International Corporate Social Responsibility for the Dutch

Metallurgical Industry

Social and Economic Council of the Netherlands (SER), The Hague

Tuesday 21 February 2017

Content

• Metallurgical industry facts

• Looking back

• Expectations about the dialogue phase

• What is at stake

Metallurgical industry facts

• What is the metallurgical industry? – Companies such as steel companies, aluminum and

zinc smelters, foundries and wire drawing – Manufacture of metals in primary form or of metals

not yet processed or transformed into a final product – Producers of purified or refined metals from the metal

ore, which are then suitable for further processing – Companies that melt and reprocess collected

recyclable materials – Metal scrap can be recycled indefinitely, without loss

of quality / material properties and without being in competition with food chain

Metallurgical industry facts

• Over 50,000 fulltime employees • Added value of € 2 billion annually (about 3% of industry), exporting

€ 6 billion worldwide (primarily within Europe) • At the foundation of important industrial clusters, such as hightech

materials and systems • VNMI represents 80% of all metallurgical companies with > 20 FTE • Dutch metallurgical industry part of Dutch metal processing

industry > 325,000 fulltime employees • After chemical and petrochemical industry, largest industrial energy

intensity

See also (Dutch language) 2011 Nyfer report, based on public statistics: http://www.vnmi.nl/_uploads/1345541990_de-basis-moet-goed-zijn_kleur.pdf

Metallurgical industry facts

• Supplies to important OEMs in EU: – Metal processing industry, automotive industry, transport-

and energy sector, packaging, building and construction – Proximity of (EU) supply important to secure continuity of

production

• Increased price risk, LME commodity price driven, low pricing power

• Level playing field conditions are essential because of global competition

• Focus on operational efficiency, lowering environmental impact, product innovation (alloys, recyclability)

Metallurgical industry facts

• Value chain risks: mining and recycling phase, representing only small part of the value chain

• Most metal producers in foreign hands; investment conditions in the Netherlands compared to those in other countries

• Increasing cooperation between upstream and downstream companies

• Sustainable goods mostly based on metallurgical innovations (renewable energy, weight reduction in automotive, etc.)

• Strategic importance: major export markets for Dutch producers have lack of supply

Looking back

• Internal VNMI workshops

• Quartermasters phase: external consultant

• Our commitment to the dialogue phase

Internal VNMI workshops

• Several companies active in ICSR reporting

• Many companies do not own mines and/or scrap recycling facilities

• Pressure from all sides: customers (ICSR declarations), public (NGO’s) and politics (conflict minerals)

Quartermasters phase

• Objective: support in exploring the opportunities for a broad-based and SMART formulated ICSR covenant for VNMI and its members (whether or not under the umbrella of an FME covenant)

• Activities: analysis ICSR-issues, perspectives, business cases and opinions

• Output: recommendations for vision, ambition and strategy, commitment to the dialogue phase

Key principles

• Based on OECD guidelines and UNGP, due diligence is key

• Based on (voluntary) compliance with government and civil society (SER monitoring)

• Primary focus on avoiding negative impacts, but also room for realizing positive impacts

• More direct involvement in the issue > higher expected efforts to solve them / reduce and to provide victims with rehabilitation or satisfaction

Findings: summary

• Input streams can come from ICSR-risk countries

• Many international sustainability initiatives regarding professional mining (often still "under development"), whereas fewer international initiatives regarding artisanal mining (ASM) and secondary metal / scrap

• Due diligence ICSR risks chains limited / absent (sometimes regarding virgin raw materials)

• Potentially, all degrees of involvement (cause, Contribute, linked to)

Findings: summary

• Different stakeholders, varying opinions • No preselected minerals or countries of origin • 'Other' input materials, forward chain and waste

negotiable • Primary focus on environmental / biodiversity,

working conditions, human rights and impacts on local communities – Especially (potential) impacts on children, women,

trade union rights, living wage and land rights

• In addition, perhaps corruption, taxation and fair competition

Findings: summary

• Avoiding negative impacts at center of debate, positive impacts welcome

• For ASM and scrap desire for more formalization and regulation

• Exclusive focus on circular economy in the Netherlands is insufficient

• Connecting with existing international initiatives (particularly sustainability of professional mining), while accounting for interests ASM

• No consensus: VNMI covenant or FME covenant

Our commitment

• Anticipate and contain regulation and discussions about conflict minerals

• Secure supply of raw materials: avoid discontinuity, strengthen relationships, develop urban mines in developing countries

• Anticipate increasing legal liability

• Prevent reputation damage / USP towards customers substantial ICSR policy

• Fulfill governmental expectations

• VNMI committed to deliver its best effort, not a result

Our commitment

• Given reasonable quid pro quo of government and civil society

– Companies promise to do due diligence in value chains, suggesting improvement plans following significant issues (based on rules UNGP)

– Based on commitments and 'customization‘, whilst providing adequate space for individual projects (individual companies choose when and to what extent to step in, as leading group is established and committed to start from the beginning)

– General agreements on monitoring & evaluation (M & E), transparency, financing, complaint mechanism, etcetera

• Given substantial quid pro quo of government and civil society

– Sector participation (through VNMI) in projects

– Sustainability ASM, for example Cobalt

– Sustainability international secondary metal / scrap chains

– Exploitation new urban mines developing countries

Expectations about the dialogue phase

• Negotiation leverage

• Role of government and civil society/NGO’s

• UN Guiding Principles for Business and Human Rights, OECD Guidelines for multinational enterprises

• Current third-party certification (e.g. LBMA) and ICSR sector covenant gold industry

Negotiation leverage

• Highly consolidated professional mining industry

• Most scrap exported to non-OECD countries

• Dutch metallurgical industry has little or no activity in mining and/or scrap recycling facilities

• Jointly, industry, government and NGO’s have more leverage

Role of government

• Influencing EU conflict minerals legislation

• Linking Socially Responsible Procurement and 'Holland branding’

• In the EU and the UN, encouragement of ICSR

• Linking ICSR assessment tools and sector instruments

• Embassies and consulates help support and implement covenant

• Support sector projects

Role of government

• Identify partnership seaports

• Active information on other grant and loan opportunities

• Strengthening quality Environmental & Social Impact Assessment for expansion and construction of new mines and strengthen implementation ESIA in decision-making processes regarding licensing

• Guarantee agreements do not conflict with competition authority

• Only support for companies that have signed ICSR covenant – help prevent free riders

Role of civil society / NGO’s

• Assess sustainability initiatives mining and methodology

• Provide databases and international networks • Support identification conflict and high risk areas • Joint development of efficient monitoring and

reporting • Be available for M & E and co-implementation

projects • Support and strengthen the business case for

VNMI members

What is at stake

• No black and white debate or zero sum game

• Concerns for both business, government, as well as civil society/NGO’s

• Agreement at national level and / or in international arena

Contact details

• Association of the Dutch Metallurgical Industry (VNMI)

• www.vnmi.nl

• +31 88 400 8528

• Frank Buijs, director VNMI

• vnmi@fme.nl