30 05 14 As June 2nd conflict minerals deadline approaches, Global Witness warns that first reports lack substance
U.S.-listed
companies that manufacture products containing tin, tantalum, tungsten
and gold from the DRC and its neighbours have until June 2nd to
file their first Conflict Mineral reports with the Securities and
Exchange Commission (SEC) under the Dodd Frank Act’s Section 1502 (known
as the conflict minerals provision). The provision aims to break the
links between the DRC’s vast mineral wealth and the violent armed groups
that profit from the trade.
“While
some firms have made strong submissions, most reports filed to date
don’t include enough information to show that companies are doing
credible checks on their supply chains,” said Sophia Pickles, a
campaigner for Global Witness. “Companies must step up their efforts to
demonstrate that they are sourcing responsibly – or they risk being in
breach of the law.”
Companies
that source minerals from DRC or a neighbouring country must report on
the steps they have taken to check their supply chains and assess risk
– a process known as due diligence. But Global Witness is concerned
that a number of the conflict minerals reports already filed with the
SEC do not contain adequate detail.
“Done
properly, these reports should give consumers and shareholders a
crucial window onto what companies are doing to ensure they are buying
minerals responsibly,” said Pickles. “However, the failure by some
companies to disclose meaningful information suggests they have not
taken the necessary steps to find out what is really going on along
their supply chains.”
Many of the reports filed so far raise serious questions about the quality of due diligence being carried out by companies. In particular:
- some
companies have published minimal – if any – information on their
efforts to determine which countries the minerals in their products are
sourced from; - the majority of companies have not demonstrated how they assess their suppliers’ due diligence practices;
- the
majority of companies have not demonstrated the steps they have taken
to identify and mitigate the risks in their supply chain; and - only one company, Intel, has so far obtained an audit of its conflict minerals report.
As the June 2nd deadline
looms Global Witness calls on companies to step up their act. They
should submit comprehensive, clear and detailed information about their
supply chain due diligence in line with international standards set out
by the Organization for Economic Co-operation and Development (OECD) and
mandated by Section 1502. This should include an audit of the due
diligence section of the reports. Independent audits are a critical part
of the OECD framework and help ensure that reports are accurate and
credible.
“Section
1502 has already catalyzed positive changes in the way that U.S.-listed
companies approach the sourcing of metals in the DRC,” said Pickles.
“Companies that do not provide adequate detail on the systems they have
put in place to source responsibly risk breaching U.S. law. They also
lay themselves open to speculation about whether they are doing enough
to avoid contributing to conflict and abuses through their mineral
purchases.”
Global
Witness is monitoring and evaluating the substance and quality of the
reports with a view to assessing the extent of company efforts to source
minerals responsibly and is available for comment.
At the time of publishing, 39 companies had submitted filings with the SEC.
/ Ends
For more information, please contact:
Carly Oboth, Washington, DC
Sophia Pickles, London, UK
Notes
Known
as the conflict minerals provision, Section 1502 requires US-listed
companies that use conflict minerals—tantalum, tin, tungsten and gold—to
determine whether their mineral purchases inadvertently fund armed
groups in the DRC or surrounding countries. Companies must then disclose
in reports to the SEC their efforts to conduct supply chain checks – or
due diligence – that meets internationally recognized standards set by
the Organization for Economic Co-operation and Development (OECD).
The
legislation, aimed at breaking the links between the vast mineral
wealth in the DRC and violent armed groups who prey on and profit from
the region’s mineral trade, has already changed the way that many
companies view their supply chain and has catalyzed important reforms in
the Great Lakes region. For more information on the positive impacts
of Dodd Frank Section 1502, please see our most recent briefing, “Seeing the Light.”