Data for due diligence: How EITI supports responsible and resilient mineral supply chains

Global demand for key minerals used in renewable energy technologies is expected to more than double between 2020 and 2040. While growth in mineral production offers potential benefits for stakeholders across the supply chain, it also increases the risk that extraction could drive environmental destruction, disrupt local livelihoods and generate illicit revenue flows. By conducting due diligence on their supply chains, companies that use minerals – such as renewable energy producers, automakers and electronics companies – can ensure that their sourcing decisions do not cause adverse environmental, social or governance impacts on communities near mining operations.

Due diligence is crucial to maintaining stable mineral supplies. By identifying and addressing risks and impacts on local populations, companies protect their social license to operate and ensure resilient business relationships. Governance risks are particularly critical as weak governance can amplify other risks by weakening social and environmental safeguards and limiting regulatory oversight. Yet limited information and political sensitivities often make governance and corruption issues difficult to tackle, and due diligence in this area is typically less developed than for other risk categories.

Due diligence is crucial to maintaining stable mineral supplies.

The EITI can help bridge these gaps. Through its country reporting in 55 implementing countries, the EITI provides detailed information on mining sector governance and company operations. It also publishes assessments of EITI supporting companies that operate globally. Together, these sources offer valuable insights for identifying governance and corruption risk in mineral supply chains. The new Guide to using EITI data for due diligence provides practical instructions for companies seeking to integrate this information in their due diligence processes, in line with OECD responsible sourcing requirements. 

Identifying governance risks in mineral supply chains

The OECD due diligence framework lays out six steps that companies should take to identify and manage actual or potential adverse impacts linked to their sourcing decisions. These include establishing policies and management systems, identifying and addressing risks, tracking and communicating results and supporting remediation.

Companies can build an understanding of their supply chain by drawing on EITI country reporting, which provides an overview of national mining sectors, including key projects and production and export volumes.

EITI data is particularly valuable for step 2 – risk identification and assessment. To begin, companies can build an understanding of their supply chain by drawing on EITI country reporting, which provides an overview of national mining sectors, including key projects and production and export volumes. Once sourcing countries have been identified, companies can use EITI Validation findings to spot governance weaknesses at the national level. When specific suppliers are identified, companies can also turn to EITI country reporting and assessments of EITI supporting companies for insights on payments to government, contracts and beneficial ownership, helping to pinpoint areas that need further follow-up.

Meeting responsible sourcing expectations

A range of responsible sourcing standards include specific requirements for due diligence on mineral supply chains. Several leading frameworks – including the OECD Minerals Guidance and the Red Flag Assessment of the London Metal Exchange (LME) – refer to EITI-related disclosures. 

In some cases, compliance with responsible sourcing standards can be a prerequisite for market access. For instance, the LME responsible sourcing policy requires listed brands to evaluate whether upstream suppliers source materials from countries implementing the EITI Standard or disclose government payments in accordance with EITI Requirements. Alternatively, brands can meet LME requirements by complying with industry standards such as the Copper Mark or the Responsible Minerals Initiative (RMI), which embed EITI principles within their assessment frameworks and have been evaluated as OECD-aligned by the LME.

By integrating EITI data into their due diligence practices, companies can more easily meet the requirements of such standards.

By integrating EITI data into their due diligence practices, companies can more easily meet the requirements of such standards. They can use EITI country reporting and assessments of EITI supporting companies to identify red flags and supply chain risks, check whether suppliers are reporting project-level payments and other disclosures required by the EITI Standard in countries where they operate.

Building responsible and resilient mineral supply chains

Addressing governance and corruption risk is essential to building responsible and resilient mineral supply chains. A lack of transparency and regulatory oversight can heighten risks of environmental and social harm, undermine equitable revenue distribution and expose companies to reputational and operational risks. The Guide to using EITI data for due diligence provides practical steps for accessing and integrating EITI data into due diligence systems, supporting companies to maintain a social license to operate and meet market access requirements.