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1 Conflict Minerals: Procurement Stress? Experience from Philips Jan-Willem Scheijgrond, Philips 24 October, Bern.

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Presentation on theme: "1 Conflict Minerals: Procurement Stress? Experience from Philips Jan-Willem Scheijgrond, Philips 24 October, Bern."— Presentation transcript:

1 1 Conflict Minerals: Procurement Stress? Experience from Philips Jan-Willem Scheijgrond, Philips 24 October, Bern

2 2 What minerals? What sector? Electrical Non-electrical Tin (Sn)Tantalum (Ta) Tungsten (W)Gold (Au)

3 3 Simplified supply chain for electronics Typically 7+ tiers between mine and end-user Finished Product MineTraderSmelter Component producer Contract manufacturer / assembly End-user

4 4 Smelter is at key point in supply chain to enforce responsible purchasing

5 Illustration of global tantalum supply chain 5 Tens of Ta smelters globally Ten thousands of 1 st tier suppliers globally

6 6 Actions that need to be taken by US Stock-listed Companies for DF1502 Step 1: Do your manufactured products contain conflict minerals? Step 2: Do the conflict minerals originate in the Covered Countries? Step 3: If yes, then conduct due diligence, and potentially provide a Conflict Minerals Report

7 7 bagging & tagging Conflict Free Smelter Program Conflict Free Smelter Program Due Diligence Finished Product MINE SMELTER/REFINERY OEMS EICC and GeSI Approach to Conflict-Free Sourcing

8 Philips Responsible Sourcing of Minerals 3 rd party audit Responsible sourcing of Minerals Program Conflict Resolution 1.Conflict Free Tin Initiative 2.Indonesia Conflict Due Diligence (OECD compliant) 1.Risk based approach 360 risk suppliers 2.EICC/GeSI template 3.ID CFSP compliance 4.Smelter list online SEC Conflict Minerals Report

9 9 Due diligence at Philips – results Summer 2013 >300,000 products 10,000 suppliers 360 risk suppliers 158 smelters 40 CFS smelters ZERO conflict mines

10 10 Conflict Free Smelters in Philips supply chain number of identified smelters per region (yes/no CFS compliant, total: 231)

11 The Conflict Free Tin Initiative with support of Dutch Government 11 Finished Product Mine in Congo Exporter Smelter MSC (Malaysia Smelting Corp.) Solder manufacturer AIM Alpha End users Philips, Tata, Blackberry, Intel, Motorola Solutions Upstream: implement traceability mechanism Downstream: create a market with industry partners

12 12 CFTI: Travelling to the mine site

13 13 At the mine site 800 workers are working at the mine site Children and pregnant women are not allowed at the mine site.

14 14 bagging & tagging Minerals are weighed and tagged at the mine site ID tags, quantities, prices, miner, trader, date, etc. are administered Data is entered in a database to enable traceability. Minerals without a tag cannot be sold

15 15 Bags are sold to traders (negociants), who further filter the minerals

16 16 The comptoir further processes and exports the minerals to the smelter

17 What should EU do? Follow De Guchts six principles and… De Guchts six principlesPhilips position 1.Comprehensive approach1.EU should function as neutral broker bringing all relevant stakeholders together 2.Compatibility with existing approaches 2.Only compatible with OECD guidelines, dont repeat mistakes of DFA 3.Do no harm 3.Incentivize conflict resolution, such as CFTI 4.Broad geographical scope 4.Include all resource related conflicts 5.Targeted approach 5.Focus on smelters not on individual products 6.No unintended consequences 6. EU to convince non-EU governments to adopt similar approach


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