Global Witness (GW) recently released a report ‘Time to Dig Deeper [1], which reviewed progress of annual public reporting as recommended in Step 5 of the OECD Due Diligence Guidance. The review referenced many public reports of 3T companies who are iTSCi members which have been made available via the iTSCi website [2], and also made certain recommendations to companies and the iTSCi programme.

We were pleased to note that good progress was recognised in 3T supply chains and countries where iTSCi is implemented – all except one report was on 3T minerals rather than gold, all 3T reports were from iTSCi members, and contrary to other established iTSCi countries, there were no reports on 3T from Uganda where iTSCi was not at the time implemented.

iTSCi was also happy to cooperate with GW during their research, including encouraging member companies to respond to GW enquiries, as well as assisting with the visit to the Abahizi cooperative in Rwanda. However, we did not have the opportunity to consider the final recommendations of the report before publication which we comment on below;

GW recommendation> Ensure they do not remove, or advise companies to remove, non-sensitive information on risk from their public due diligence reports.

We are pleased that GW did not identify any significant examples of removal by iTSCi staff of non-sensitive information from any reports on our website. Information that we consider sensitive/confidential is explained in depth in both our letter of April 2017 (included as Annex 5 of GW report), and our letter of July 2017 (not included in the GW report but annexed to this response) which discusses further details of the ETI and TSL annual reports. We strive to maintain consistent and fair standards of transparency taking into account business confidentiality as per the OECD recommendations and normal business practice.
Regarding ETI, it is relevant to note that the workplace risk assessment had already been published the year prior (2014 [3]), and is also published (with appropriate redactions on topics outside our scope) for 2016 [4]. This illustrates continuous improvements in policy made by iTSCi as we learn from experience.

In further follow up with TSL, of which GW were aware but did not appear to account for, the company confirmed that “The 2015 report is just a new version that we made that was not sent to you before… The risk assessment is something that we updated after some recent incidents to help our staff to understand what they must do…” i.e. documents obtained by GW were updated versions not the originals provided to iTSCi.

GW recommendation> Treat poor quality risk reporting as a red flag and log this as an incident to be followed-up on.

GW consider that public reporting is key to translate due diligence theory into practice, and a vehicle for sharing information through the supply chain, allowing for public scrutiny and verification. While this would be the case if no industry programme were in place and annual reports are a key source of information, iTSCi expects a much more continuous engagement of member companies in risk mitigation via our incident reporting mechanism, followed-up through discussions facilitated by our on the ground assessment teams, and driven by potential membership sanctions. Lack of response to risk by any actor, not only by companies but also by authorities or our own iTSCi staff are already noted, shared with the supply chain on a monthly or more frequent basis, and made public in the incident summaries [5]. Response to and reporting of risks is also evaluated by iTSCi audits, the summaries of which are made public [6].

Practical implementation via an industry programme is the most effective approach. Reliance on annual public reports, which are issued some time after risks may have occurred, and containing information which is not verified, would be significantly less credible or effective. Any company at any point in the supply chain is welcome to participate as an iTSCi member in order to receive the best possible regular information on risks and follow up as appropriate.

The OECD guidance emphasises that companies are ultimately responsible for their own due diligence and as a result, iTSCi expects all members to evaluate information on suppliers and make their own evaluation to determine decisions on continuation of trade. While we recognise that annual reports of members can be improved, and plan to continue to provide guidance and suggestions on content or other recommendations, we would consider making judgement on what a company has itself decided to include in its own report as stepping beyond the scope of our responsibility. iTSCi does open incidents to highlight when any member has not published any report.

GW recommendation> Treat the involvement of a politically-exposed person (PEP) in company ownership and/or management as a red flag, i.e. a corruption and/or direct or indirect link to conflict risk.

Further comment on PEP’s is contained in our letter of July 2017 annexed to this response; PEPs are not explicitly referred to in the main body of the OECD guidance and are therefore not directly within the scope of our activities. Nevertheless, without explicitly naming PEP’s the iTSCi membership process does highlight the involvement of higher risk individuals within any company ownership when relevant and already considers this in relation to OECD Annex II risks.

GW recommendation> Communicate clearly that information on company ownership and potential conflicts of interest exists in its members’ database, which should also be made easily searchable.

Information on company ownership is obtained and held by iTSCi, and any identified risks or conflicts of interest are highlighted in the public summaries of company status and understanding of due diligence. However, contact details and personal information of individuals is confidential and is not shared between all members. If a member intends to begin trading with another member they may enquire directly to iTSCi for information and a discussion on potential risks which will be provided if a legitimate business interest and supplier relationship is established. It would not be appropriate to establish a freely available database of personal information. Member companies can, and do, make their own additional due diligence on potential suppliers, both for financial and other risks and do not entirely rely on public iTSCi information.

Regarding publication of specific risks

Throughout the report, and in recommendations to companies, GW discuss how companies should be reporting specific risks in their supply chain, however, the OECD guidance for 3T minerals does not recommend publication of specific risks but discusses methods, general risk assessments, and practices. We disagree that information in public reports must be sufficiently detailed to describe precise actions and allow other companies in the supply chain to address and act on the identified risks since, not only would this be too late, but publishing a detailed report of specific risks in any supply chain would require the explicit permission of other named companies, and would reveal supplier relations which the OECD guidance recognises must remain confidential. While the gold supplement mentions disclosure of actual risks, this is not the case in the 3T supplement and is not an approach agreed in 3T multi-stakeholder discussions. Since GW identified only one report by a gold company it remains to be seen whether the gold sector will report on specific risks.
Through the iTSCi industry programme, member companies are made aware of risks in much more detail and at an earlier date than would ever be achieved through evaluating unverified annual reports. Since incident summaries are also made public, the parties responsible for mitigation and their performance can also be evaluated through public scrutiny without the need for repetitive inclusion in numerous company reports.

Additional comments

GW highlight that some companies did not report on accidents on their concessions. iTSCi agrees with responses from those companies that health and safety incidents, while important and requiring improvement plans, are not issues of due diligence relating to Annex II risks such as conflict and human rights abuses and not relevant for Step 5 reporting.

GW imply that incidents aside from those recorded by iTSCi and companies are likely to exist but when asked, did not provide any examples of additional risks which had not been identified by the programme.

While GW requested iTSCi to forward communications on their behalf to some companies with uncertain contact details in order to allow those companies to respond this was not done consistently. For example, Malaysia Smelting Corporation (MSC) is noted in the report as not replying to GW’s request for comment, but the company states that no such request was received and iTSCi was not requested to make contact on behalf of GW to follow up.

From our detailed trading records, iTSCi has a somewhat different list of 2015 active exporters per country than those listed in the GW report; 4 differences in DRC, and 11 differences in Rwanda. This will have affected expectations upon them and the calculation of percentages of companies reporting as per GW report Table 1 as well as the overall conclusions. Differences in documentation and mix-ups are not unusual in-region and this has also been recognised in comments from GW in their Annex 1 on methodology.