The weeks following a Summit are always kind of sad. The euphoria of the event is over...the anticipation of seeing colleagues and friends behind us. But the things we take away from the event--the new peer relationships, the insightful things we learn--carry on for years to come. I attended some incredible sessions on topics I knew little about previously. One such session was with Ernst & Young (EY) and Caterpillar on Conflict Minerals. In the sourcing world, the term has become fairly well known, but for those unfamiliar, conflict minerals are minerals--namely tantalum, tin, tungsten and gold (aka columbite-tantalite, cassiterite, wolframite and gold)--that, much like "blood diamonds," are mined in conditions of armed conflict and human rights abuses, most namely in the Congo and adjoining countries. To me this was still a little ethereal until I dug a little deeper and learned that the "miners" are often hired by gunpoint or physically forced to do this work to protect themselves or their families. The work conditions are horrific and in themselves may result in death to the miners. In fact, more people have died in Congo Civil Conflict than in the U.S. Revolution, Vietnam War and Korean War COMBINED. Without more transparency in the supply chain, consumers don't have any way of knowing if their purchases, primarily in industries like electronics, aerospace, industrial products, automotive and jewelry, are funding armed groups that are widely known to commit human violations and mass atrocities unfathomable to most people. To address this, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act was written that requires companies to identify where the minerals used in their products originated from. The Dodd-Frank Act has successfully reduced the amount of revenue militias are receiving by around 65% by dissuading companies from engaging in trade that supports regional conflicts.
Conflict minerals...is this just the beginning of a long line of areas that supply chains are now being held responsible to settle unrest and injustice in the world? I am personally torn by the rules - I agree we all need to recognize where our supply chain needs can cause harm to others, from child labor to carbon footprint to funding an underground militia – but why is this not played out through public scrutiny versus corporate rulings? Without financial penalties, it is public disclosure, public pressure and a board backing the decision to make changes that will sway a company’s practices…so why enact such an ambiguous act subject to dramatic swings in interpretation? Coming out of a recession and adding this layer of governance to an already risk filled supply chain is a cost and a burden at a time when we need to be rebuilding shareholder value, creating jobs and putting more money in the economy. Until the entire world recognizes the need to support the conflict minerals provisions, are we not unjustly “taxing” American businesses? Has anyone actually studied the cost of implementing a program to fulfill the requirements? Why is it okay if we put our label on a generic item using conflict minerals, but we can’t manufacture with it? How does that make sense? How come it is okay to use a button containing tin as an ornamental part of a garment, but if it acts to close a shirt or zip a pair of pants, it is now a functional part of a garment and must be disclosed? Really? Am I the only one confused here?