Conflict Minerals Filings and the Automotive Industry

Automakers are leading the way with their long-term commitment to corporate social responsibility and assertive supply chain transparency initiatives. At a recent event, members from the Automotive Industry Action Group (AIAG) met to discuss leading practices in identifying and combating the funding of “conflict minerals” from areas of conflict, specifically Democratic Republic of Congo.

Desire to Improve Corporate Social Responsibility

Based on discussions held at the briefing, it was apparent that regardless of any potential conflict minerals regulatory (Dodd-Frank 1502) changes, the need for supply chain transparency is not going away. However, this desire for improved corporate social responsibility will not come without challenges. As new regulations emerge around the globe – including conflict minerals reporting in the European Union, and consumer and investor demands grow louder, the temptation increases for some within the vast supply chain to hide or manipulate information. So, compliance work is quickly becoming a part of comprehensive ethical sourcing programs.

As the auto industry understands the trending need for more supply chain information, not just compliance, we will see more successful ethical sourcing programs. Data collection and verification can be an overwhelming and often frustrating task, but those that understand and promote the “why” behind regulations will make internal and external “buy-in” more achievable. Wrestling data out of suppliers, verifying this information and then producing comprehensive reports – can all be easier when proper education is a part of an ethical sourcing program.

Increasing Efforts toward Supply Chain Transparency

Recent analysis by Source Intelligence showed some promising results:  Companies are revealing more information in their conflict minerals reports. However, the analysis also reveals a disturbing indicator: If given the chance, most U.S. companies will not proactively report if they can even determine the source for all the raw materials in their products. Successfully identifying these risks will require a thorough, well-organized system of data collection, and reasoned review of the collected information.

Supply chain transparency is progressing, but it’s clear from the recent SEC filings and continued rise in government regulations that we still have a long way to go.

Gain full access to the automotive industry brief on conflict minerals reporting here.