Tesla Tightly Controls its Supply Chain, Reveals 2022 Conflict Minerals Report

Tesla has tight control over its supply chain, reveals its Conflict Minerals Report for 2022. The company is committed to sourcing only responsibly produced products and is devoting a lot of effort towards this goal.

Tesla is committed to sourcing only responsibly produced materials

This means having safe and humane working conditions in its supply chain and ensuring workers are treated with respect and dignity. In addition to the Tesla Supplier Code of Conduct, Global Human Rights and Responsible Sourcing policies outline its expectations for all suppliers and partners with whom the company work, as well as Tesla’s commitment to respect human rights and responsible sourcing. The company strictly follows all U.S. as well as foreign legal requirements, and requires its supply base to do the same.

Tesla’s contractual agreements with suppliers reinforce these requirements and establish expectations of adherence to Tesla’s Code and Policies. The company’s suppliers are obligated to provide it evidence that their operations address these social, environmental and sustainability issues, and that their sourcing is done in a responsible manner.

Tesla’s responsible supply chain

All of Tesla’s supply chain partners are subject to Tesla’s Code. The company, along with its partners and independent third parties, conducts audits to observe these principles in action. If there is a reasonable basis to believe a supplier is in violation of the Code, Tesla will transition away from that relationship unless the violation is remediated in a satisfactory manner.

In addition to the Code, Tesla’s Global Human Rights Policy formalizes its commitment to uphold, respect, and embed human rights and the values they represent throughout the company’s business as it accelerates the world’s transition to sustainable energy.

Tesla’s Responsible Sourcing Policy helps ensure that all companies or individuals involved in the supply chain producing goods and services for the company, whether directly and indirectly, conduct their worldwide operations in a responsible manner, consistent with Tesla’s mission. Tesla’s suppliers are required to use reasonable efforts to ensure that the products they supply to Tesla do not contribute to armed conflict, human rights abuses or environmental degradation, regardless of sourcing location. For all materials used in Tesla products, Tesla requires its suppliers to establish policies, due diligence frameworks, and management systems consistent with the OECD Due Diligence Guidance for Responsible Business Conduct and with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

The 2022 report details Tesla’s due diligence efforts to understand the origin of the conflict minerals used in its products and the company’s efforts to eliminate from its value chain any benefits its sourcing of these materials may give to armed groups in the Democratic Republic of the Congo and its adjoining countries (“DRC region”) or other conflict-affected and high-risk areas (“CAHRAs”). The SEC currently defines “conflict minerals,” also known as “3TG,” as:
▪ columbite-tantalite (tantalum);
▪ cassiterite (tin);
▪ gold; and
▪ wolframite (tungsten).

Continuous Improvement

Tesla is working to continuously improve its responsible sourcing efforts. The company’s goal is that wherever Tesla’s supply chain has an impact, local conditions for stakeholders continuously improve as a result of its purchasing decisions and relationships. The company strives to source all of its 3TG through conformant SoRs and support upstream positive impact. Tesla works to stay up to date on current and emerging risks and regularly updates its policies, standards, and management systems to meet challenges and address existing and emerging issues more effectively. In order to further strengthen its efforts, the company:
▪ Continues to participate in cross-industry groups such as the RMI;
▪ Continues to work with in-scope suppliers to improve response rates to its requests, improve the quality (including accuracy) of their responses, and encourage their sourcing from conformant SoRs that meet Tesla expectations;
▪ Continues to contractually require participation from its suppliers in its due diligence process;
▪ Encourages suppliers to conduct responsible sourcing from the DRC region by using conformant SoRs, and discourage the creation of a de facto embargo on sourcing from the DRC region;
▪ Through participation in RMI’s workgroups, encourages SoRs to participate in RMAP protocol and thus enable responsible sourcing from the DRC region or other CAHRAs;
▪ Enhances efforts to understand on-the-ground opportunities for impact, including through engagements with upstream parties, non-governmental organizations and other stakeholders;
▪ Enhances efforts to implement on-the-ground opportunities for impact, in consultation with local stakeholders; and
▪ Explores opportunities to further Tesla’s mission to accelerate the world’s transition to sustainable energy as it relates to the responsible sourcing of minerals.