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Your smart phone has been getting better – and you probably didn’t notice

Home / Hermes EOS Blog / Your smart phone has been getting better – and you probably didn’t notice

Darren Brady,
30 September 2015
EnvironmentSocial

We all love - and equally hate - our smartphones and tablets. With the touch of a finger they place a world of information and communications at our finger tips. This isn’t always a good thing but I leave tech addiction to be discussed elsewhere. However, even the newest, fastest and shiniest of smartphones has had a dirty secret until recently…it helped kill people (although not as you might think).

Conflict minerals
Three critical minerals are found in almost every electronic device you encounter each and every day. They are tin, tungsten and tantalum – the 3Ts – and your smartphone can’t live without them. And while nothing gleams like a newly unwrapped smartphone, the 3Ts critical to its composition come from a decidedly much less glamorous place – dark wet holes found deep in a land beset by violence and human atrocities – the Eastern parts of the Democratic Republic of Congo and surrounding areas. Over the years trade in the 3Ts has allegedly fuelled violence and horrific civilian abuse as armed militia groups have sought to reap the massive financial awards on offer from controlling the minerals trade.

Now, I really don’t think any device maker would ever knowingly want to obtain some components for its manufacturing at the expense of human lives. History, sociology and iron ore smelting lessons aside, the problem has historically been one of visibility. That’s now changed.

Things are still far from perfect…but they have gotten much better. In an effort to contribute to the resolution of this problem, we have worked and collaborated with countless NGOs, investors and industry bodies to seek improved practices on conflict minerals over the past few years – and with great success. However, without the tireless work and dedication from the real heroes in this story, the likes of the OECD, Enough Project, the Electronic Industry Citizenship Coalition, the Conflict-Free Sourcing Initiative and many companies within the tech sector such as Intel, HP, Apple and numerous others, the improvements we’ve witnessed would never have materialised. As a result, consumers of raw minerals are now able to achieve much greater transparency and traceability in their supply chains.

Wave of reform
The next wave of reform is beginning to swell, with the EU deep in the drafting of new regulations that could place supply chain due diligence and disclosure demands on companies similar to those first seen in the US under Section 1502 of the Dodd-Frank Act. Dodd-Frank requires companies to determine if 3T metals are used in the manufacture of their products and, if so, determine whether they originated in the DRC or surrounding countries. Companies also have to trace the supply chain for the source and produce an independently audited report on their due diligence efforts. While legislative efforts are still far from perfect, the glass is certainly half full.

Although Dodd-Frank has caused regulators and companies some teething pains since its first introduction in 2013, it has undoubtedly brought the issue to the front of industry’s attention and enshrined the human relevance in civil and corporate law. The EU appearing to follow suit can only be a good thing in terms of furthering the quest for a constructive outcome to the conflict mineral problem.

While the final version and stringency of any EU regulation relating to conflict minerals remains to be seen, the mere fact that this regulation appears destined for life in Europe gives grounds for optimism. Draft conflict minerals legislation is currently debated among the European Parliament Committee on International Trade, the Council of the EU and the European Commission – and we’ve already let them know our views on this. We expect the topic to be high on their agenda at their next meeting in late September when the European Parliament resumes sessions following the summer recess.

So, that’s how your smart phone has been getting better – and it never even left your pocket.

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Darren Brady Darren Brady is sector lead for technology and focuses on governance and engagement activities in the Americas. Before joining Hermes EOS, Darren was based in New York as a product manager with New York Life Investment Management where he was responsible for the positioning and management of the firm’s equity products. Prior to New York Life, Darren held similar roles with Oppenheimer Funds and also previously worked for ING and Haidar Capital Management. He holds a degree in Economics and International Studies from Wake Forest University and the CFA Institute’s Investment Management Certificate.
Read all articles by Darren Brady

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