Post on 22-Feb-2016
description
1
Conflict Minerals: Procurement Stress? Experience from Philips
Jan-Willem Scheijgrond, Philips24 October, Bern
2
What minerals?What sector?
64%
36%40%
60% 70%
30%
Electrical Non-electrical
91%
9%
Tin (Sn)Tantalum (Ta) Tungsten (W) Gold (Au)
3
Simplified supply chain for electronics
Typically 7+ tiers between mine and end-user
Finished Product
Mine Trader Smelter Component producer
Contract manufacturer
/ assemblyEnd-user
4
Smelter is at key point in supply chain to enforce responsible purchasing
5
Illustration of global tantalum supply chain
Tens of Ta smelters globally
Ten thousands of 1st tier suppliers globally
6
Actions that need to be taken by US Stock-listed Companies for DF1502
Step 1: Do your
manufactured products contain
conflict minerals?
Step 2: Do the conflict
minerals originate in the
Covered Countries?
Step 3: If “yes”, then conduct due
diligence, and potentially provide a
Conflict Minerals Report
7
‘bagging & tagging’
Conflict Free Smelter Program
Due Diligence
Finished Product
MINE SMELTER/REFINERY OEMS
EICC and GeSI Approach to Conflict-Free Sourcing
Philips’ Responsible Sourcing of Minerals
3rd party audit
Responsible sourcing of Minerals Program
Conflict Resolution1. Conflict Free Tin Initiative2. Indonesia Conflict
Due Diligence (OECD compliant)
1. Risk based approach 360 risk suppliers
2. EICC/GeSI template3. ID CFSP compliance4. Smelter list online
SEC Conflict Minerals Report
9
Due diligence at Philips – results Summer 2013
>300,000 products
10,000 suppliers
360 risk suppliers
158 smelters
40 CFS smelters
ZERO conflict mines
10
Conflict Free Smelters in Philips supply chainnumber of identified smelters per region (yes/no CFS compliant, total: 231)
Asia excl. China China Europe North America South America Others0
10
20
30
40
50
60
70
80
90
100
7680
1410
29
17 6
4 9
2
2
YesNo
11
The Conflict Free Tin Initiativewith support of Dutch Government
Finished Product
Mine in Congo Exporter
Smelter MSC
(Malaysia Smelting Corp.)
Solder manufacturer
AIMAlpha
End usersPhilips,
Tata, Blackberry, Intel,
Motorola Solutions
Upstream: implement traceability mechanism
Downstream: create a market with industry partners
12
CFTI: Travelling to the mine site
13
At the mine site
• 800 workers are working at the mine site
• Children and pregnant women are not allowed at the mine site.
14
‘bagging & tagging’
• Minerals are weighed and tagged at the mine site
• ID tags, quantities, prices, miner, trader, date, etc. are administered
• Data is entered in a database to enable traceability.
• Minerals without a tag cannot be sold
15
Bags are sold to traders (negociants), who further filter the minerals
16
The ‘comptoir’ further processes and exports the minerals to the smelter
What should EU do?Follow De Gucht’s six principles and…
De Gucht’s six principles Philips’ position1. Comprehensive approach 1. EU should function as neutral broker
bringing all relevant stakeholders together2. Compatibility with existing
approaches 2. Only compatible with OECD guidelines,
don’t repeat mistakes of DFA
3. Do no harm 3. Incentivize conflict resolution, such as CFTI
4. Broad geographical scope 4. Include all resource related conflicts
5. Targeted approach 5. Focus on smelters not on individual products
6. No unintended consequences 6. EU to convince non-EU governments to adopt similar approach