Tracing the source: Engagement with ASML on its approach to conflict minerals
As part of our ongoing efforts to improve performance across key environmental, social, transparency and governance (E.S.T.) metrics, we recently engaged with ASML - held in our World Equity Fund.
ASML manufacture machines used to produce semiconductors, so we met with them to discuss its conflict minerals due diligence programme.
Turbulence in the mineral-rich region of Central Africa has increasingly gained the attention of governments, activists, and the media. This is due to growing awareness of the human rights and environmental risks associated with mineral extraction in the region. Minerals sourced from this area- such as tin, tungsten, tantalum, and gold (collectively known as ‘3TG’), as well as copper and cobalt- are essential components in thousands of everyday products.
In certain regions, particularly the Democratic Republic of Congo (DRC), the extraction of these minerals can be linked to armed conflict, human rights abuses, and political instability. These are referred to as conflict minerals.
However, in certain regions, particularly the Democratic Republic of Congo (DRC), the extraction of these minerals can be linked to armed conflict, human rights abuses, and political instability. These are referred to as conflict minerals. Armed groups often fund their activities through the sale of these resources, making mineral sourcing not only an ethical issue but also a legislative one. Regulations, in the US for example, now require companies to trace and disclose the origins of the minerals they use.
Not all minerals from the DRC and surrounding areas are conflict-linked, but due to the challenges in tracing supply chains, many companies are advised to proceed with caution when sourcing from the region.
This quarter, we engaged with ASML, a leading supplier of advanced semiconductor equipment, to better understand how the company manages the risks associated with conflict minerals.
Awareness and best practices around conflict minerals are much newer than other human rights topics.
Awareness and best practices around conflict minerals are much newer than other human rights topics. While issues such as modern slavery, child labour, and fair wages have long been recognised and addressed through international frameworks and corporate policies, conflict minerals have only more recently gained attention. As a result, many companies are still in the early stages of implementing effective due diligence. We recognise that ASML is operating in a challenging space and welcome its commitment to improving oversight and transparency in this emerging area.
ASML has established a dedicated Conflict Minerals Team, comprising experts from sourcing, legal, sustainability, and engineering. Oversight is provided through monthly ESG Progress Review Meetings, which include senior leadership such as the CEO and CFO. We welcome ASML’s structured governance approach. Embedding conflict minerals into senior-level discussions ensures accountability and signals that the company takes the issue seriously.
Conflict minerals are embedded within ASML’s Human Rights Policy, rather than addressed through a standalone policy. The company believes this integrated approach helps streamline strategy and focus efforts. While a standalone policy can offer clarity, we understand ASML’s rationale for integration. Embedding conflict minerals into broader human rights and procurement frameworks can help ensure consistency and drive progress across multiple issues.
Embedding conflict minerals expectations into contractual agreements would strengthen accountability and help ensure suppliers take the issue seriously.
We learnt that while ASML does not currently include conflict minerals clauses in its supplier contracts, the company is open to exploring this approach—something we would support. Embedding conflict minerals expectations into contractual agreements would strengthen accountability and help ensure suppliers take the issue seriously.
ASML is a member of the Responsible Minerals Initiative (RMI) and uses the Conflict Minerals Reporting Template (CMRT) to collect data from suppliers. The CMRT is a standardised reporting tool developed by the RMI. It enables companies to disclose information about the sourcing of minerals, helping to identify whether these originate from conflict-affected or high-risk areas. ASML aims to source exclusively from smelters that are conformant with the Responsible Minerals Assurance Process (RMAP), also run by the RMI. RMAP provides independent third-party audits of smelters and refiners to assess their sourcing practices.
Historically, the company relied on supplier declarations stating they were “conflict-free,” but recognising the limitations of this approach, it has now adopted a more rigorous, risk-based engagement model. ASML’s current focus is on improving supplier response rates to obtain higher-quality data from its supply chain. This data is essential for understanding the origin of the minerals used in its products and assessing supplier and smelter risks.
We’re encouraged by ASML’s shift away from simplistic declarations toward a more nuanced approach. This reflects a deeper understanding of the complexities involved and a commitment to continuous improvement. Supplier training is particularly important in building long-term capacity and awareness.
In 2024, 84 suppliers failed to submit valid CMRTs. ASML continues to engage with these suppliers and is developing internal KPIs to track response rates and progress. ASML publishes an annual Conflict Minerals Report and is open to including more detailed trend data in future disclosures. We support ASML’s commitment to transparency and its willingness to improve disclosures over time. Tracking supplier response rates and smelter data is a positive step, and we’ve encouraged the company to set measurable targets and timelines to strengthen its accountability.
Outcome: As investors, we believe companies must go beyond compliance and take proactive steps to ensure their supply chains uphold human rights and environmental standards. ASML’s progress reflects a growing awareness of these issues, and we will continue to engage constructively to support further improvements. We also took the opportunity to ask ASML for any advice that it would give to smaller organisations that are less advanced in this area. We are planning to engage with other companies in our fund range on this issue and will be able to pass on this advice where necessary.
Written by Ffion Spencer
Information is accurate as at 05.11.2025. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.