What is the OECD Due Diligence Guidance?
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from ConflictAffected and HighRisk Areas (often shortened to OECD DDP) is a set of internationallyrecognised standards that helps companies identify, prevent, and mitigate the adverse impacts of their mineral sourcing. First published in 2016 and updated in 2021, the guidance is intended for businesses, investors, civil society, and governments that want to ensure that the minerals they procuresuch as tin, tantalum, tungsten, gold, cobalt, lithium, and rare earth elementsare not financing conflict, human rights abuses, or severe environmental harm.
While the guidance focuses on conflictaffected and highrisk areas (CAHRAs), its principles are applicable to any supply chain where there is a risk of adverse impacts. The OECD itself does not enforce compliance; instead, it provides a framework that national authorities can adopt into legislation or voluntary standards.
Core Principles
The guidance rests on three overarching principles that shape every step of due diligence:
- RiskBased Approach: Companies must assess the likelihood and severity of specific adverse impacts in the contexts where they operate.
- Continuous Improvement: Due diligence is not a oneoff exercise; it should evolve as new information emerges and as the supply chain changes.
- Transparency and Stakeholder Engagement: Open communication with affected communities, civilsociety groups, and other stakeholders builds trust and improves the quality of risk information.
These principles are reflected in the fivestep duediligence process described below.
The FiveStep Due Diligence Process
All companies are encouraged to follow the same logical flow, which can be adapted to the size and complexity of the organization.
1. Establish Strong Company Management Systems
- Define clear policies on responsible mineral sourcing.
- Allocate resources (human, financial, technical) for duediligence activities.
- Integrate due diligence into existing compliance, ESG, or procurement frameworks.
2. Identify and Assess Risks in the Supply Chain
- Map the supply chain from mine to final product, identifying direct and indirect suppliers.
- Use publicly available data (e.g., conflict maps, country risk assessments) and primary information from suppliers.
- Apply a riskscoring matrix that considers the probability of conflict financing, humanrights violations, and environmental harm.
3. Design and Implement a RiskMitigation Strategy
- Choose appropriate actions such as supplier audits, thirdparty verification, contractual clauses, or capacitybuilding programs.
- Prioritise highrisk entries for deeper engagement.
- Document the logic behind each mitigation measure to support later reporting.
4. Conduct Independent ThirdParty Audits
- Engage accredited auditors familiar with the OECD framework.
- Audits should verify both the accuracy of risk assessments and the effectiveness of mitigation steps.
- Audit findings must be shared with senior management and used to refine the riskmitigation strategy.
5. Report on Due Diligence Findings
- Publish an annual duediligence report that covers the five steps, key risk indicators, and remedial actions taken.
- Reports should be accessible to the public and to relevant authorities.
- Include a statement on how the companys approach aligns with the OECD guidance and any national legislation.
Adhering to this process helps organisations demonstrate reasonable effort to avoid financing conflict or contributing to serious abuses, thereby reducing legal, reputational, and financial risks.
SectorSpecific Advice
Although the guidance is sectoragnostic, certain industries face unique challenges. Below is a snapshot of typical considerations.
| Sector | Key Risks | Practical Tips |
|---|---|---|
| Electronics & Mobile Devices | High reliance on tin, tantalum, tungsten, gold, cobalt, lithium. | Use traceability tools (e.g., blockchain) for component tracking; partner with industry initiatives such as the Responsible Minerals Initiative (RMI). |
| Aerospace & Defense | Strategic minerals (rare earths, titanium) sourced from geopolitically sensitive regions. | Integrate geopolitical risk analysis; maintain dualsource strategies. |
| Automotive (EV batteries) | Cobalt and lithium extraction linked to child labor and unsafe mining. | Adopt sourcetocell verification; engage directly with mining communities to improve livelihoods. |
| Jewellery | Gold mining associated with forced labor and environmental degradation. | Validate gold with internationally recognised certifications (e.g., Fairtrade Gold, Goldfields Responsible Mining Assurance). |
Implementation Tips for Companies New to Due Diligence
- Start Small, Scale Fast: Pilot the fivestep process with one highrisk material or region before expanding.
- Leverage Existing Tools: Many NGOs and industry groups offer riskmapping databases and audit templates that align with the OECD guidance.
- Engage Suppliers Early: Communicate expectations clearly and provide capacitybuilding resources to help them meet standards.
- Embed in Procurement Contracts: Include clauses that require suppliers to cooperate with duediligence audits and to remediate identified issues.
- Use Technology Wisely: Digital traceability platforms can automate data collection, but they must be supplemented with ontheground verification.
- Monitor Legislative Changes: Several jurisdictions (e.g., EU Conflict Minerals Regulation, US DoddFrank Section1502) have incorporated the OECD framework into law.
- Report with Credibility: Align reporting format with the OECDs Due Diligence Report template and consider thirdparty assurance for added trust.
Further Resources
- OECD Due Diligence Guidance Full PDF (2021 update)
- Responsible Minerals Initiative (RMI)
- UN Office on Drugs and Crime Conflict Minerals Report
- EU Conflict Minerals Regulation (2021)
- U.S. SEC Modernization of the Conflict Minerals Rule (2021)
These documents provide deeper technical detail, case studies, and tools that can help your organization align with the OECD framework.
