Intel Corp has spent more than five years
figuring out how to rid its supply chain of minerals that finance
violence in the Democratic Republic of Congo region, and now it is offering to show other companies how they can do the same.
Intel's offer to "open source" its methods for verifying that
none of its products contain minerals from armed groups involved in the
DRC conflict could save other companies significant amounts of money and
give them a head start in meeting new U.S. regulations that require
them to certify their products are conflict free.
"For us, this has always been about doing the right thing,"
Intel CEO Brian Krzanich said at a meeting in the U.S. Senate offices on
Wednesday with DRC officials where he announced the move.
Its decision to work on stanching a multimillion dollar mineral
trade – used by rebel groups to finance one of the world's longest
running and most brutal conflicts – stands in contrast to how leading
representatives of corporate America have responded to the tragedy.
The U.S. Chamber of Commerce, Business Roundtable and National Association
of Manufacturers have sued to overturn or limit the conflict minerals
rule, adopted by Congress in 2010. They argued before the U.S. Court of Appeals
in January that it is impractical, too costly, and would force them to
make political statements about the content of their products, in
violation of their First Amendment freedom of speech rights.
At the heart of their arguments is that business should not be
dragged into fundamentally political issues and that they should not be
held responsible for righting the wrongs of the world. Strategically
their lawsuit is a pushback against the trend for global corporations to
take more responsibility for labor conditions, environment, corruption
and human rights – issues that traditionally were the realm of the
Over the past two decades, transnational corporations have
grown bigger and more powerful than many states where they operate, and
their global supply chains have turned them into empires affecting broad swathes of people.
With that power have come new responsibilities. At first
corporations embraced voluntary accords to address human rights
concerns, starting with audits of fair labor standards after child
labour scandals in the garment industry in the 1990s. But the Rana Plaza
factory collapse in Bangladesh in April 2013, which killed more than
1,000 workers, exposed the limitations of corporate compacts and audits
of their supply chain.
Voluntary accords have succeeded in setting a commonly agreed
set of global standards, said Arvind Ganesan, director of the business
and human rights division of Human Rights Watch. The technology industry
has agreed on privacy standards; security standards have been
The United Nations has formed the Global Compact for business
members who sign up to a common framework for human rights, labour,
environment and anti-corruption. The U.N. Guiding Principles on Business
and Human Rights in 2011 lay out responsibilities.
But voluntary accords can only help so much.
"The strain today is that we never intended voluntary accords
to be the only ones. Our thinking was that they would become law because
we rarely see companies or governments adopt human rights out of
enlightened self-interest," Ganesan said.
Enter the legislative mandates. Anti-bribery laws have spread
in many countries over the past decade. The U.S. and the European Union
both require extractives companies to disclose payments to governments
in a bid to counter corruption, and there is the U.S. conflicts minerals
In the United States, corporate lobbies have challenged both
the extractives disclosure and conflict minerals laws in court, arguing
they overreach and impose too heavy a burden on business.
Certainly they can carry sizable costs. The Securities and
Exchange Commission estimates that about 6,000 companies are affected by
the conflict minerals rule and it will cost them between $3 billion and
$6 billion to check their supply chain, with ongoing annual costs of
$207 million to $609 million.
This is where Intel comes in. Carolyn Duran, Intel's director
of supply chain, said it took a long time to develop its system for
bagging, tagging and verifying minerals as they reach the smelter. Now
the costs are manageable and other companies can benefit by learning
from its experience.
The benefits are tangible, said Faida Mitifu, the DRC
ambassador to the United States. At first reduced demand caused hardship
in communities dependent on illegal mines, but as violence has ebbed,
it has helped foster peace, she said.
"It has had a significant impact and created a more responsible
chain," Mitifu said. "The government has worked closely with the mining
companies and put in place a system of certification, and we have
noticed very positive progress in terms of the industry, and inward
investment. More and more, we are exporting clean minerals."
Who would want to oppose that?
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