Update On Conflict Minerals Reporting Shows Wasted Time and Effort

For a number of years, NAED and it Government Affairs department has worked to overturn a section of the Dodd-Frank Act that requires distributors to list where the tin, tungsten, tantalum and gold in their products came from.  The Act specifically wants to make sure those materials do not come from the Democratic Republic of the Congo, where severe human rights abuses continue.

Palmer Schoening, Chairman of the Family Business Coalition, passed along an update on conflict minerals reporting to tED magazine.  Among the findings from from the Government Accountability Office (GAO) report to Congress on the progress since the Act began in 2010 is the fact most of the conflict minerals reports could not determine where the minerals came from, and that all of the reports could not determine if the products benefitted armed groups in the Congo. Schoening’s report also comes one day after tED magazine provided the Exclusive Feature, “Dirty Work,” an inside look at what it takes for a distributor to comply with the Dodd-Frank Act.

“SEC Conflict Minerals Rule: 2017 Review of Company Disclosures.”
Yesterday’s 11-page Government Accountability Office report to Congress stated:
The exploitation of the mining and trade of “conflict minerals”—in particular, tin, tungsten, tantalum, and gold from the eastern region of the Democratic Republic of the Congo (DRC)— has contributed to the displacement of people and severe human rights abuses. Section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which addresses the exploitation of conflict minerals, required several U.S. agencies, including the Securities and Exchange Commission (SEC), to take certain actions to implement its conflict minerals provisions. The Dodd-Frank Act required SEC, in consultation with the Department of State (State), to promulgate disclosure and reporting regulations regarding the use of conflict minerals from the DRC and adjoining countries (which this report refers to as “covered countries”). SEC adopted a conflict minerals disclosure rule in August 2012 and published the adopting release in the Federal Register in September 2012. In addition, the Dodd-Frank Act included a provision for GAO to report, beginning in 2012 and annually thereafter, on the effectiveness of the SEC rule in promoting peace and security in the DRC and adjoining countries, among other things.

As in prior years, many companies reported encountering challenges in determining the country of origin of conflict minerals, due in part to complex supply chains involving many suppliers and processing facilities.

After conducting due diligence, an estimated 55 percent of the companies in 2016 reported that they could not definitively confirm the source of the conflict minerals in their products, compared with 67 percent in 2015. Moreover, an estimated 39 percent of the companies reported in 2016 that they were able to determine that their conflict minerals came from covered countries or from scrap or recycled sources, compared with 23 percent in 2015. Almost all of the companies that reported conducting due diligence in 2016 reported that they could not determine whether the conflict minerals financed or benefited armed groups, as in 2015 and 2014.


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