Investors call for more stringent European conflict minerals rules ahead of key European Parliament vote

Plea comes before plenary debate and vote this week

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A group of leading investors has issued a strong plea for more stringent European rules on conflict minerals ahead of a key vote at the European Parliament tomorrow (May 20).

The Parliament is set to vote in plenary session on a proposed text put together by its international trade committee (known in EU jargon as INTA) which rejects mandatory disclosure requirements. It is being debated today and the investors reject a proposed system of voluntary self-certification to encourage importers, smelters and refiners to source their minerals responsibly.

The investor group wants broader conflict mineral due diligence for all companies placing conflict minerals on the European market, in raw form or embedded in products.

The investors – which include BNP Paribas, Candriam and KLP (see list below) – take issue with the text that emerged from the trade committee which would only mandate transparency from only European smelters and refiners of tin, tantalum, tungsten, and gold (3TG).

“As proposed, this legislation, in our view would have minimal impact since European smelters and refiners only account for 5% of globally processed 3TG,” the investor group says in a joint statement, adding it would create an uneven playing field between European and non-European smelters and refiners.

“Therefore, without mandating public reporting from downstream companies, the majority of global smelters and refiners—the critical choke point in minerals supply chains—will be unaffected.” Campaign groups such as Global Witness have claimed the INTA text would be “weak and ineffective”. Focusing on smelters and refiners, the investors argue, would not capture the majority of European companies importing 3TG minerals.

“We strongly urge the European Parliament to strengthen its proposal in the upcoming vote by expanding the scope of the legislation to ensure that all companies placing minerals on the market, in raw form or contained in semi-finished or finished goods, are legally required to source responsibly,” they say.The investors say they have benefited from disclosures mandated by the US Dodd-Frank Act’s Section 1502 on Conflict Minerals, saying they have been “fundamental” for evaluating corporate risk management and investment decisions, given that some 1,315 companies filed under section 1502 in 2014. They claim the US rules have “operationalized the concept of supply chain due diligence”. It has also stimulated companies to map their supply chains, partner with their suppliers to identify and address social risks, and communicate to investors and consumers as well as spurring collaboration on supplier information and verification systems.

The trade committee’s ‘rapporteur’ for conflict minerals, Iuliu Winkler, a Romanian member of the centre-right European Peoples Party (EPP) grouping at the parliament, has said the voluntary/mandatory issue was a “false dilemma” and that the real challenge is creating “efficient, workable regulation”. In a supporting statement, Winkler said the voluntary approach would prompt the “avant-garde” of responsible companies to participate, which he hopes would gradually enlarge “due to market competition pressures”. He wrote: “Companies can choose to join at their own speed. A decision to join can be well-prepared and the costs and impacts limited.” He also sought to avoid duplicating other supply chain due diligence systems.

But these views were countered by a separate committee at the Parliament. The development committee said that the proposal, “being based on ‘do no harm’ approach, risks doing no good either”. Rapporteur Bogdan Brunon Wenta called on the EU to show leadership on the issue. Link

Signatories (selected):

  • ACTIAM

  • ASN Bank

  • Boston Common Asset Management
  • BNP Paribas Investment Partners
  • Calvert Investments

  • Candriam Investors Group

  • EUROSIF
  • Hermes Equity Ownership Services
  • Interfaith Center on Corporate Responsibility

  • KLP Kapitalforvaltning
  • Sonen Capital
  • Trillium Asset Management
  • Triodos Investment Management
  • Zevin Asset Management