Minerals Due Diligence Reporting: Progress and Gaps

Our key takeaway: Reporting on due diligence in minerals supply chains is becoming more common among companies across sectors but the quality of this reporting is patchy, especially in the areas requiring the most effort by companies (identifying and responding to risks). This shows that there is mixed uptake of the OECD Minerals Guidance and that companies are struggling to put policy into practice at all levels of the value chain, especially upstream. There is a role for voluntary industry reporting schemes to complement mandatory reporting and bring up the quality of companies’ due diligence, bridging policy and practice for better implementation.

The Secretariat of the Organisation for Economic Cooperation and Development (OECD) and WikiRate assessed disclosures by 503 companies on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Minerals Guidance) between 2014 and 2018:

• Higher uptake of guidance, but quality of reporting varies: The report found that the “share of global companies demonstrating some level of uptake of the Minerals Guidance increased from 30% in 2014 to 53% in 2018.” While the represents positive progress, the report also determined that that there are some areas of reporting within the five steps of the Minerals Guidance where companies continue to perform poorly. For example, companies “consistently excel” in disclosing the existence of minerals sourcing policies (Step 1 of the Minerals Guidance) and there is increased reporting of company audits at the smelting and refining stage (Step 4). However, in the most critical segments of reporting—Step 2: Identifying risks and Step 3: Responding to risks—companies continue to demonstrate “weak disclosure.”
• Legislation may be raising the level of disclosure: The report found that the growing number of regulations related to supply chain transparency and due diligence “appears to shape patterns of uptake, pushing sectors [covered under legislation] to disclose extensively on due diligence while non-covered sectors largely sidestep minerals due diligence.” At the same time, participation in voluntary industry initiatives is “associated with more disclosure on due diligence, but significant shortcomings in the quality of disclosure are still evident among participating companies,” suggesting that complementary mandatory and voluntary reporting schemes are not entirely bridging disclosure gaps.
• Downstream and upstream companies are performing differently: Some downstream sectors, such as electric vehicle manufacturers, are “in the forefront of disclosure on due diligence, as evidenced by downstream performance on specific metals consistently exceeding that for suppliers.” However, this does not extend to upstream companies—including those that supply to higher-performing downstream sectors. Interestingly, there is “progressively falling performance on disclosure as the supply chain moves upstream,” with the exception of companies operating in high-risk, high-scrutiny areas.

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