Using on-the-ground assessments to inform decision-making
On-the-ground assessments (OGAs) are a critical component of our enhanced due diligence process, enabling us to verify conditions on the ground, validate or challenge information identified during desktop reviews, and better understand complex ESG risks.
The following examples illustrate how OGAs inform our decision-making. In one instance, the assessment confirmed that a potential supplier had implemented strong systems to responsibly manage identified risks, allowing us to move forward. In another, the assessment revealed unmanaged risks, leading us to discontinue engagement.
On-the-ground assessment demonstrating improvements
We carried out an on-the-ground assessment of a potential metals and minerals supplier in South America after identifying several risks during our initial desktop review and assessment. These included adverse news allegations of illegal mining, human rights violations against Indigenous communities, corruption and environmental pollution. The supplier also had limited publicly available information, making it difficult to evaluate how it was managing these issues.
As a result, we determined that an on-the-ground assessment by a third party with local expertise was necessary to better understand the allegations and evaluate the conditions on-the-ground. The objective of the assessment was to first identify what measures were being taken to manage the identified red flags and then assess whether the approach met the requirements and expectations specified in our Supplier Code of Conduct.
The assessment focused on environmental and social considerations, including the supplier’s efforts to address environmental pollution, their environmental monitoring programmes and the effectiveness of remediation measures for impacted communities. The assessment concluded that the potential supplier had invested significantly in robust management systems, including environmental and human rights policies, undertaking an impact assessment, conducting training, improving governance structures, consultation processes with local communities, a whistleblowing mechanism to identify, prevent and mitigate environmental and human rights risks within their operations and surrounding communities and environment, and demonstrated compliance with our responsible sourcing requirements.
On-the-ground assessment identifying significant actual risks
We commissioned external consultants to conduct an on-the-ground assessment of a potential supplier of mined material. The objective was to identify the presence of any OECD Annex II risks and other production-related risks as well as the ability of the potential supplier to manage such risks and our capacity to have visibility on, and influence over, the management of the risks. The on-the-ground assessment identified a range of risks with the potential supplier including:
- Governance: concerns related to transparency, regulatory compliance, and anti-corruption measures were noted, posing challenges to establishing accountable business practices.
- Security: the presence of NSAGs and inadequately managed security arrangements raised red flags about human rights violations and safety risks.
- Communities and ASM: the coexistence of ASM activities and industrial operations was identified as a source of community tensions and potential conflicts.
- Health, safety and environment: gaps in operational safety practices and environmental management systems were found, increasing the risk of accidents and ecological harm.
- Transportation: logistical vulnerabilities, including unsafe transit routes and weak enforcement of standards were flagged as significant risks.
In this case, we chose not to progress our engagement with the supplier as the scale and complexity of the identified risks, combined with limited capacity for effective mitigation or control, made a partnership incompatible with our commitment to responsible sourcing.