As the First Reporting Deadline Approaches, New Paper Outlines Best Practices for SEC Conflict Mineral Reports

With less than a year until the first reporting deadline,  companies are becoming increasingly focused on evaluating any conflict minerals in their supply chains.

In May of 2014, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act will require companies in a variety of industries, from electronics to apparel, to submit reports to the Securities and Exchange Commission (SEC). The reports will disclose information on the use and mining conditions of minerals sourced from the Democratic Republic of the Congo or neighboring countries, where egregious human rights abuses linked to the mining industry have plagued the region for over 14 years.

Though the deadline may seem far off, the reports require companies to collect detailed information from many tiers in their supply chains as well as establish due diligence procedures, both of which take considerable time to implement.

In order to assist companies in providing thorough information to investors and human rights organizations, the Responsible Sourcing Network partnered with the Enough Project to create a set of guidelines and indicators. The paper, Expectations for Companies’ Conflict Mineral Reporting, encourages companies to establish baselines in their inaugural disclosures to the SEC and to clearly specify the steps they are taking to show improvement in their transparency and accountability reporting over time.

The paper describes the characteristics of a robust report, including:

• Constructing key elements of a vigorous company conflict minerals policy and steps for implementing a program
• Metrics that companies should track to effectively determine their actions to accurately assess the origin of their minerals
• Commitment to only using minerals from smelters that have been audited as conflict free by a credible program such as the Conflict-Free Sourcing Initiative as they become available
• Building a clean minerals trade by 1) Committing to sourcing conflict-free minerals from Congo and the surrounding region; and 2) Implementing OECD due diligence processes to determine if an issuers’ minerals are contributing to the conflict

Stakeholders also encourage companies to take steps beyond the 1502 reporting requirements to help in creating a peaceful and secure Congo by participating in diplomatic efforts and contributing to alternative livelihood projects in the region.

As stakeholders clearly communicate their concerns and establish their expectations about the human rights abuses surrounding conflict minerals in the Congo, companies can enhance their brands by fulfilling on these expectations with well-defined actions and reports.