to fix this during the forthcoming technical discussions will now be critical to ensuring the final EU law helps, not hinders, the global responsible sourcing movement.
Despite these positives, the agreement still represents a missed opportunity. Minerals enter the EU in two ways. Raw forms of minerals —ore and metal—are imported, typically for processing and manufacturing. But these minerals also enter the EU inside components and products, such as electronics and jewellery. Under the agreement that has been reached, only companies importing ores and metals will have to check their supply chains. Companies that import the very same minerals inside components or products will not be required to do anything at all.
While these products may have been manufactured outside of the EU, the minerals inside them still end up in the hands of EU companies and consumers. This means the EU retains a significant responsibility for risks that arise in these supply chains and—as the world’s largest economy—the influence to do something about them. In fact, it has just launched a new trade strategy proudly based on “values” rather than interest alone.
Yet with the agreement on the table, the EU has dodged this responsibility and passed up this opportunity. So when policy makers tell us that “All but the smallest EU firms importing tin, tungsten, tantalum, gold and their ores will have to do ‘due diligence’ checks on their suppliers” they only mean that the relatively small number of companies that import these minerals in their ore or metal forms will be required to do so. Some MEPs have suggested this “means that the rest of the supply chain will also be covered, because smaller companies get their products from the bigger ones.” But this is simply not the case. Big companies can, and do, buy products from smaller ones. More to the point, big and small companies alike buy products from companies based outside of the EU. None of these materials will be covered under the agreement that has been reached. Lost is also the opportunity to use the commercial leverage of EU companies and consumers to drive positive change outside of the EU by making it clear that the EU is a market for products that have been manufactured responsibly, not an open invitation where we won’t ask if you don’t tell.
There is no question that all companies have a responsibility to play their part in making sure their supply chains are transparent, sustainable, and responsible. Ultimately, therefore, the EU has decided to trust that the majority of companies will choose to act responsibly of their own accord, at a time when the ability of business to regulate itself is coming under question. It is now up to companies and policy makers to demonstrate that this trust is well placed.
Here the EU must act decisively to clarify the mixed messages it is sending to companies not covered by the law. Imagine a colleague informally invites your entire office to their wedding, only to send formal paper invitations to a much smaller group. The rest of you might well wonder whether your attendance is genuinely welcomed. The EU must now make it clear to companies left out of the law that they are not unwanted wedding guests, but that their engagement with the responsible sourcing movement is still both expected and desired. If these companies do not respond, the EU market risks becoming a weak link in global supply chains, and we will expect the EU to deliver on its promise to deliver further legislative action if the law agreed fails to change the way business is done and the lives of those affected by opaque and irresponsible parts of the minerals trade.
Attention will now turn to technical discussions, where several important issues are to be discussed. We will be eager, in particular, to ensure the EU does not backtrack on its commitment to making the law truly global in scope by unhelpfully singling out certain countries or regions, and to ensure companies can’s simply outsource their responsibilities to private closed-door industry initiatives that have already been given significant power under the agreement.