Five-Step Framework for Risk-Based Due Diligence in the Mineral Supply Chain

While specific due diligence requirements and processes will differ depending on the mineral and the position of the Company in the supply chain, China Mobile should review their choice of suppliers and sourcing decisions and integrate into their management systems the following five-step framework for risk-based due diligence for responsible supply chains of minerals from conflict-affected and high-risk areas:

1. Establish strong company management systems. China Mobile should:
   

   A)	Adopt, and clearly communicate to suppliers and the public, a company policy for the supply chain of minerals originating from conflict-affected and high-risk areas.
   B)	Structure internal management to support supply chain due diligence.
   C)	Establish a system of controls and transparency over the mineral supply chain. This includes a chain of custody or a traceability system or the identification of upstream actors in the supply chain. This may be implemented through participation in industry-driven programs.
   D)	Strengthen the Company engagement with suppliers. A supply chain policy should be incorporated into contracts and/or agreements with suppliers. Where possible, assist suppliers in building capacities with a view to improving due diligence performance.
   E)	Establish a company-level, or industry-wide, grievance mechanism as an early-warning risk-awareness system.

2. Identify and assess risk in the supply chain. China Mobile should:
   

   A)	Identify risks in their supply chain.
   B)	Assess risks of adverse impacts in light of the standards of their supply chain policy and the due diligence recommendations.

3. Design and implement a strategy to respond to identified risks. China Mobile should:
   

   A)	Report findings of the supply chain risk assessment to the designated senior management of the Company.
   B)	Devise and adopt a risk management plan. Devise a strategy for risk management by either i) continuing trade throughout the course of measurable risk mitigation efforts; ii) temporarily suspending trade while pursuing ongoing measurable risk mitigation; or iii) disengaging with a supplier after failed attempts at mitigation or where a company deems risk mitigation not feasible or unacceptable.
   C)	Implement the risk management plan, monitor and track performance of risk mitigation efforts and report back to designated senior management.
   D)	Undertake additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances.

4. Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain. China Mobile should have their due diligence practices audited by independent third parties. Such audits may be verified by an independent institutionalised mechanism.
5. Report on supply chain due diligence. China Mobile should publicly report on their supply chain due diligence policies and practices and may do so by expanding the scope of their sustainability, corporate social responsibility or annual reports to cover additional information on mineral supply chain due diligence.