Raw Materials for IT Products – Not Always Unproblematic

Raw Materials for IT Products – Not Always Unproblematic
21 Dez 2020

All along the supply chain, the production of IT hardware is often associated with pollution and poor working conditions, which can even include forced labour. What is more, mineral raw materials such as tantalum, tin or tungsten sometimes lead to violent conflicts and fund armed groups, as is the case in DR Congo for example. Refurbished hardware is a sustainable alternative that reduces the consumption of resources and minimises the risks involved in procuring raw materials.

Digitalisation has two faces: on the one hand it offers many advantages such as more efficient processes, better customer service, more flexible working practices or the creation of new data-based business models. On the other hand, it increases the demand for resources and raw materials for the production of a growing number IT hardware products, be it servers, PCs, notebooks, smartphones or displays. Furthermore, the production, use and disposal of the devices sometimes has a considerable negative impact on the environment and is associated with the worker exploitation.

The most important raw materials for IT devices include minerals such as tin, tantalum, tungsten, cassiterite, coltan, wolframite and their concentrates as well as gold and rare earths. The problem is that these raw materials are often extracted under dangerous conditions in countries without appropriate social or ecological standards. Many mines and smelting works are characterised by exploitation and appalling standards of health and safety; suppliers frequently fail to comply with labour and human rights and are unscrupulous in their use of forced, prison and child labour.

Conflict minerals

Tin, tantalum, tungsten and gold are considered “conflict minerals” as the income from trade in these minerals is used to fund armed conflict in the Democratic Republic of the Congo and the bordering countries. Troops and militias frequently use the profits from mines to pursue their own aims. And often they are also responsible for acts of violence and violations of human rights.

Poor working conditions where employees often earn less than the living wage and work longer than 60 hours a week can also be found in the production of IT hardware. The Chinese company Foxconn, which assembles the iPhone for Apple for example, is one particular supplier that has repeatedly hit the headlines. In Africa and Asia, huge dumps with electrical waste are a further source of concern. Here workers and children try to recover reusable materials from old equipment such as PCs, screens or smartphones. They smash displays, dip PCBs into strong acids or breathe in toxic vapours in their attempt to obtain reusable metals – without protection and under conditions that are extremely harmful to both health and the environment.

Pressure on manufacturers

All of these points have led to concerns and enormous criticism from customers, suppliers, regulatory authorities and investors and have also been the reason for significant image problems. They are demanding verification from manufacturers of IT components and devices to the effect that the minerals and metals from their supply chains have not contributed to activities that harm human beings. For example they should be conflict-free, that is to say no military organisation from a conflict or high-risk zone should earn money from them. Furthermore, manufacturers are increasingly required to comply with statutory regulations, industry guidelines or internal self-commitments when refining these minerals. Here are some examples:

  • EU Conflict Minerals Regulation: From 1 January 2021, the Conflict Minerals Regulation will enter into force in the EU. Its purpose is to stem trade in four minerals – tin, tantalum, tungsten and gold – that contribute to the funding of armed conflicts or are mined using forced labour.

  • OECD Due Diligence Guidance: The OECD has developed the “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas“. Its aim is to provide detailed recommendations to help companies respect human rights.

  • Responsible Business Alliance (RBA): The RBA is the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains. The aim of the RBA Code of Conduct is to achieve better social, economic and ecological results for all involved in the electronics and ICT supply chain.

  • Dodd-Frank Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act (in short: Dodd-Frank Act) was passed in the USA in 2010. It is the first law to contain mandatory regulations for corporations regarding their handling of conflict minerals. Section 1502 requires all companies listed on the US stock exchange to disclose the use of conflict minerals in their products and to produce an annual report covering the previous year.

  • European Partnership for Responsible Minerals: Multi-stakeholder partnership with the objective of increasing the proportion of responsibly produced minerals from conflict-affected and high-risk areas and supporting socially responsible extraction of minerals.

  • Public-Private Alliance for Responsible Minerals Trade (PPA): Multi-sector initiative that improves conflict-free supply chains in the Democratic Republic of the Congo and the Great Lakes Region of Central Africa.

  • Humanity United Foundation for working conditions: KnowTheChain is a project run by the Humanity United Foundation. Its ranking rates technology firms according to how active they are in the fight against exploitation and forced labour in their supply chain and in ensuring that their suppliers respect both labour and human rights.

Refurbished hardware as a sustainable alternative

Refurbished hardware is a sustainable alternative that reduces the consumption of resources and minimises the risks involved in procuring raw materials. Background: many companies replace their hardware after just three years. When firms discard their hardware, it is by no means the case that these devices are obsolete or no longer meet modern standards. There could be other enterprises that can still use the hardware, for example because their requirements in terms of bandwidth or computing power are not so demanding. From the ecological point of view too, it would be better to use hardware for as long as possible.

In the last few years, the demand for used or refurbished IT equipment has risen across all sectors. Green IT Solution GmbH specialises in refurbished hardware, thereby making a valuable contribution to environmental protection. The company mainly purchases network components such as servers, routers or switches and refurbishes them. This equipment has a low level of wear and tear and usually comes from customers working in dust-free, unpolluted surroundings. This means that the effort that goes into refurbishment is less than for other types of equipment. Moreover, prices for servers, routers and switches are very stable, and the residual value is still very high even after a period of five years.

You will find further information, including an outline of the advantages of refurbished hardware, in this blog article.

Stefan Winklhofer