Traders and market makers — Step 1
Establish strong management systems
- Adopt a policy for responsible supply chains of minerals consistent with the OECD Due Diligence Guidance.
- Assemble an internal team to oversee supply chain due diligence. Ensure that the necessary budget resources are assigned and that a senior manager is ultimately accountable.
- Communicate company policy, actions and expectations related to responsible sourcing to suppliers. Companies may want to incorporate these expectations into supplier contracts and consider other ways to support the capabilities of suppliers to fulfil responsible sourcing expectations.
- Establish an internal system of transparency, information collection, and records of supply chain due diligence processes, findings and resulting decisions. In particular, maintain records on the identity of smelters and refiners, or any other suppliers at points of transformation where the mineral is processed to reach commercial market quality, once this information is collected in Step 2.
- Collect and address stakeholder grievances.
Traders and market makers — Step 2
Identify, assess, and prioritise risks
- Identify your company’s suppliers and collaborate with them to identify the key points of transformation in the supply chain where the mineral is processed to reach commercial market quality (e.g. smelters or refiners for metals).
- Engage with the key points of transformation (e.g. smelters or refiners for metals). Obtain preliminary information on the country of origin and the transit and transportation routes used between the mine and refiners, or other point of transformation to identify any relevant red flags.
- Assess whether smelters and refiners have conducted all necessary due diligence steps for any red-flagged supply chains that have been, or should have been, identified (e.g. by reviewing information from the assessment teams and the results of any audits under Step 4 below).
- The above may be best achieved through an industry scheme or other collaborative initiative. If relying on such schemes or initiatives, review those findings to ensure they are credible, up-to-date, and cover risks specific to your supply chain.
Traders and market makers — Step 3
- Inform senior management of recognised supply chain risks (e.g. identify priority suppliers; identify smelters and refiners and assess their respective risk levels and corresponding due diligence actions; document any information gaps; and clarify the chain of custody).
- Identify and track which suppliers respond to information requests and which do not. Follow up with suppliers and escalate uncooperative suppliers to senior management.
- Strengthen efforts and systems to identify and maintain information on key points of transformation.
- Disengage from suppliers associated with smelters and refiners that may be contributing to conflict or to the most serious human rights impacts as defined in Annex II of the OECD Guidance.
- Manage all other risks by devising a risk management plan with suppliers to promote progressive improvement within reasonable timescales. Specifically, risk management plans with smelters & refiners or other points of transformation should include clearly defined targets, indicators and timeframes to demonstrate significant measurable improvement every six months.
- Implementing risk management plans with smelters & refiners or companies at other points of transformation may be best achieved through an industry scheme or other collaborative initiative. If relying on such schemes or initiatives, review those efforts to ensure they are credible and on track.
- Improve internal risk assessment systems over time by tracking internal implementation as well as commitments with suppliers.
Traders and market makers — Step 4
Audit control point
Support an audit of the smelter, refiner, and/or other key points of transformation by:
- providing financial resources for independent third-party audits of refiners and smelters
- becoming members of industry programmes or promoting smelter and refiner participation in audit programmes
- periodically assessing the quality of industry-led validation programmes or independent audits of the smelters or refiners that choose to participate in such schemes.
Traders and market makers — Step 5
Communicate and report on due diligence
- Report publicly on your company’s due diligence efforts for responsible supply chains of minerals from conflict-affected and high-risk areas.
- Reports should focus on the actions taken by the company to address identified risks (e.g. management systems established; steps taken to identify smelters and refiners in the supply chain; risk assessment methodology implemented; assessments conducted to identify smelter and refiner risks and corresponding due diligence measures in accordance with the OECD Guidance; steps taken to manage risks; and efforts made to monitor and track performance for risk mitigation).
- Disclose information with due regards taken of business confidentiality and other competitive concerns (i.e. price information and supplier relationships).