The law proposed on the 5th of March by the European Commission on responsible sourcing of minerals falls far short of expectations and is too weak to prevent European companies’ mineral purchases from financing conflict or human rights abuses.
Four years ago the European Parliament demanded legislation on conflict minerals, for which the US had already set an example with their Dodd Frank Act. The European Commission proposed legislation last week, in which companies are offered the opportunity to monitor imports of tin, tantalum, tungsten and gold, under a new voluntary self-certification scheme.
Much of the tin, tantalum, tungsten and gold used in electronics and lighting is mined in areas of civil conflict in Africa, particularly in the Democratic Republic of Congo, where mining is often controlled by violent militia groups.
Voluntary reporting system
The proposed draft regulation takes the form of a voluntary reporting system. It offers incentives to importers that adopt recommended due diligence measures. Among these incentives are financial support for small and medium-sized firms and “visible recognition”.
The voluntary character of the proposal, instead of building on the momentum generated by the US legislation to raise standards for responsible sourcing, threatens to lower international standards on conflict minerals reporting. It could even be redundant, since EU governments have already endorsed the voluntary due diligence guidance developed by the OECD.
In stark contrast, the EU's trade directorate, which prepared the legislative proposal, sees it as complementary to the US legislation. They argue it would be more pragmatic to concentrate on "upstream" actors and not to impose an "extra burden" on small European businesses.
According to an EU official compliance would involve “a kind of self-transparency, looking in the mirror and putting pressure on yourself, because the media could point a finger and say why is company X on board and not you”.
The self-certification scheme is only directed at select companies in the supply chain, namely the importers of raw ores and metals. With this, the Commission has missed a unique opportunity to influence the behaviour of a much wider cross-section of global players. To ensure that conflict minerals do not enter European markets, legislation should also target manufacturers, and companies that import manufactured products like computers, phones, light bulbs and cars.
The scope is even further restricted since the Commission’s proposal only applies to goods produced within the EU. However, most of the affected consumer goods are produced outside the EU, and the current legislative proposal thus only addresses the tip of the iceberg.
Another disappointment is that the Commission’s proposal does not address other natural resources, but is limited to four minerals. By focusing only on four minerals, the Commission fails to address reports that other natural resources, like coal in Colombia, are also fuelling conflict.
MEP Judith Sargentini, on behalf of the development committee, passed a much more biting proposal in the European Parliament on the 19th of February. This proposal demanded binding legislation on conflict minerals, which would apply to all companies in the supply chain. The proposal furthermore proposed a sanction-mechanism for non-compliance by companies.
The gap between the legislation’s ambition and its lack of enforceability could set up a clash with the European Parliament, which showed a willingness to come up with much stronger EU legislation. The Commission’s proposal first has to pass the European Parliament. It can thus still be changed by the Parliament or by the Council, but only after consensus is reached with the Council, the Parliament and the Commission. With the European elections coming up in May, this could become a long process.