naming, shaming, & measuring
Just before the holidays, the Enough Project released its first rankings of electronics companies based on their "progress they are making toward conflict-free supply chains and a conflict-free mining sector in Congo." You can look at the quick guide to their rankings here or read the full report here.
As longtime readers of this blog know, I'm cynical about the effects that any effort to engage in supply chain monitoring in the DRC will have on the conflict there. This is because the conflicts there are not only about or fueled by the mineral trade and also because local institutions are not strong enough to prevent smuggling, mislabeling, and the many, many, many other ways of getting around a monitoring and tracing regime. I'm of the view that this exercise is mostly a waste of time and effort, but if companies want to do it, then so be it. The "name-and-shame" approach that Enough is using here is standard advocacy practice. Whether consumers will pay any attention remains to be seen.
What I'm interested in here, however, is the report's authors' methodology in determining whether a company is making a good-faith effort at tracing and ending the use of Congolese conflict minerals in their products. The report outlines 18 indicators they used to make this judgment:
1. Tracing: Has the company traced its suppliers of tin, tantalum, tungsten, and goldAs you can see from the rankings, Enough believes it has sufficient information for most companies to answer all of the above questions. I'm curious, though, as to how they've verified that companies have undertaken these actions. It's virtually impossible to fully trace suppliers, determine mine of origin, and to determine the chain of custody for the 3T's and, in particular, gold in the eastern DRC. On what basis is Enough gauging these activities? As Jason Stearns points out, it's pretty easy under the newly-released draft SEC framework (the development of which was required by the Dodd-Frank legislation) for a company to engage in due diligence, find nothing, and yet still be using minerals the sale of which is funding violence. As he notes in another post, the lack of an oversight mechanism plus the secretive nature of mineral sales in the Kivus will make it very, very difficult for companies' auditors to actually verify what they claim to be verifying.
(3TG)? (four questions)
2. Auditing: Does the company have audits conducted of its suppliers of the 3TG
minerals to determine mine of origin and chain of custody? (six questions)
3. Certification: Has the company taken concrete steps to develop an international
certification regime for the 3TG minerals? (three questions)
4. Stakeholder engagement: Has the company had regular engagement with the NGO
coalition, led by Enough, on the conflict minerals issue? (two questions)
5. Support for legislation: Has the company supported the legislation on conflict
minerals? (three questions)
Then there's the issue of engagement with Enough, which I find a somewhat bizarre indicator for measuring this particular outcome. The insinuation here is that a company that doesn't go along with Enough's method and advocacy program must not be doing anything about this issue. For example, one of the questions (worth one point) in the survey is, "Has the company held regular communication with the Enough NGO coalition regarding conflict minerals (at least bi-monthly)?" Which means that if your company hasn't sent an email or talked to Enough and the coalition once every two months, you must not care about conflict minerals.
Is that really the case, though? It may be unlikely, but isn't it possible that a corporation could be pursuing efforts to avoid the use of conflict minerals outside of Enough's framework? Especially if, like many observers, they believe that this effort is unlikely to lead to lasting peace in the DRC? Likewise, I find the "supporting conflict minerals legislation" criteria dubious. The legislation on this issue wasn't necessarily worth supporting for the reasons I've outlined above. Does a corporation have to support that legislation in order to be a good corporate citizen?
The conflict minerals issue gave Enough the chance to score a major legislative victory, and it gives corporations a chance to make themselves look like good corporate citizens. This is true regardless of whether the approach mandated by the legislation actually produces measurable positive outcomes for the Congolese. (HP in particular has been very interested in appearing to be a leader on conflict minerals.) However, much of the criteria by which this commitment is measured seems to me to be fairly dubious. A corporation can lose up to nine points on the scale simply for not working with Enough or getting involved with the legislation. To an academic like me, the use of "working with Enough" as an indicator seems to be measuring something that has very little to do with the outcome they're seeking to measure, namely, progress towards the use of fewer conflict minerals in consumer electronics.
I'd be interested to hear from other advocacy folks as to the justification for using such measures as a matter of commitment, as well as whether this is standard practice.