Transparent Supply Chains: Knowledge Is Power
Transparent supply chains—referring to the networks of all the parties involved in the various stages of bringing a product to a customer—are critical for conscious consumption. These supply chains include raw material suppliers, distributors, wholesalers, retailers, and finally, you, the consumer.
One of the assets of Fair Trade is its relationship-based approach that empowers us to know how and where products (like coffee, baskets, or chocolate) were created and even know the name of the producer and their story.
This is a world away from the products made from the extractive industries, whose minerals are often used in common household electrical products or jewelry. The source of these minerals and how they were made remain difficult to determine due to lack of clear and accessible information. What is clear in the extractives industries is the link between some natural resources and armed conflict. The term “blood” or “conflict” diamonds popularized the reality that in West and Central African countries, diamonds were illegally being used by rebels to fund conflict. As a response, the Kimberly Process was established in 2006 to help end this illegal trade. While this initiative has had some success, there is more to be done to ensure compliance and enforcement. Civil society groups have advocated for more transparency in the exploitation of other minerals such as gas and petroleum resources. There is still a pressing need for transparency to ensure that the materials in our everyday lives, like cell phones and computers, are not contributing to conflict in other countries.
Civil society has placed a special focus on the lack of financial transparency that makes it difficult to follow the money generated from the exploitation of natural resources in the extractives industry. Multi-million dollar payments have entered personal pockets and government coffers and in some countries, quickly vanished to offshore accounts. In other instances, this wealth has been diverted away from development. For example in the country of Chad, in Central Africa, where poverty is devastating, many were outraged in early 2000 when the President of Chad used $25 million received as a bonus for oil contracts for the military.
CRS believes it is possible for consumers of extractives industries’ final products (e.g. cell phones) to shop their values, just as fair traders do. Catholics and others of goodwill who care about upholding principles of justice and the common good with their purchases, however, find it difficult and time consuming to locate information about how and where our natural resources come from. That is why, as part of Catholics Confront Global Poverty initiative, CRS supported the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Shining light on the extractive industry: The Dodd-Frank Wall Street Reform and Consumer Protection Act
Provisions in the Dodd-Frank Act passed in 2010 by Congress have provided an opportunity to bring greater transparency to extractive industries. Specifically, two sections in the Act combat corruption and increase publicly available information. According to Section 1504, companies must make public how much they pay to foreign governments or the U.S. federal government for the purposes of developing oil, natural gas, or mineral resources. Section 1502, relating to “conflict minerals” requires companies to report to the Securities and Exchange Commission on how they track the source and chain of custody of these minerals and to disclose the mine of origin if possible. These minerals, such as tin, tantalum, tungsten and gold, are mined in eastern Congo and neighboring countries and used heavily in everyday electronic devices such as cell phones and computers. Eventually, products will be labeled “conflict free” if they do not contain minerals that directly or indirectly benefit armed groups in the DRC or a neighboring country.
These provisions allow us to stand in solidarity with those who live in resource rich, developing countries, and often suffer extensively from conflict driven by these natural resources. While the oil and gas and electronics industries in the U.S. have resisted these regulations, it has been supporters like you who have kept the focus on the security, peaceful livelihoods and dignity of our affected brothers and sisters overseas.
Learn more about Dodd-Frank and read CRS’ response to the Regulation on Congo Minerals.