Apple’s Supply Chain Using Only Conflict-Free Tantalum

In February 2014, Apple, Inc. (NASDAQ: AAPL) announced that all of the tantalum smelters used by its suppliers are conflict-free.

Trillium Asset Management commends Apple’s leadership in supporting ethical sourcing of minerals and economic development in the Democratic Republic of Congo (DRC) and neighboring regions. In our view, Apple’s strategy to source clean minerals from the DRC is sound risk management.

The company’s 2014 Supplier Responsibility Report includes a comprehensive list of the smelters and refiners whose tin, tantalum, tungsten, and gold has been verified as conflict-free and which ones have not received independent verification. This information allows investors and other stakeholders to understand how Apple is managing human rights risks in its supply chains. The company has publicly committed to requiring verified tantalum sources in future manufacturing and is focusing on expanding the verified smelter base, stating:

[T]he only way to impact the human rights abuses on the ground is to have a critical mass of smelters verified as conflict-free, so that demand for the mineral supply from questionable sources is affected.

During last week’s annual meeting, Apple’s CEO Tim Cook’s reminded shareholders that “many things Apple does because they are right and just”.

In 2010, Apple was seen as lagging consumer electronics companies in responding to this material business risk. Since then it has become the first company to publicly identify the number of smelters in its supply chain and require suppliers across its product lines to use only verified tantalum smelters. In January 2014, Intel (NASDAQ: INTC) announced that it is now manufacturing and shipping its first-ever conflict-free electronics product, a microprocessor.

Trillium has been concerned about the human rights and environmental risks of sourcing from the DRC since 2008. In 2011, Trillium joined a diverse range of stakeholders including investors, human rights activists and industry representatives, convened by Responsible Sourcing Network, to provide recommendations to the U.S. Securities and Exchange Commission’s (SEC) draft rules pertaining to the procurement of four minerals tied to the deadly conflict in the DRC. Several of the multi-stakeholder group’s recommendations were incorporated in the final rules and companies are expected to file a special disclosure report on their use of conflict minerals beginning in May.

Apple’s announcement is good for business, its shareholders and the communities in the DRC and surrounding regions.

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