Conflict Minerals Policy and Due Diligence

Conflict minerals are minerals mined in conditions where armed conflict and human rights abuses occur. The term is typically to refer to four minerals – tungsten, tantalum, tin and gold (also known as 3TG) – that are mined in the eastern region of the Democratic Republic of the Congo (DRC). These minerals are used in the production of various goods such as jewelry and virtually all electronic devices.

Responsible sourcing of minerals is an important part of our supplier sustainability commitment. We implement measures in our chain to ensure that our products are not directly or indirectly funding atrocities in the DRC. Even though Philips does not directly source minerals from the DRC and the mines are typically seven or more tiers removed from our direct suppliers, we are working toward the following goals: 

 

  • Stop trade in conflict minerals that benefits armed groups in the DRC or adjoining countries
  • Enable legitimate minerals from the region to enter global supply chains, thereby supporting the Congolese economy and the local communities that depend on these exports.

Conflict minerals policy

Philips is committed not to purchase raw materials, subassemblies or supplies which we know contain conflict minerals. We do not directly source minerals from mines in the DRC or elsewhere, and the supply chain for these metals consists of many tiers, including mines, traders, exporters, smelters, refiners, alloy producers and component manufacturers, before reaching our direct suppliers.
Conflict Minerals
Cooperation amongst these different tiers in the supply chain, as well as amongst different industries that use these metals, is crucial in effectively breaking the link between mining and conflict financing in the DRC. This is why Philips actively contributes to the Responsible Minerals Initiative, which brings together the electronics, automotive, and other industries to improve conditions in the extractives industry. We continue to engage with other stakeholders including the European Parliament as well as local and international NGOs.

Conflict-free smelters

Smelters mix minerals from many sources and refine them into metal that is used in our industry. The smelter is at a key point in the supply chain to enforce responsible sourcing – by exercising due diligence in selecting their mineral sources. The Responsible Minerals Assurance Process (RMAP) identifies smelters which can demonstrate, through an independent third-party assessment, that the minerals they procure do not originate from sources that contribute to conflict in the DRC.

As sufficient validated conflict-free smelters for all four metals become available, we will direct our supply chain towards these smelters. We regularly update the Philips smelter list with new information received from our suppliers and request the identified smelters to participate in the RMAP.

Background to Philips due diligence activities

Philips has disclosed the use of conflict minerals since 2009, even before the Dodd-Frank Wall Street Reform and Consumer Protection Act was instated. In 2012, Philips was the first company to publish its list of smelters in the minerals supply chain. Since 2014, Philips annually reports on supply chain due diligence by filing a Form SD and Conflict Minerals Report to the U.S. Securities and Exchange Commission (SEC). The complete Philips Conflict Minerals due diligence framework, measures and outcomes are described in the Conflict Minerals Report. Philips has this report voluntarily audited each year by an independent accredited third party audit firm.
 

Our conflict minerals supply chain due diligence program is designed in line with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and its supplements (OECD Guidance). Drawing upon the Five-Step approach described in the OECD Guidance, we established a system of control and transparency over 3TG supply chains by creating a process to engage suppliers, assess their due diligence efforts, and identify smelters.

Latest results

The results of our most recent supply chain investigation show that Philips achieved a 100% response rate from identified priority suppliers. To our best knowledge, none of the smelters identified in Philips’ supply chains are sourcing 3TG that directly or indirectly benefits armed groups in the DRC. Also, 100% of identified tantalum smelters have successfully passed the Responsible Minerals Assurance Process (RMAP) or equivalent audit. By focusing on the improvement of smelter data quality received from suppliers, we were able to reduce the number of 3TG smelters that were not recognized by the RMI (non-listed smelters) from 85 in 2015 to 3 in 2018.
 

We recognize that due diligence is a continuous process and continue the efforts of actively steering our suppliers toward conflict-free smelters in our supply chain management. We have also made responsible sourcing of minerals a supplier contract requirement and one of the supplier assessment topics in the Supplier Sustainability Performance program.

