Annual Progress Report Metals 2020-2021
Due diligence activities in the first implementation year was focused on the development of due diligence tools and templates, and on supporting companies with the completion of their maturity assessment and improvement plans. In the second year, companies have conducted individual and collective risk assessment and developed action plans based on the results of the assessment. A due diligence knowledge session on risk analysis was also organised with two guest speakers from natural stone company Arte, and palm oil company Wilmar, as a due diligence support activity. It is important to mention that due to various reasons, including the effects of COVID-19, not all companies were able to meet all the deadlines for handing in specific due diligence tools and assessments. In consultations with the parties, new deadlines were set and companies are now working hard to catch up with their deliverables. The Steering Committee has also emphasized the importance of meeting set deadlines going forward.
Progress in implementation of due diligence by companies
The goal for companies at the end of the five implementation years of the Metals Agreement is to reach full maturity in their due diligence processes (depending on the stage at which they joined the Agreement). One of the main activities undertaken by the due diligence working group was the update of the Maturity Assessment Tool (MAT) which helps companies determine their maturity level regarding the implementation of due diligence. The scoring system was improved, an assessment framework was added with the help of Kumi Consulting, and additional questions from the OECD Due Diligence Minerals Guidance for Responsible Supply Chains of Minerals from Conflicted Affected and High-Risk Areas were included. Because the new scoring system is a more advanced model, it is not possible to make a quantitative comparison between the results of year 1 and year 2. However, on a qualitative basis, the general observations of the MAT results for year 2 show a better understanding by companies of the requirements of the six due diligence steps. With the exception of two companies who joined later in the year and therefore not captured in the MAT results, progress from year 1 took the following forms:
- Most companies either did not have an RBC policy or had one which did not include the required RBC elements; in year 2, six out of nine companies have an RBC policy in place which cover most of the required elements, and six out of nine companies have integrated international RBC expectations into their businesses.
- On risk assessment, companies started with initial risk assessment in year 2 and seven out of nine companies have delivered a heat map (a tool used to prioritise risk found in the supply chain).
- The action plans of most companies to prevent/mitigate adverse impacts were assessed as ‘not yet fully developed’ in year 1; in year 2, four companies have a draft mitigation plan to respond to RBC risks.
- On reporting, four out of nine companies now already publicly report on their RBC/due diligence approach. We expect the other companies will publish before the deadline of March 2022.
International RBC policy of Agreement Companies
Publicly available due diligence reports of Agreement Companies
Examples of individual companies’ due diligence action plans
A due diligence action plan contains a company’s plan to prevent, mitigate and account for identified existing and potential risks and violations for people and the environment in their supply chains. All companies were required to submit an individual action plan based on the results of their risk assessment. Submitted action plans are discussed and reviewed in bilateral meeting sessions with the Independent Secretariat. Three examples of actions planned to be taken by some of the companies are:
- To start a dialogue with a supplier in the supply chain after potential risks regarding different human rights issues were found, and to encourage the supplier to adopt, publish, and implement a human rights policy.
- To increase transparency in the supply chain up to the point of origin of materials sourced. As a first step, the company will ask its direct suppliers where they source their materials from and inquire about their due diligence policy.
- To address potential risks regarding health and safety and environmental pollution found in the supply chains by engaging with the associated supplier to ask questions on environmental standards and health and safety measures, and to check whether this supplier also follows these standards and applies these measures.
Collective due diligence
One of the deliverables for year 2 was to develop and execute a collective due diligence action plan. The process began with the development of a template and the aggregation of individual company risk assessments to produce a collective heatmap showing industry risks. A plenary session was then organised where parties selected two collective risks to be jointly addressed. The two risks identified for further action are; 1) health and safety issues and 2) environmental (water) issues. In selecting these risks, parties considered the collective heatmap, the relevance for all companies of the Agreement, the expertise of the civil society organisations, and the feasibility of executing the project. The implementation of a collective project to address the identified risks has been handed over to the working group on collective actions to work out the process for its execution in the third Agreement year.
Collaboration between parties on due diligence processes
The second implementation year was the first-time companies conducted a due diligence risk assessment to develop a due diligence action plan. It was an opportunity to collaborate with civil society organisations. A few companies have had initial consultations with one or more civil society organisations in their due diligence processes. However, concrete follow-up between the companies and civil society organisations has not taken place yet for all companies.
Kay Nimmo, ITA
Irene Grannetia-Morittu, General Manager Climax Molybdenum BV
“Society increasingly expects companies to take responsibility for promoting and encouraging better practices in their production and supply chains. We are dedicated to a safe, fair and sustainable mining and metals industry. We seek to make a positive contribution to the United Nations Sustainable Development Goals, while mitigating any potential impediments to their realisation. This includes implementing 38 performance expectations unanimously approved by ICMM’s Council of CEOs in December 2018 and assuring they are met at the site level. As a part of this effort, we are working with our supply chains to better understand and improve sustainability performance globally. Participation in the Metals Agreement aligns very well with this work, and we look forward to the continued collaboration and positive impact it will have.”