As Demand Grows to Add Another Mineral to the List, Calls Continue to Reform Conflict Minerals Reporting Requirement. Today’s Election May Decide the Next Round for Dodd-Frank
The U.S. Securities and Exchange Commission (SEC) continues to receive comment letters from a variety of organizations and individuals about whether to refine conflict minerals reporting requirements under Section 1502 of the Dodd-Frank Act.
Yet, as business lobbying groups and others continue to state their case in SEC comment letters and ask Congress to modify or dump the conflict minerals rule, environmental and human rights organizations are going in the opposite direction and pressing regulators to add one more mineral to the conflict list. The recent push to add cobalt to the list of minerals (3TG) under compliance scrutiny will certainly be discussed this week in California as hundreds of business representatives and others gather for the annual Conflict-Free Sourcing Initiative and Electronic Industry Citizenship Coalition conferences.
One thing is certain: No changes to the conflict minerals rules under Dodd-Frank will occur for the 2016 reporting year. Publicly traded companies based in the United States must continue to conduct due diligence and file reports that show their efforts to determine whether their products contain conflict minerals. However, under a court ruling from 2014, the federal government cannot compel companies to state whether their products do, in fact, contain conflict minerals.
Letters currently being submitted to the SEC are the result of the commission asking for input on a broader set of disclosure regulations. The SEC occasionally will seek input as it prepares to review its enforcement regulations. As they have since Dodd-Frank was enacted, many business industry groups, such as the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce, are arguing that conflict minerals reporting requirements add significant costs and staff time to companies. Section 1502, these groups argue, also is difficult for companies because of the complexities and constantly changing nature of international supply chains, and because due diligence process effectively forces smaller companies not subject to the SEC rules to comply because they are suppliers to the publicly traded firms.
It remains to be seen whether the SEC will modify conflict minerals regulations, or whether the next Congress will take up changes to the Dodd-Frank Act. The fate of Dodd-Frank rests a lot with the outcomes of today’s elections and whether Democrats gain majorities in either house.
As the cost-benefit argument continues in the U.S., the global trend is toward greater transparency and regulation. Conflict minerals rules are about to be imposed in the European Union and ethical sourcing guidelines are in place in China. Regulations against modern-day slavery, which often has ties to conflict minerals, are also increasing and being enforced with greater frequency around the world.
The easiest and most cost-effective solution today for both supplier and manufacturer/retailer is a centralized data collection, verification and reporting system. Source Intelligence has helped thousands of suppliers and Fortune 500 firms with simplifying their ethical sourcing reporting procedures as well as provide iron-clad reports that meet both compliance requirements and investor/consumer demands for more transparency in their supply chains.
Efficient use of existing compliance data will be the subject of a webinar on Nov. 17th hosted by Source Intelligence: Approaching Modern Day Slavery: Using Your Existing Compliance Data To Develop a Robust Anti-Slavery Program. The webinar will feature Kilian Moote of KnowTheChain.org, a resource organization for businesses that was formed in reaction to California’s anti-slavery law (SB 657) and has since expanded to provide guidance on the U.K. Modern Day Slavery Act. KnowTheChain.org is currently benchmarking 60 global enterprises to determine how industry groups are improving efforts to protect workers’ rights. The webinar will also feature Kristen Sullivan, who leads the Americas group sustainability reporting for Deloitte and Touch. Source Intelligence’s own Chief Scientific Officer, Jennifer Kraus will also be joining the webinar to speak about the critical importance of data quality and validation. To learn more about Source Intelligence’s upcoming webinar, click here.