Ask the Expert Q&A with Nikki Johnson - Pilot Reporting Template (PRT)
The single most common question our clients ask is a simple one: what is coming next? More specifically, what regulations will be enacted in the next few years that could impact our supply chain?
At Source Intelligence, our regulatory experts work alongside key decision-makers shaping the future of supply chain sustainability. Nikki Johnson, our VP of Environmental Engineering, serves on several international committees that assist in the formation of new supply chain regulations before they are enacted.
We asked Nikki about a new reporting template developed by the Responsible Minerals Initiative (RMI) intended to improve supply chain transparency between companies and suppliers of unregulated minerals—the Pilot Reporting Template (PRT).
To understand its impact, what problem is the Pilot Reporting Template (PRT) solving?
Currently, all responsible minerals regulations focus on 3TG—tin, tantalum, tungsten, and gold. However, those are only four of the many raw materials that have atrocities associated with their mining practices: dangerous mine conditions, forced labor, child labor, or any number of human rights violations.
Minerals beyond 3TG are also associated with these same inhumanities, but they are not included in any regulations at this time. There are several minerals of concern, including cobalt, mica, copper, aluminum, lithium, and nickel. In response to this, many companies are looking to increase their due diligence by understanding what other minerals they are using that might expose them to those risks. The Pilot Reporting Template will assist in this understanding.
Is it fair to say that some companies want the PRT to ensure they are not using any conflict minerals—even unregulated ones—in their supply chain?
Exactly. Right now, companies are developing their own conflict minerals supplier surveys. There is no standard template or process. This means that suppliers are receiving any number of different customer-specific requests that they must fill out.
So, companies collect unregulated mineral data each in their own separate ways without a central place to see the results? That must be a confusing process.
It is chaos. Having so many different variations of sourcing surveys within the industry only adds to supplier fatigue. Suppliers are left scrambling, trying to answer questions that they are not prepared for, and lacking any sort of industry standard to fall back on for guidance as to how the requested data should be gathered, correlated, and provided.
Will the Pilot Reporting Template help organize the chaos?
Yes. The PRT will serve as one tool that any company can use to ask its suppliers to share source information on unregulated minerals. The RMI will be able to see, in a uniform way, which minerals companies are most concerned about and how widely those minerals are used. Suppliers will be able to use the same template to answer questions in their supplier surveys.
With this new template, are all companies required to gather this information?
Not currently, as no conflict minerals regulation requires tracing of cobalt, mica, or the other minerals of concern. The purpose of the Pilot Reporting Template is to gather information beyond existing conflict minerals regulations. Currently, there are other due diligence requirements surrounding some of the minerals of concern which is also helping to drive the effort.
Why would companies voluntarily add to their supply chain review burden instead of simply meeting the requirements of their respective conflict minerals regulation?
Based on my professional expertise, that approach will not stand the test of time. Environmental, social, and governance (ESG) regulations are gaining strength and many people believe in the mission. Companies are demanding their suppliers have due-diligence processes in place to make sure that—no matter what the current laws are—they are not using minerals produced using human rights violations.
Additionally, some companies are afraid of public shaming, with non-governmental organizations (NGOs) investigating inhumanities within supply chains. If a company is discovered to be utilizing a smelter that has participated in some great atrocity, the company name could appear in the news as one of their potential clients. Company reputation is always at stake.
While it is clear how the PRT will benefit individual companies, how will its use benefit the global manufacturing community?
The data will be collected, correlated, and reviewed in standardized forms. It will be easier to produce known smelter lists of smelters not involved in abuses. We have already seen this benefit for 3TG minerals from the Conflict Minerals Reporting Template (CMRT). The RMI has done extensive research into which smelters are following the rules and which are not.
For these additional minerals, those types of lists do not yet exist, but they will be built over the next few years.
Will the data these new forms gather also help determine which minerals are likely to be regulated in the future?
There is no way to know exactly which minerals will be added to conflict minerals regulations in the future. Cobalt and mica are already in the process of becoming regulated through other due diligence measures. The PRT will help identify which minerals have the biggest pinch points in the supply chain and which are sourced the most frequently, with the purpose of helping identify which minerals would benefit from additional regulation.
By this time next year, companies will have much better information about which minerals are most important to the industry and likely to cause concern to regulators, customers, and others within the supply chain. They will also be able to better identify which smelters, processors, and refiners are the safest to work with.