The assessment focuses on issues related to the trading activities of each company, providing an overview of the basic measures that the companies are taking to: (1) manage their supply chain risks related to human rights abuses, illicit financial flows and environmental damage; and (2) publicly share data on their corporate governance, trading activities and other public interest issues.

The assessment results offer companies a ‘gap analysis’ of their current performance, indicating where improvement is most needed. More broadly, the assessment supports industry-wide learning by providing a framework that can be used by all companies in the extractive commodity trading sector and by other stakeholders (e.g., banks, investors, industry associations, etc.) to develop their own approaches on these key issues.

Companies and other stakeholders can use the results, recommendations and learning resources in this report to improve their due diligence and public reporting. For example, the interactive library of over 1,500 documents (sourced largely from the assessed companies) includes useful models of tools such as supplier expectations, risk assessment questionnaires and public reporting frameworks.

The full assessment framework of indicators and metrics is included in the report (See Annex 3).

[1] Most due diligence systems fall far short of robust risk management

Most companies’ due diligence systems are very limited, covering little more than the initial step of setting expectations for their suppliers. Few systems extend to the critical stages of assessing supplier compliance, engaging with suppliers, and taking action to address any non-compliance. This is the case for due diligence systems on all three risk areas studied: human rights abuses, illicit financial flows, and environmental damage, with evidence particularly weak on assessment and mitigation of environmental risks. Without these elements the due diligence systems will never contribute to the prevention of these significant supply chain issues.

→ Recommendation: Companies can learn from the few examples of comprehensive due diligence systems demonstrated by some of their peers.

[2] Little effort to improve effectiveness of due diligence systems

Very few companies can show they are checking how well their due diligence measures are working. For example, about two-thirds of the companies show no evidence of tracking and reporting their performance on managing human rights risks in their supply chain. A similar proportion of companies show no evidence of tracking and reporting their performance on preventing illicit financial flows. Given the harmful practices that continue to come to light, particularly on illicit financial flows, the onus is on companies to demonstrate they are reviewing their performance on responsible sourcing and seeking ways to strengthen it.

→ Recommendation: Companies can enhance their continuous improvement efforts by increasing their focus on the last two critical steps of the ‘plan-do-check-act’ management cycle.

[3] Some companies are debunking the myth that public disclosure harms competitiveness

Very few companies are publicly disclosing information of strong public interest such as their annual turnover, the taxes they pay, or their purchases from governments or state-owned enterprises. One of the reasons cited by companies for non-disclosure is that financial data of this kind is highly confidential, and public disclosure could harm their competitiveness. Yet on each of these issues a few companies (private as well as publicly listed) show strong and voluntary disclosure. These good practices demonstrate that transparency on these issues can be considered compatible with competitiveness.

→ Recommendation: Companies can follow the examples of their more transparent peers to share public interest data without compromising their competitiveness.

[4] Anti-bribery and corruption systems rarely supported by practical measures

While most companies have anti-bribery and corruption (ABC) systems, including a compliance function and whistleblowing mechanism, there is less evidence of companies ensuring that their employees routinely fulfil their ABC responsibilities. Few companies show detailed evidence of conducting regular training on ABC for their workforce. And there is no evidence that ABC performance is included in any ESG executive compensation criteria. These kinds of practical measures are critical as ABC risks are by no means hypothetical. Several assessed companies have been subject to recent investigations or legal action relating to bribery and corruption.

→ Recommendation: Companies can improve their prevention of bribery and corruption by strengthening awareness and accountability at all levels of their workforce.

[5] Weak progress overall, some individual improvements

There is no sign of a marked shift towards responsible and transparent practices. The overall average performance has increased only minimally, from 33% to 34% in the last two years. Nonetheless, the majority of companies show progress on at least one issue. Improvements include, for example, new policy commitments, new management standards, and more public sharing of public interest data. Currently a few companies show significantly stronger results among those assessed, and it is encouraging to see that some companies are starting to catch up with their better-performing peers.

→ Recommendation: Companies can use the results of this assessment to improve their due diligence practices and strengthen their public disclosure.