Other due diligence initiatives

Since 2016, Philips has started applying a risk-based approach to Mica sourcing, a mineral generally used in cosmetics and electronic products (such as irons, hairdryers, and induction cookers). This mineral is increasingly associated with severe human rights (such as child labor). Based on a preliminary study and risk assessment, we request suppliers with higher risks to establish whether Mica is included in products and components provided to Philips. If so, the suppliers are asked to identify origin of the Mica. Suppliers unaware of the presence of Mica are required to perform deeper analyses, which has resulted in a clear view of Mica in our supply chain. Philips has also been a proponent of having Mica on the agenda of multi-stakeholder collaborations like the Responsible Minerals Initiative.
 

To stay aware of early risk warnings, Philips proactively reviews public allegations and incidents based on concerns reported via the externally hosted Philips Ethics Line, Philips website, existing industry grievance mechanisms like RMI and ITRI’s Tin Supply Chain Initiative (iTSCi) as well as other publicly available information. 

Beyond due diligence – multi‐stakeholder initiatives and on-the-ground projects

From our position in the supply chain as a downstream company, we believe that a multi-stakeholder collaboration in the responsible sourcing of minerals is the most viable approach for addressing the complexities of minerals value chains.

European Partnership for Responsible Minerals (EPRM) 

erpm
Philips is a founding partner and strategic member of the European Partnership for Responsible Minerals (EPRM) since its inception in May 2016. EPRM is a multi-stakeholder partnership between governments, companies, and civil society actors, working toward more sustainable minerals supply chains. EPRM is an accompanying measure to the EU Conflict Minerals Regulation dedicated to making real change ‘on the ground’. Through EPRM, Philips financially supports activities and on-the-ground projects to improve responsible mining practices in mining areas in CAHRAs and shares our knowledge and practice in conducting due diligence. It is also an active participant of multiple strategic working groups that aim to strengthen dialogues between pillars and foster cross-sector learning and due diligence capacity building.

IRBC Responsible Gold Agreement 

In June 2017, Royal Philips signed the Responsible Gold Agreement, joining a coalition to work on improving international responsible business conduct across the gold value chain. Signees include goldsmiths, jewelers, recyclers, NGOs, electronics companies, trade unions, and the Dutch government. This partnership intends to bring about cooperation between companies, government, trade unions, and NGOs to prevent abuses within production chains. From September 2019, Philips represents companies from gold and precious metal, recycling, and electronics manufacturers in the Steering Committee of the Responsible Gold Agreement.

Uganda Gold Project 

Conflict Minerals

From the Responsible Gold Agreement, Philips co-developed a project with several other parties including civil society actors to facilitate sourcing of responsible gold from Uganda. The project aims to reduce and prevent child labor, increase economic prosperity with improved mining equipment, and provide miners with sustainable access to international markets.
 

This project engages three mining organizations in Busia, Uganda. Here, we are establishing two child labour free zones in the communities that surround the mines, involving different stakeholders in the area. To prevent children in the communities from entering or continuing child labour, we have set up motivation centers that support (re-)integration to normal schools. The goal is to reach 400 children and over 700 households. Together with local government, the project partners are working to implement legislation that promotes children’s rights.

This project is also working to increase the mines’ productivity, thereby strengthening the capacity of artisanal miners to earn a more sustainable. For that purpose, we have installed equipment to improve the gold extraction rate and help reduce the need for mercury, trained miners on mining methods and conflict resolution, and established an export model and social and environmental criteria.
 

In this partnership, Philips focuses on the international context and market outreach, involving supply chain stakeholders and encouraging them to integrate the responsibly sourced gold into the supply chain.  

India Mica Project 

Philips initiated a multi-stakeholder program in 2016, to tackle the worst forms of child labor in Mica mines in Jharkand, India. In this region, there is a high poverty rate and low literacy and school attendance. Child labour occurs regularly at Mica mines in this area, and the mining and processing of Mica brings along various health and safety risks.
 

This project is aimed specifically at 14 villages in Koderma, Jharkhand, focusing on both livelihood and empowerment programs. Together with local partners, awareness raising workshops and activities were set-up, targeting children and their families, training local government officials on child rights, and supporting child protection structures at a village level. The project partners worked to mobilize adult Mica miners to actively cooperate and increase their livelihoods by, for example, forming groups for accessing resources and knowledge, capacity building in business development and marketing, collective marketing and access to fair price for Mica products. In addition, one of the deliverables focused on defining conditions for a responsible Indian Mica supply chain and developing advocacy plans to influence the private and public sector at large. The project was completed in September 2019.