How can suppliers and customers jointly ensure a responsible and inclusive supply chain?

Following the webinar on inclusive due diligence, on March 10th, CSR Europe and Levin Sources are now launching a joint blog series on how to pursue progressive, inclusive due diligence. Every month, from April to September 2021, we will publish interviews with experts from leading companies and civil society organisations to further explore the topic.

In this first installment, Estelle Levin-Nally, CEO and Founder of Levin Sources, interviewed Norman Mukwakwami, Artisanal Mining, and Due Diligence Specialist at the World Bank, on the engagement that suppliers expect from their customers to jointly ensure a responsible and inclusive supply chain.

Estelle Levin-Nally

*CEO & Founder of Levin Sources*

Norman Mukwakwami

*Artisanal Mining and Due Diligence Specialist, World Bank*

Estelle Levin-Nelly: Norman, you have done a lot of work for Levin Sources in Zimbabwe, doing due diligence on the country’s ASM gold sector for downstream businesses. What principles have underpinned how you have approached this work, in order to be inclusive of marginal groups?

Norman Mukwakwami: It has been important to ensure that the most vulnerable groups are consulted during assessments with a keen interest in understanding the dynamics that underpin their vulnerability and their own insights on solutions that can build their resilience. For example, artisanal miners who work on alluvial deposits are regarded as illegal miners, and without any recognition at law, they cannot sell their gold into the formal gold supply chain. There is a need to ensure their voice is heard with regards to how they can be included in the formal gold supply chain, and how they can feasibly and progressively transition into formal miners by - for example - either transitioning to mining hard-rock deposits or lobbying for regulated alluvial mining.

Estelle Levin-Nelly: From this experience, how can companies start a meaningful conversation with their suppliers to jointly ensure a responsible supply chain?

Norman Mukwakwami: Companies need to start by ensuring that the supplier understands that evidence collected around risks affecting their supply chain is going to be used to improve the supply chain and not to punish the supplier. Once trust and this common understanding are ensured, a meaningful conversation to jointly ensure a responsible supply chain becomes possible. The formal gold supply chain, for example, is unique in that all suppliers are required to sell their gold to a refinery owned by the Central Bank, which will then sell to gold trading companies. Suppliers in Zimbabwe have gone through multiple waves of coercive actions by the State that range from an outright ban of artisanal mining to having armed state security officials permanently stationed at mining sites. It is important, therefore, that companies ensure that their encouragement to the Central Bank’s refinery to mitigate upstream risks in the gold supply chain does not lead to new coercive actions that are aimed at, for example, stopping the use of mercury at mining sites.

Estelle Levin-Nelly: What is needed, in your opinion, to include and empower the most vulnerable in responsible supply chains and drive positive change on the ground?

Norman Mukwakwami: There are four main ways to ensure inclusion and empowerment of the most vulnerable in responsible supply chains. These are:

An evidence-based understanding of the dynamics on the ground that give rise to vulnerability.
Identification, improvement, financing, and scaling up of local solutions.
Partnerships for change with key stakeholders including national and sub-national governments.
Countering the compulsion to de-risk supply chains by supporting credible, incremental improvements of suppliers operating in higher-risk contexts.

Estelle Levin-Nelly: During the webinar, last month, Isaac Gyamfi - Regional Director of Solidaridad Africa - and James Nicholson - Head of Corporate Responsibility at Trafigura - both made the same point about the importance of taking a progressive approach to responsible business conduct, which we know aligns with the OECD’s prioritisation of continued engagement enabled by continuous improvement, as opposed to disengagement. Can you give me any examples of where a progressive, inclusive due diligence could look like in practice?

Norman Mukwakwami: I agree with both Isaac Gyamfi and James Nicholson that a progressive approach is important. In the context of Zimbabwe, a vivid example of this is around the use of mercury which is a toxic chemical that artisanal and small-scale gold miners used to extract gold. This raises the risk of the gold supply chain contributing to public health problems. Zimbabwe recently ratified the Minamata Convention which seeks to reduce the amount of mercury used by miners. Achieving this goal in a sustainable manner requires educating miners about the dangers of mercury, understanding the dynamics that make the dangerous use of mercury persistent despite several interventions implemented over the last two decades, providing the miners with access to alternative technology, and introducing market and policy mechanisms that incentivize the production of gold without the use of mercury while ensuring those who continue to use mercury progressively bear a fuller financial cost of doing so. This requires a progressive approach that allows and supports the desired transition while ensuring any lessons learned are fully considered and used to improve the due diligence interventions.

Estelle Levin-Nelly: As market nations start to expand the ESG issues in scope for supply chain due diligence, what additional support do Zimbabwean miners and mining sector stakeholders need in order to be able to be part of these more responsible supply chains?

Norman Mukwakwami: Zimbabwean miners and mining sector stakeholders need the Government to appreciate the importance of environmental, social, and governance issues in mineral supply chains and create an enabling policy environment for good performers to realize the full benefits of being responsible producers and traders of minerals. The Government of Zimbabwe has often viewed due diligence assessments as a strategy of exclusion by which some Western countries can find reasons to ban or restrict the importation of Zimbabwean minerals into their jurisdictions. The Government has to not only appreciate the benefits of responsible supply chains to the nation of Zimbabwe but also demonstrably see that transparency lowers the risks of imposition of sanctions.

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