SEC Rules on Conflict Minerals: Now What?

Authors

• Marshall Chase

  Former Associate Director, BSR

Marshall Chase, Manager, Advisory Services, BSR

The release of the SEC’s final rules on conflict minerals reporting last Wednesday marks a milestone for companies, NGOs, investors, and others who have been working on this issue for years—in many cases (including BSR’s) well before the conflict minerals reporting provision of Dodd-Frank was written into law in mid-2010.

In our initial review of the rules and conversations with BSR members and stakeholders, we are finding that the rules clarify a few key issues. These include the initial reporting period—
due on May 31, 2014 for calendar year 2013—and a phase-in period for material whose origin can’t be determined (a new product category of “DRC conflict undeterminable” will be available for two years, or four years for smaller reporting companies).

More importantly, the rules don’t fundamentally change the course of action for companies that have already started working on conflict minerals. For these leading companies, addressing conflict minerals is an issue of corporate responsibility and supply chain transparency as much as a legal disclosure issue, and they will continue to implement the supply chain engagement and reporting programs they have already initiated.

The key lessons we highlighted in a BSR review on conflict minerals and in our blog series earlier this year still hold true:

• Companies need to find ways to conduct due diligence and proactively source conflict-free material from Central Africa (and several are already doing so).
• Conflict is just one of several concerns about supply chains, both in the DRC and globally.
• There are growing customer, NGO and government expectations that companies will be held accountable for activities in their supply chains.

For companies that will have to report but have been waiting on final rules, work needs to start now to understand and address this issue. A lot of groundwork has been laid, and there are lessons to be learned from leaders in the electronics, automotive, manufacturing, and other sectors. Some of these are described in the summary reports from the OECD downstream Due Diligence Pilot that BSR is managing.

BSR will provide more information through a member webinar on Wednesday, September 5 featuring General Electric, Global Witness, and the UN Group of Experts on the DRC. In addition, we will continue to work with companies, NGOs, and others on this issue and to share the lessons learned.

Join us for a Twitter BSRchat with our conflict minerals staff on Friday, September 7 at 12pm PST / 3pm EST. You can follow along using the hashtag #BSRchat, and tweet any questions about the topic to @BSRnews and #BSRchat.