OECD Due Diligence Guidance — Cobalt Supply Chains

The OECD Due Diligence Guidance for Responsible Mineral Supply Chains from Conflict-Affected and High-Risk Areas (4th Edition, 2016) is the global standard for responsible mineral sourcing. It is referenced by the EU Battery Regulation, the EU Conflict Minerals Regulation, the US Dodd-Frank Act, and most major corporate cobalt policies.

The Five-Step Framework

The OECD guidance establishes a five-step framework that companies throughout the cobalt supply chain must implement:

Step 1: Establish Strong Company Management Systems

Companies must adopt a supply chain policy for minerals from conflict-affected and high-risk areas (CAHRAs), structure internal management to support supply chain due diligence, establish a system of controls and transparency over the supply chain, strengthen engagement with suppliers, and establish a company-level grievance mechanism.

Step 2: Identify and Assess Risks in the Supply Chain

Map the supply chain to identify smelters and refiners. Assess the risks of adverse impacts in the supply chain against the Annex II model supply chain policy. This includes identifying whether cobalt originates from conflict-affected areas, is associated with serious human rights abuses, or involves illegal taxation by armed groups.

Step 3: Design and Implement a Strategy to Respond to Identified Risks

Report findings to senior management. Devise a risk management plan and implement the plan, monitoring performance over time. For smelters and refiners, this may involve engaging suppliers to improve practices, suspending or discontinuing engagement with suppliers where risks cannot be mitigated, and supporting industry-wide initiatives.

Step 4: Carry Out Independent Third-Party Audit of Supply Chain Due Diligence

Commission independent third-party audits of smelters and refiners. The OECD-aligned audit programs include the Responsible Minerals Initiative (RMI) Cobalt Refiner Assessment Program (CoRAP) and the Responsible Cobalt Initiative (RCI) audit framework.

Step 5: Report on Supply Chain Due Diligence

Publish an annual report on supply chain due diligence policies and practices. The report must be publicly available and cover the due diligence measures taken, risks identified, and actions taken to address those risks.

Annex II Red Flags for Cobalt