Step 5 Reporting in the Due Diligence

Guidance7th Multi-stakeholder forum on

responsible mineral supply chains

27 May 2014 - Paris, France

Reporting in the Guidance

Step 5 of the OECD Due Diligence Guidance says:

Companies should publicly report on their supply chain due diligence policies and practices

They may do so by integrating into their sustainability, corporate social responsibility or annual reports to cover additional information on mineral supply chain due diligence

More detail on reporting expectations for upstream, refiners/smelters and downstream in the 3T and Gold supplements

Slight differences in reporting expectations between the 3T and Gold supplements

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Confidentiality and competitive concerns

Annual public reporting is a clear expectation under Step 5

But concerns around confidentiality and competition between commercial entities mean that not all information must be made public:

3T: Price information and supplier relationships

Gold: Price information; supplier identities and relationships (however the identity of the refiner and the local exporter located in red flag locations should always be disclosed except in cases of disengagement); transportation routes; and the identity of information sources and whistle-blowers located in conflict-affected and high-risk areas, where revealing the identity of such sources would threaten their safety.

But all information should be disclosed to a third party, described as “any institutionalised mechanism, regional or global, once in place with the mandate to collect and process information on minerals from conflict-affected and high-risk areas”

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Upstream reporting

Report section 1 Introduction: The Company

This section should serve as an introduction to the company and its activities so that the reader can understand the context of the following sections on the company’s supply chain due diligence activities.

Suggested components of this section: Name of company that is being reported on, registration number,

contact details of due diligence manager Brief overview of company structure: sub-entities, joint ventures,

holding companies etc. Company’s activities, such as:

location of operation (countries, provinces, areas) type of operation and licences/permits (mining company,

mineral trader, treatment unit, local exporter etc.) Reporting period and the scope of the report

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Report section 2: Company management systems

Components of this section:The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:

Set out your company’s supply chain due diligence policy Explain the management structure responsible for due

diligence, including who is directly responsible Describe your company’s control systems over the supply

chain, how the system operates and what data/information it has yielded

Describe your company’s record keeping system and methods of disclosing suppliers down to the mine of origin to downstream actors

Disclose information on payments made to governments in line with EITI criteria and principles

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Report section 3:Risk Assessment

Components of this section:

The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:

Publish the risk assessment (with due regard to business confidentiality and competitive concerns).

Outline the methodology, practices and information yielded by the on-the-ground assessment.

Outline the methodology of your company’s supply chain risk assessment

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Report section 4:Risk management

Suggested components of this section:

The below wording stems from the Due Diligence Guidance Supplement on Tin, Tantalum and Tungsten, Step 5: Report Annually on Supply chain Due Diligence, Section A1:

Describe the steps taken to manage risks, including a summary report on the strategy for risk mitigation in the risk management plan, capability training and – if any – involvement of affected stakeholders.

Describe your company’s efforts to monitor and track performance of supply chain risk management.

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Report section 5: Annex or Appendix

If the company wishes to provide supporting evidence or examples of key policies, templates or risk assessments, it may wish to do so in an annex or appendix to the main report.

Example section 5: AnnexSuper Export company wishes to draw attention to a number of annexes to this annual report on our supply chain due diligence policies and activities: • Annex A: Conflict minerals policy (full text in French)• Annex B: Supplier agreement, including due diligence

requirement and reference to conflict minerals policy. • Annex C: Supplier Inspection template• Annex D: Examples of supplier inspections carried out during

the reporting period: Site A, Site B, Site D and Site M

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Gold supplement ‘additions’ (1/2)

The following components are specific to the Gold Supplement:

Company management systems Describe your company’s record keeping system and methods of

identifying all suppliers down to the mine of origin and the methods for sharing information about DD throughout the supply chain.

Risk Assessment Explain how your company identified red flag operations or red flags in

their supply chains, including the verification of supplier representations proportional to risk.

Describe the red flags identified in the gold supply chain. Describe the steps taken to map the factual circumstances of those red

flag operations and red flagged supply chains. Outline the methodology, practices and information yielded by the on-the-

ground assessment team, including whether and how your company collaborated with other upstream companies and how your company ensured that all joint work duly takes into consideration circumstances specific to your individual company.

Disclose the actual and potential risks identified; companies should not report risks identified for potential suppliers with whom they have not done any business.

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Gold supplement ‘additions’ (2/2)

Risk management

Describe how your company’s internal control systems (such as chain of custody or traceability systems) have been strengthened to collect and maintain reliable up-to-date information on red flagged gold supply chains.

Describe your company’s efforts to monitor and track performance of supply chain risk management, including all instances and results of follow-up after 6 months to evaluate significant and measurable improvement.

Disclose the number of instances where the company has decided to disengage with suppliers and/or supply chains, consistent with Annex II.

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Refiners / Smelters

Smelter and Refiner Reporting in the Due Diligence Guidance

In addition to the upstream reporting requirements, smelters / refiners should:

3T Supplement (Step 5, Section A2): Publish the audit reports of smelters/refiners with due regard taken

of business confidentiality and other competitive concerns.

Gold Supplement (Step 5, Section A2): Publish the summary audit reports of refiners with due regard taken

of business confidentiality and other competitive or security concerns. The summary audit report should include:

a) Refiner details and the date of the auditb) The audit activities and methodology, as defined in Step 4(A)(4),

where an Industry Programme or Institutionalised Mechanism in conformance with this Guidance and as defined in Step 4(B)(2) has not published these details

c) The audit conclusions, as defined in Step 4(A)(4), as they relate to each step in this Guidance

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Downstream

Downstream Reporting in the Due Diligence Guidance

Company management systems:• Set out your company’s supply chain DD policy.• Explain the management structure responsible for DD, including

who is directly responsible.

Risk assessment and management:• Describe the steps taken by your company to identify

smelters/refiners in the supply chain and to assess their DD practices, including the published list of qualified smelters/refiners through industry validation schemes conforming to DD processes in this Guidance.

• Describe steps taken to manage risks.

Audit:• Publish audit reports of their DD practices with due regard to

business confidentiality and other competitive concerns and responses to identified risks. 15

Gold supplement ‘additions’

The following components are specific to the Gold Supplement:

Management systems: Describe your company’s control systems over the gold supply chain,

explaining how this operates and how it has strengthened your company’s DD efforts in the reporting period

Describe your company’s database and record keeping system.

Risk assessment: Describe the assessment of their [refiners?] DD practices. Explain the methodology of your supply chain risk assessments. Disclose the actual or potential risks identified.

Risk management: Describe your company’s efforts to monitor and track performance of

supply chain risk management, including all instances and results of follow-up after 6 months to evaluate significant and measurable improvement.

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Example reports*

Metachem Sprl African BarrickAngloGold AshantiBarrick Gold Fields IAMGOLD Kinross New GoldPrimeroArgor-Hereaus New Boliden KrastsvetmetHewlett PackardIntelGE

* The OECD makes no claims to the quality of the reports suggested above. These reports are included only to give companies illustrations of their peers activities and approaches to reporting

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