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Corporate Responsibility
Conflict minerals

The Drucker Difference ... How Intel Gets Social Responsibility Just Right ... Getting rid of conflict minerals

Burgess COMMENTARY

Peter Burgess

The Drucker Difference ... How Intel Gets Social Responsibility Just Right

Intel co-founder Andy Grove once noted that some of his fundamental views on running a business were based on reading Peter Drucker’s foundational work, The Practice of Management, 30 or so years after its publication in 1954.

The experience, Grove said, illustrated “how long some of the principles . . . last and retain their appropriateness, even as things change.”

Another 30 years down the road, whether they know it or not, the folks at Intel are living out what Drucker prescribed on those very same pages—especially in the book’s concluding chapter, “The Responsibilities of Management.”

Last week, at the Consumer Electronics Show in Las Vegas, Intel Chief Executive Brian Krzanich announced that Intel was the first company to reach a significant milestone: It is now manufacturing and shipping only “conflict-free” microprocessors—that is, computer chips devoid of minerals that come from those mines that pass their profits on to warlords in the Democratic Republic of the Congo and other violence-ravaged parts of Africa.

Armed groups, which reap more than $100 million a year from the mineral trade in eastern Congo, regularly slaughter innocents as they jockey to control the region’s most valuable mines and transportation routes. Meanwhile, the minerals being illegally extracted—coltan, tin, tungsten and gold—wind up in a host of name-brand electronic products.

“The minerals are important, but not as important as the lives of the people who work to get them,” Krzanich said.

At a most basic level, Intel’s initiative is a reminder that businesses do not exist in a vacuum and that many of their everyday decisions ripple far out into the world—a notion that Drucker spelled out in The Practice of Management, long before the term “social responsibility” first came into fashion.

“What is most important is that management realize that it must consider the impact of every business policy and business action upon society,” he wrote. “It has to consider whether the action is likely to promote the public good, to advance the basic beliefs of our society, to contribute to its stability, strength and harmony.”

Lest there be any question as to what he was driving at, Drucker reinforced this idea in his 1973 book Management: Tasks, Responsibilities, Practices: “One is responsible for one’s impacts whether they are intended or not,” he asserted. “The social impacts of the organization are management’s business.”

Drucker added that management has a particular responsibility “whenever its special competence gives it authority” to act.

Such was certainly the case here. Intel—and Intel alone—possesses the knowledge to manage its supply chain in a manner that promises to eliminate the company’s use of conflict minerals.

Even then, it was “a significant challenge for us,” Carolyn Duran, who helps direct Intel’s global sourcing and procurement, told NPR’s “All Things Considered.” Indeed, it took several years for the company to figure out how to trace what is mined in the Congo to a series of smelters and then verify the provenance of the various minerals through third-party audits and on-site visits. Already, she said, Intel has seen smelters “changing their behavior” because of the pressure.

Some observers have dismissed Intel’s efforts. They point out that Krzanich and his team have been motivated, at least in part, by a 2010 law that requires companies to publicly disclose whether their products contain conflict minerals.

“The new U.S. law doesn’t restrict any sort of trade,” the web magazine Engadget remarked when the measure first came out. “It does, however, allow companies that don’t use bloody rocks to label their products ‘conflict-free,’ so we’re sure astute marketing gurus are developing plenty of new all-plastic gizmos even as we speak. For the children, of course.” Another report suggested that Intel and other companies aren’t “too keen on the bad PR” that might stem from their electronics being branded full of conflict minerals.

But so what? If customers care about this issue—and I sure hope they do—then what is wrong with trying to give them what they value in this regard? What’s the problem with using “conflict free” as a marketing advantage?

“The ideal approach,” Drucker declared, “is to make the elimination of impacts into a profitable business opportunity.”

Duran leaves no doubt that Intel is, in fact, aiming to do just that. “It will be up to the public and ultimately consumers to determine and highlight those that are doing the right thing and those that are choosing to turn away,” she said.

After all, many companies have failed to respond as aggressively as Intel has. A 2012 report by the Enough Project, which is working to end the atrocities in Sudan, eastern Congo and elsewhere, ranked Intel, HP, Motorola Solutions and Apple as having made the most progress on conflict minerals. It put Nintendo, HTC, Sharp, Nikon and Canon at the bottom of the industry list.

Intel’s latest step—though neither foolproof nor a panacea—marks a “huge breakthrough,” said Sasha Lezhnev, an Enough Project senior policy analyst. “It really does help move the supply chain from being opaque and turning a blind-eye on its sourcing to being more transparent.”

If Intel attracts customers as a result, that should be a cause for celebration, not cynicism.


