The first set of company reports submitted under a landmark U.S. law that aims to stop the minerals trade fuelling violence in eastern Democratic Republic of Congo (DRC) fall short of the mark, warns Global Witness.
Today marks the first deadline for U.S.-listed companies using minerals from the DRC and its neighbouring countries to submit Conflict Mineral reports to the Securities and Exchange Commission (SEC). Companies manufacturing products containing tin, tantalum, tungsten and gold are reporting today under Section 1502 of the Dodd Frank Act. Known as the ‘conflict minerals provision’, Section 1502 aims to break the links between the DRC’s vast mineral wealth and violent armed groups that profit from the trade.
“Some firms have made strong submissions containing detailed information about the steps they have taken to source minerals responsibly – and demonstrating that oversight of supply chains is possible,” said Sophia Pickles, a campaigner for Global Witness. “Sadly, these companies are in the minority. The lack of information in most of the submissions we have seen suggests companies have not taken the necessary steps to find out what is really going on along their supply chains – so we can’t tell if they are sourcing responsibly or not.”
Under the provision, companies that source minerals from DRC or a neighboring 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 warns many of the inaugural reports are disappointing and 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;
- Many companies have not explained how they assess their suppliers’ due diligence practices;
- Many companies have not shown the steps they have taken to identify and mitigate the risks in their supply chain; and
- As of Friday, only one company, Intel, had obtained an audit of its conflict minerals report.
Global Witness calls on companies to provide 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 companies have carried out. Independent audits are a critical part of risk-based due diligence and will help ensure that the reports submitted to the U.S. regulator are accurate and credible.
“Companies have had since 2010 – when U.S. Congress passed Section 1502 – to do the work and figure out where the metals that they use come from,” said Pickles. “The companies that have stepped up to the mark have helped to catalyze positive changes along mineral supply chains, including in DRC. A question mark now hangs over those companies that have failed to clearly explain what they are doing to avoid funding conflict or human rights abuses.”
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. At the time of publishing, more than 620 companies had submitted filings with the SEC.
For more information, please contact:
Carly Oboth, Washington, DC
Sophia Pickles, London, UK
+44 207 492 5893
Known as the conflict minerals provision, Section 1502 requires U.S. 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 US Securities and Exchange Commission 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 due diligence laws, please see our most recent briefing, “Seeing the Light.”