Responsible Supply Chains Responsibility along the Supply Chain

Background

Sustainable consumption and production patterns are sustainable development goal (SDG) 12 (External link) in the United Nations 2030 Agenda (External link). Given the increasing demand for raw materials, responsible supply chains are of central importance in the mining industry. More and more consumers want to know where and under which conditions the products they purchase are produced. In the extractive sector, this mainly affects raw materials for technology products such as laptops, smartphones or electric vehicles, as well as jewellery (e.g. gold, diamonds and precious stones). Until the final product such as a smartphone, car or television reaches the consumers, a multitude of people and companies in different countries are involved in the production. For example, a smartphone consists of numerous individual components, such as the battery, the display or the capacitor for energy storage. Each component is made up of a large number of different raw materials – in total, a smartphone consists of more than 40 raw materials.

A significant proportion of raw materials is extracted in developing countries and emerging economies. The extraction of these raw materials poses environmental and human rights risks. In some regions, for example, children work in the extraction of raw materials and sometimes violent conflicts are financed by the trade in illegally mined minerals. In addition, mining can be accompanied by negative environmental impacts, such as the pollution of groundwater and rivers through the release of chemicals or illegal deforestation, for example for the development of new mining areas, for the storage of overburden, or for the energy supply of the miners by charcoal.

Policy initiatives and measures for responsible supply chains

Responsible companies and clear legal frameworks are needed to ensure that social and environmental standards are applied and enforced in resource-producing countries. Therefore, companies need an understanding of the requirements to systematically anchor them in their business processes. At the same time, conducting due diligence must benefit those at the start of supply chains who are often affected by negative social and environmental impacts.

In its National Action Plan for Economic Affairs and Human Rights, Germany recognises the need for responsible supply chains. In 2021, the German government passed the “Act on Corporate Due Diligence in Supply Chains” which sets out clear requirements for corporate due diligence starting from 2023.

With its regulation on minerals from conflict-affected and high-risks areas (External link) (CAHRAs), the European Union seeks to better control the trade in the minerals tin, tungsten, tantalum and gold (3TGs). Revenues from the extraction and illegal taxation of these minerals have contributed to the financing of armed conflicts in the past. Since 1 January 2021, European companies have to conduct mandatory due diligence when importing these minerals into the EU. The regulation thus makes the existing OECD Guidelines for Due Diligence for the Promotion of Responsible Supply Chains for Minerals from Conflict-Affected and High-Risk Areas (External link) legally binding within the EU.

Cooperation for responsible sourcing of raw materials

For the responsible design of global supply chains, a so-called smart mix of binding and voluntary measures is necessary, including accompanying development measures. Responsible production of raw materials can be promoted through multi-stakeholder initiatives. The European Partnership for Responsible Minerals (EPRM) (External link) complements the regulation on minerals from conflict-affected and high-risks areas (CAHRAs) into the EU as a measure to support inclusive development in producing countries. The partnership aims to improve the living and working conditions of artisanal and small-scale miners and mining communities in CAHRAs. Germany, represented by the BMZ, is a member of the EPRM and, supported by the Sector Programme, actively participates in the initiative.

On behalf of the BMZ, the Sector Programme organises the workshop series “Responsible Gold in Germany” that promotes knowledge exchange on gold supply chains between business, civil society, science, and development cooperation. The Sector Programme also cooperates with the European network for corporate responsibility and sustainability CSR Europe (External link), which coordinates the Drive Sustainability (External link) Initiative, in setting up sustainability networks for mining companies in the Democratic Republic of Congo and South Africa to strengthen responsible sourcing and due diligence in the battery value chain. Finally, the Sector Programme supports the Global Battery Alliance’s (External link) commitment for responsible sourcing of raw materials in battery value chains for electric cars.