Rick Wartzman @DruckerInst

Rick Wartzman is the executive director of the Drucker Institute, a social enterprise at Claremont Graduate University, whose mission is strengthening organizations to strengthen society. He is the author or editor of five books and for 20 years was a reporter, editor and columnist at The Wall Street Journal and Los Angeles Times. Read more: How Intel Gets Social Responsibility Just Right | TIME.com http://business.time.com/2014/01/15/how-intel-gets-social-responsibility-just-right/#ixzz2qmMSW5jU


http://thinkprogress.org/security/2014/01/07/3126271/intel-announces-launch-conflict-free-microprocessors/ Intel Announces First ‘Conflict-Free’ Microprocessor BY HAYES BROWN ON JANUARY 7, 2014 AT 1:34 PM facebook icon 162 twitter icon 109 google plus icon email icon 'Intel Announces First ‘Conflict-Free’ Microprocessor' Share: Share on facebook Share on google_plusone_share google plus icon Share on email Intel CEO Brian Krzanich Intel CEO Brian Krzanich CREDIT: AP PHOTO/JULIE JACOBSON Tech giant Intel on Monday announced that its entire 2014 line of microprocessors would be free from so-called “conflict minerals,” making them the first in the rare mineral-heavy industry to completely phase out their use in one of their products. Intel CEO Brian Krzanich was speaking at the annual Consumer Electronics Show in Las Vegas on the company’s strategy and new products to be released over the coming year when he revealed the culmination of their efforts. The tantalum, tungsten, tin, and gold that Intel purchases — all of which play heavily into the manufacturing of microprocessors and other electronics — will all be guaranteed to not have come from mines that pass their profits on to armed groups in the Democratic Republic of the Congo and other mineral-rich areas of Africa. “The minerals are important, but not as important as the lives of the people who work to get them,” Krzanich said. Enough Project senior researcher Sasha Lezhnev told ThinkProgress that Intel’s step was a “huge breakthrough to defund the warlords” that operate in the Congo. “It really does help move the supply chain from being opaque and turning a blind-eye on its sourcing to being more transparent.” The 2010 financial sector reform bill known as Dodd-Frank and its provisions related to conflict minerals has spurred many of the changes seen in the tech sector related to how it sources its raw materials. Since its passage, Intel and other electronics industry manufacturers have been working to come into compliance, both to adhere to the law and for the boost in popularity that will surely come with being able to market their products as “conflict-free.” Lezhnev said consumers would begin demanding such products, calling it the “wave of the future,” and noting that he’d already received questions about when the first conflict-free iPhone would be available. “Now that Intel has made the first conflict-free product,” he continued, “it’s important for Apple, Boeing, Tiffany, to make their own conflict-free products.” Last year, Intel adopted its first “Conflict Minerals Policy” in which it declared that “[a]s part of Intel’s commitment to corporate responsibility and respecting human rights in our own operations and in our global supply chain, it is Intel’s goal to seek to use tantalum, tin, tungsten and gold in our products that are ‘DRC conflict free’ while continuing to support responsible in-region mineral sourcing from the DRC and adjoining countries.” Krzanich was originally determined to end all purchases of materials in the DR Congo, according to Fast Company, but quickly realized that doing so would negatively impact local miners and opted instead to focus on the smelters of the raw ore into usable metals. As part of that effort, Apple and Intel announced in 2011 that they were joining the Electronic Industry Citizenship Coalition and its Conflict-Free Smelter program, which “requires mineral processing plants either prove that they don’t fund the ongoing hostilities in central Africa or peddle their war-supporting wares elsewhere.” “It took years, but Intel finally hunted down all of the smelters used to produce all the minerals in its microprocessors,” Fast Company reported. “Now they’re all conflict-free, too. Most have been validated by third-party audits.” The precise role of conflict minerals — the spiritual successor of West Africa’s “conflict diamonds” in the advocacy space — and the effectiveness of Dodd-Frank in preventing violence in the Congo is still debated. Some critics maintain that the 2010 law’s unintended consequences make it more difficult for Congolese to make a living, effectively acting as an embargo in its early days before companies began putting in the legwork needed to responsibly source minerals from the Congo. The Enough Project, which lead the charge for Intel and other tech companies cutting conflict minerals out of their supply chain and releases rankings of said companies’ efforts, maintains that cutting off a financial resource for the armed groups that terrorize the region is an important step towards lasting peace. So while a good first step, making electronics conflict-free isn’t a silver bullet, as Lezhnev told Fast Company. “It’s also making sure the rest of the causes of the conflict are addressed, and sending messages to the U.S government, the UN, and other governments in the region that they need to get this peace process organized,” he said. Tags: AfricaConflict MineralsCongo
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