obama dod frank

Briefing / Feb. 1, 2016

The Dodd Frank Act

Global Witness has long worked to expose the links between the decades-long conflict in Congo and the international minerals trade. Section 1502 of the Dodd Frank Act represents a major effort to break the links and ensure companies are sourcing their raw materials responsibly.

The trade in natural resources finances conflict and human rights abuses all over the world. Global Witness has exposed links between abuses and fighting and the international trade in minerals and precious stones in Myanmar, Afghanistan,  the Democratic Republic of Congo and elsewhere.

Eastern Congo has endured a violent conflict and instability for twenty years. Millions have died unnecessarily. Millions more have been forced to flee their homes.

This is a complex conflict underpinned by a web of long-standing political tensions, ethnic grievances and disputes over land. But it is also fuelled and funded, in part, by mineral resources.  Breaking the link between armed groups and the minerals they profit from may not end these conflicts by itself, but it will deprive some groups of the revenues they need to keep fighting and the economic incentive to keep doing so.

The companies that use and trade Congo’s minerals therefore have a critical role to play. They make up the supply chains that carry these resources to international markets. With this comes a responsibility to make sure profits reach the rightful owners of these valuable resources—the Congolese people—rather than the armed groups that prey on them.

As one of the first organisations to document the links between the international mineral trade and armed groups in Congo, Global Witness advocates for solutions to hold these companies accountable.

In 2010, a landmark law was passed by US Congress. It requires companies whose products contain tin, tantalum, tungsten or gold to conduct supply chain checks, known as due diligence, on minerals that may originate from the Democratic Republic of Congo or its nine neighbouring countries. Simply put, companies are asked to do their bit to make sure profits end up where they should, while building transparent supply chains that allow others to do the same.

Section 1502 of the US Dodd Frank Wall Street Reform and Consumer Protection Act, better known as the ‘conflict minerals provision,’ is a groundbreaking piece of legislation aimed at disrupting the finances flowing to armed groups in eastern parts of Congo from the trade in precious minerals. US-listed companies covered by the law must report annually to the US Securities and Exchange Commission (SEC) on their efforts to ensure the minerals in their products are sourced responsibly.

These landmark efforts have been followed by responsible sourcing laws in the EU and African Great Lakes region, as well as voluntary guidance for Chinese companies.

Corporate fightback against the transparency rules

Section 1502 is one of the most prominent laws requiring U.S. businesses to manage their supply chains responsibly and transparently. It has not gone unchallenged. 

In October 2012, the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM) and the Business Roundtable – three of America’s largest industry associations and vocal opponents of this groundbreaking law – mounted a legal challenge against the SEC aiming to repeal the law and maintain business as usual. For the ensuing three years Global Witness, alongside a broad coalition of civil society organisations, fought to ensure that many  key provisions of the law were upheld.

Do U.S. corporations have a constitutional right to conceal information about conflict minerals? 

Status of implementation

In 2015, Global Witness and Amnesty International analysed the first set of submissions by companies reporting under Section 1502. Of the companies surveyed, 79 percent were not yet meeting the minimum requirements of the law. While some companies have made significant strides since then, many companies still have much more work to do.

See why we think it’s a good thing for companies to avoid describing their products as conflict free here.

There is a long way to go to make sure the benefits of progress are shared by all, including those braving the often harsh realities of life at the bottom of many global supply chains.

Companies must invest in making real change rather than in finding new ways of dodging oversight and legislation to allow them to carry on with business as before. Governments must do their part too, by cleaning up corrupt institutions and ensuring their country’s resource wealth is shared by all rather than siphoned off by a few.  They must also continue working with civil society to bring about reforms and development that bring more options to mining-dependent communities that too often have none.