Last month, Tesla released its Conflict Mineral Report for the fiscal year ending on December 31, 2019, and emphasized the importance of sourcing only responsibly produced materials. “This means having safe and humane working conditions in our supply chain and ensuring that workers are treated with respect and dignity,” the company said in its SEC filing.
Tesla’s Conflict Minerals Policy
Some common myths surrounding Tesla and mining include the idea thatg Tesla is using child or slave labor. Tesla ensured that it obtains the minerals in its products humanely and that it doesn’t use child labor, slavery, or human trafficking. Although Tesla’s suppliers obtain many of its minerals, Tesla has emphasized that they must be DRC Conflict Free. This means armed groups in the Democratic Republic of Congo (or any adjoining country) such as those utilizing slave or child labor do not benefit from Tesla’s purchase of minerals.
In the filing, Tesla shared what these conflict minerals are:
- Columbite-tantalite (Tantalum)
- Cassiterite (Tin)
- Wolframite (Tungsten)
- and any derivatives of the above.
If these minerals do not benefit armed groups within the DRC or its adjoining countries, then they are considered conflict-free. Tesla’s suppliers are required to establish policies, due diligence frameworks, and management systems consistent with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance).
The company also expected its suppliers to stay up to date with and use validated conflict-free smelters and refiners that are assessed by the Responsible Mineral Initiative (RMI) and similar organizations.
“Tesla recognizes the importance of mining responsibly and in a way that contributes to economic and social opportunity and development in the DRC region. Suppliers are allowed to source from the DRC or its adjoining countries, so long as it is from validated conflict-free sources such as smelters recognized as conformant under the RMI’s Responsible Minerals Assurance Program (“RMAP”).”
Tesla’s Human Rights Policy
Tesla stated that it is committed to ensuring that slave or child labor or human trafficking isn’t happening within its supply chain. Although these types are slavery are crimes under state, federal, and international laws, it still happens. Tesla has a zero-tolerance policy when it comes to slavery, though.
“Tesla does not, and will not, tolerate the use of slave or child labor in the manufacturing of its products and does not, and will not, accept products or services from suppliers that engage in human trafficking in any form.”
Tesla ensures that its suppliers are in compliance with its expectations, code, and policy along with applicable legal requirements, and in order to do this, it is committed to the following:
- Continuously evaluating our supply chain to address any risks related to conflict minerals, human trafficking, slavery, and child labor.
- Reviewing suppliers’ practices to ensure their compliance with Tesla’s Policy.
- Requiring our Tier 1 suppliers to certify that their materials incorporated into Tesla products comply with the applicable laws related to conflict minerals, slavery, child labor, and human trafficking of the country or countries in which they are doing business.
- Disciplining contractors and appropriate parties who fail to meet the requirement of our Code and Policy, including potential termination of contract.
- Ensuring appropriate Tesla employees are aware of issues regarding conflict minerals, human trafficking, child labor, and slavery, particularly with respect to mitigating risks within Tesla’s supply chain.
- Investigating if Tesla has a reasonable basis to believe that a supplier may be engaging in human trafficking, slave or child labor, or use of conflict minerals.
- Transitioning away from purchasing goods or services from any supplier that is believed to be engaging in human trafficking, slave or child labor, or use of conflict minerals if the supplier does not take corrective actions.
Tesla’s Process Of Due Diligence
Tesla’s conflict minerals process and policies aim to follow the OECD Guidance and it has several steps it takes in order to ensure this. They are:
Establish Strong Company Management Systems. This includes its Human Rights and Conflict Minerals Policy along with the published Tesla Supplier Code of Conduct. Tesla also has a supplier manual that addresses its policies on conflict minerals while stating the company’s expectations of its suppliers. Tesla also has a specialized team within its supply chain organization that leads the company’s due diligence efforts.
Identify and Assess Risk in the Supply Chain. Tesla has a risk identification and assessment process that starts with the RCOI process and then leverages the CMRT. Its in-scope Tier 1 suppliers are engaged multiple times during this process, and internal stakeholders are also engaged. This is to emphasize the importance of participation by Tesla’s suppliers.
Along with this, Tesla collects supplier data over a 10-week period to allow for follow-up and further validation. The company carefully monitors responses from its suppliers on their own internal policies and processes regarding conflict minerals.
Design and Implement a Strategy to Respond to Identified Risks. Tesla monitors smelter validation progress by the RMI, and the Steering Committee will review and take action if there are any concerns with supplier responses throughout the data collection process.
Perform Independent Third-Party Audit of Supply Chain Due Diligence. Tesla fully supports the RMI, which audits due diligence activities of smelters and refiners. It supports the organization’s outreach efforts and RMAP smelter audits by being a member of these programs. Tesla also has the right to ask any high-risk Tier 1 supplier to audit their supply chain conflict minerals due diligence program using a third-party independent auditor.
You can read Tesla’s full Conflict Minerals Report here.