Why radical transparency is a company’s only hope for future success
This is the 10th except from my book Trust Inc. – a timely exploration of the ways business can demonstrate purpose and sustainability with authenticity to win the respect of society.
Today’s excerpt explores how companies such as Intel are embracing radical transparency in their sourcing and supply chains to win trust.
Despite all the evidence demonstrating the evolving and heightened sustainability expectations of consumers many companies still find it hard to be transparent in their business practices – often due to a combination of factors including an insular corporate culture, convoluted and overly complex working practices and contractor relationship, an overly defensive legal strategy and a communication framework aimed at protecting reputation at the expense of building relationships. It’s no wonder then that brands tend to embrace greater transparency only after coming under attack by consumers, the media, regulators and activists – often feeding off each other.
However, sometimes there are exceptions. And Intel is one good example of a company prepared to get out in front of a sustainability issue and take a leadership role to win trust.
It was in 2014 at Las Vegas’ Consumer Electronics Show, the annual over-the-top celebration of all things consumer tech-related, that Intel’s CEO Brian Krzanich delivered a keynote address with a difference. Having unveiled new “smart earbuds", 3D printing devices and better processing power for wearable computing, Krzanich told the attendees: “Okay. I'm going to switch gears for a minute now. … This is not an issue we would normally talk about at CES, but it is an issue that is very important and personal to me. That issue is conflict minerals."
The most prominent of these minerals - Gold, Tantalum, Tungsten and Tin - are vital components in the computers and smartphones we depend on every day. The reason they’re known as “conflict minerals” is because one of the main countries whey they are mined is the Democratic Republic (DR) of Congo, which, for the past 20 years, has been ravaged by the world’s worst conflict since the Second World War. During that time the sale of conflict minerals has directly financed the operations of some of the militias and rogue armies that are responsible for an estimated 5.4 million people.
At the time of Krzanich’s speech few consumers were aware the problem existed. In the US for example, only 35% of those aged 18 to 35 were aware of conflict minerals, according to a survey commissioned by Intel as part of a strategy raise awareness campaign to accompany cleaning up its own supply chain. Once they understood the importance of the topic consumers wanted companies to take action, the data showed.
Under the banner of Conflict Free, Intel committed to ensure that, from that point on, the materials that go into its products would be sourced responsibly. The company established a consortium of independent, third-party nonprofits to work with the local government to audit mines. Once a mine earned a positive rating, its ore would be placed in labelled bags that could be tracked to smelters. Intel also donated $250,000 to a fund to help smelters who want to meet the tech giant’s ethical guidelines but couldn’t afford to retrace their supply chains.
In addition, Intel became a member of the Conflict-Free Sourcing Initiative, the Global e-Sustainability Initiative and the Public Private Alliance for Responsible Minerals Trade, two industry-based and one cross-sector organisations that promote and help ensure sustainable and conflict-free supply chains.
By 2016, two years after Intel eliminated conflict minerals from all its microprocessors, every Intel product was using minerals from audited mines only. Intel’s products featured a “Conflict-Free” product mark to ensure the content of the product were responsibly sourced - enabling more informed consumer decisions.
Unlike some of the major corporate transparency commitments of recent years, Intel wasn’t pushed into change by a social media agitating though NGOs had been lobbying tech companies for decades about ethical sourcing standards. The drive for change came from inside the company having been jumpstarted a few years before the 2014 announcement when Krzanich, who previously was in charge of global manufacturing, received a letter from the Enough Project NGO that specialised in the Congo conflict. External regulations also put pressure on the industry. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act required all publicly traded companies to account for conflict minerals.
That prompted a long process of working with (and sometimes putting pressure on) suppliers to improve transparency and ensure conflict minerals didn’t enter the supply chain. Yet Intel also understood how a consumer backlash around conflict minerals could damage its reputation. Faced with a ticking reputation time bomb, Intel knew it had to lead, not hide. To raise awareness, Intel created a dedicated website and documentary campaign showing the human and environmental suffering caused by conflict minerals. It also created a social media influencer campaign to inspire and educate consumers who might not automatically search out information on a corporate site. (See sidebar Q&A with Intel’s Teresa Herd).
The Millennial generation “is looking to us to do the right thing," wrote Carolyn Duran, Intel’s supply chain director and conflict minerals program manager, in a blog post. "In fact, after being educated about the issue of conflict minerals, more than half of Millennials said they believe technology companies are responsible for taking action on the issue of conflict minerals — more than mineral suppliers, governments, consumers or NGOs. The question isn’t will Millennials care about this topic, but when."
Read the whole chapter in Trust Inc., published by Routledge, and available here.
Trust Inc. also forms the foundation for the Sustainly Academy ESG and Trust in Marketing workshops. Contact me via LinkedIn if you’d like to learn more about the workshops or my writing work.