Supply chain News and trends

Last month, Tesla released its Conflict Mineral Report for the fiscal year ending on December 31, 2019, and emphasized the importance of sourcing only responsibly produced materials. “This means having safe and humane working conditions in our supply chain and ensuring that workers are treated with respect and dignity,” the company said in its SEC filing.

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The deteriorating political situation in the Democratic Republic of Congo (DRC) is likely to fuel stricter regulations on the supply chains of cobalt from the country. The precious mineral is used in the manufacturing of phones, electric cars and laptops. International regulators have recently called for further scrutiny into the supply chain of DRC-sourced cobalt, and this demand is likely to grow louder due to the worsening political situation in the country.

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Many companies are lagging in their efforts to achieve compliance with a spate of new laws and regulations worldwide for reporting on the used of forced labor within their supply chains, according to a report by Deloitte.
Driving the sluggishness in some measure is a lack of guidance from regulators and governments on how to comply — far different from the scenario when the SEC’s rules on conflict minerals, written to satisfy a provision of the Dodd-Frank Act, took effect in 2011.

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Only about 1% of the companies were able to declare that their products were conflict-free beyond a reasonable doubt. Of the rest, 19% declared that they had no reason to believe their products contained DRC conflict minerals. The remaining 80% admitted that they were unable to determine their raw materials’ country of origin.

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Last week, the EU institutions reached an agreement on new legislation directed at ensuring that minerals and metals entering the 28-nation bloc are transparently and responsibly sourced and do not play a role in financing human rights abuses and conflict in high-risk areas.
The regulation establishes due diligence provisions for sustainable sourcing practices as of 1 January 2021, covering 95 percent of EU imports of tin, tungsten, tantalum, and gold, commonly used in electronics, jewellery, packaging, cars, and construction.

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The Regulation, as agreed by the EU Institutions, is set to ensure sustainable sourcing for more than 95% of all EU imports of tin, tantalum, tungsten and gold, which will be covered by due diligence provisions as of 1 January 2021.  
In the meantime, the Commission and Member States will work to make sure that the necessary structures are in place to ensure EU-wide implementation.

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