Many people are aware of the difficulties faced by the jewelry business when it comes to conflict resources, especially after the 2006 film Blood Diamond, which starred Leonardo DiCaprio.

But few people realize that the problem extends beyond precious gems and metals and into the manufacturing industry, and according to a recent report by Brendan Sinclair at GamesIndustry.biz, conflict minerals are a serious problem for game hardware makers.

Conflict resources are goods that are sold by military or insurgency groups to fund combat. The most prominent example today occurs in the Democratic Republic of the Congo in Central Africa, where civilians including children are forced by armed men to mine minerals like gold, tungsten, and cobalt, which are then sold to foreign businesses.

Many countries, including the United States, have laws and regulations in place to prevent companies from using conflict resources, but according to GamesIndustry’s report, many companies have insufficient knowledge of their supply chains and where all of their materials are sourced.

Sinclair wrote:

Yesterday, I covered Activision’s latest SEC filing on its sourcing of conflict minerals. The good news was that Activision has no reason to believe Skylanders or the other merchandise it sells are funding the violent conflict in DR Congo. The bad news is that it couldn’t say the same thing last year. And as I discovered upon looking at filings from other big companies in the games industry, the worse news is that Activision’s position–based on surveys completed by its supply partners and unspecified “independent research”–is about as good as it gets.

According to Sinclair, the biggest problems lie with exceptionally large companies like Microsoft Corp and The Walt Disney Company, both of whom have innumerable products that are manufactured and shipped all over the world. The logistics of ensuring no conflict resources are used is immense for these companies, and Microsoft alone reported that only 83 of its 276 suppliers are compliant with Conflict Free Sourcing Initiative standards.

In a filing with the SEC, Disney revealed that it sent compliance surveys to 1,365 suppliers and only 40 percent responded. That means the compliance of a full 60 percent of Disney’s suppliers is totally unknown.

While it may be virtually impossible to ensure that no conflict resources are used by large multi-national corporations, Sinclair’s report shows that there is plenty of room for improvement when it comes to oversight.

You can read the full report here.

Photo by wbaiv