Updated on October 30, 2017
Addressing US Law on Conflict Minerals
The Democratic Republic of the Congo (DRC) and its adjacent countries have been mired in conflict with armed groups perpetuating human rights abuses in that region. These armed groups have been trading in certain minerals commonly found in that region to finance their activities. These four minerals-columbite-tantalite, also known as coltan (tantalum), cassiterite (tin), gold and wolframite (tungsten)-are commonly found in many products, ranging from jewelry to electronics to airplane components.
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, which first became effective in January 2013, defines the above four minerals as "conflict minerals". This law seeks to ensure transparency and reporting related to conflict minerals and requires companies that issue shares on a US stock exchange, such as Sony, to conduct an inquiry into the origin of tin, tantalum, tungsten and gold in their supply chains. If these minerals come from the DRC or its adjacent countries, or if their country of origin is uncertain, then the company must conduct a more thorough review of its supply chain in an attempt to determine whether the supplies supported armed groups in the DRC. On May 31, 2017, Sony submitted its fourth report to the U.S. Securities and Exchange Commission (SEC) based on its review of its supply chain activities for calendar year 2016.
Sony has designed an internal due diligence framework to determine the country of origin and chain of custody for four minerals in its supply chain. This due diligence framework is designed to conform, in all material respects, with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Sony endeavors to ensure that its products do not contain tin, tantalum, tungsten or gold from sources that benefit armed rebel groups in the DRC or the adjoining region, while at the same time making sure that it is still able to source responsibly from that region and avoid a de facto embargo, by requiring suppliers to source materials from smelters determined to be compliant with the Responsible Minerals Assurance Process (RMAP)*1 of the Responsible Minerals Initiative (RMI)*2, which was established by the Responsible Business Alliance (RBA)*2, or other smelters that have been determined to be conflict-free smelters or determined to be conflict-free under other trusted traceability projects.
Tungsten, tantalum, tin and gold enter global supply chains from the DRC as well as numerous other supplying countries. Determining the mine of origin for these minerals requires the cooperation of many levels of suppliers and intermediaries in the supply chain. Sony's conflict minerals program is aimed at continuous improvement of its understanding of our supply chain and risk reduction over time. Sony's expectation is to make progress in the early years of this program, and achieve increased transparency over time based on its efforts to obtain increased supplier cooperation.
If any of these minerals were determined to be necessary to the functionality or production of any products manufactured by Sony or a subcontracted manufacturer, during this period, Sony assessed the country of origin and the smelters at the product level through a supplier survey sent to all relevant suppliers, utilizing the Conflict Minerals Reporting Template of the RMI. The smelters identified by direct suppliers were then compared against the conflict-free smelter list prepared by the RMI, to further enhance the accuracy of Sony's findings.
Expectations for Sony Suppliers of Tin, Tantalum Tungsten and Gold
Sony requires direct suppliers to comply with the Sony Group Policy for Responsible Supply Chain of Minerals and to fully cooperate with its due diligence efforts regarding sourcing tantalum, tungsten, tin or gold in accordance with the terms of this Policy. In addition, to ensure that products, components or materials delivered to Sony do not contain any conflict minerals, Sony expects suppliers to have in place pertinent policies, a due diligence framework and a management system consistent with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
In the event that Sony confirms that any of its products, components or materials may contain conflict minerals, Sony, in collaboration with relevant suppliers, shall take actions reasonably necessary to eliminate such minerals from such products, components or materials and shall request that the suppliers makes necessary improvement to its sourcing practices. This includes adoption of a conflict-free sourcing policy, increased responsiveness and accuracy of the supplier survey, and increased use of the four minerals sourced from smelters or refiners participating in the RMAP program. Further, in the event that Sony confirms that a supplier has failed to cooperate sufficiently with a due-diligence investigation, fails to follow Sony requests for remediation or has otherwise violated this policy, Sony shall take necessary actions, including without limitation, termination of business with such supplier by stopping new orders.
As part of its efforts to help promote RMAP validation for smelters, Sony also participates in the RMI Smelter Engagement Team, urging smelters identified by supplier surveys to acquire RMAP validation if they have not already been validated.
Sony has also established a hotline to allow any interested party to voice concerns regarding the circumstances of mineral extraction, trade, handling and/or export in conflict-affected and other high-risk areas. In addition to its internal risk assessments, the hotline enables Sony to be alerted to risks in its supply chain.
Sony recognizes that effective change requires a joint effort and has joined in multi-stakeholder dialogue about conflict minerals with nongovernment organizations (NGOs) and peer companies. Sony actively participates in and supports industry groups and alliances that seek to identify and prevent or mitigate the adverse impact associated with mineral extraction in high-risk areas, including the RBA, and has funded a range of programs addressing this issue. The RBA was founded with the objective of addressing social and environmental issues in the electronics supply chain.
In 2011, the EICC(Currently RBA) launched the CFSP(Currently RMAP) Program to provide leadership to the industry in this area. With the aim of promoting collaboration with other industries and multiple stakeholders, in August 2013 the EICC/GeSI launched the CFSI(Currently RMI). Sony utilizes the frameworks developed by the RBA, RMI and other alliances as part of its efforts to ensure responsible sourcing of raw materials. In 2016, Sony took steps to help all smelters in its supply chain acquire CFSP validation by donating funds to help support The Initial Audit Fund (a CFSI subsidy program that aims to encourage smelter participation in the CFSP by covering the expenses involved for smelters undergoing the initial audit for CFSI validation inspection).
Sony also supports and contributes to such industry initiatives as the traceability project for tin launched in 2010 by ITRI, a tin industry organization, to validate that the metals used in its products are not contributing to conflict and come from sustainable sources. In addition, Sony participates in the Public-Private Alliance for Responsible Minerals Trade (PPA), a joint effort of government, industry and civil society organizations led by the U.S. government to support responsible mineral trade from the Great Lakes region of Central Africa. Since its establishment, the PPA has supported the creation of a pilot supply chain management system that includes certifying conflict-free mines, that is, mines that engage in responsible trade practices. The PPA also provides a platform for coordination among government, industry and civil society actors seeking to support conflict-free sourcing and self-sustaining trade from the DRC and the Great Lakes Region, and serves as a resource for companies seeking information regarding how to source responsibly.
Moreover, as part of its overall effort to achieve conflict-free supply chains, Sony promotes active, ongoing dialogue with civil society organizations, industry groups and other external stakeholders for further improvement of conflict-free sourcing practices. For example, CFSI holds workshops for discussions with NGOs, socially responsible investors, local government representatives and other stakeholders, in which Sony participates. Sony also works to support the industry initiatives of the Japan Electronics and Information Technology Industries Association (JEITA).