FOR IMMEDIATE RELEASE
Contact: Tracy Fehr, +1-937-902-9587, [email protected]
WASHINGTON – On August 22, the U.S. Securities and Exchange Commission, or SEC, voted to adopt conflict minerals regulations for section 1502 of the Dodd-Frank financial reform law. Following the vote, the Enough Project analyzed the 356-page text and published a new policy brief that summarizes reporting requirements for companies, and outlines key implications for the advocacy community.
Over the next four years, hundreds of companies that file annual reports with the SEC will have to exercise due diligence on the source and chain of custody of the minerals in its products. These regulations are designed to help reduce the trade of conflict minerals, which has been a major funding source for armed groups in eastern Congo.
Many companies will have to comply with the law, but how they comply will depend in part on how narrowly or expansively companies and the SEC interpret the final rule, and how effective non-governmental organizations, faith-based groups, and other human rights advocates are at monitoring compliance.
"While the final rule is not perfect, it moves the conversation forward,” said Darren Fenwick, author of the brief and Enough Project Senior Manager of Government Affairs. “ The rule gets companies that use conflict minerals to report, and gives actors that care about this issue and want to invest in Congo, like Intel, Motorola, KEMET and HP, the terms by which to operate. The Enough Project will continue to laud companies working to eliminate the trade in conflict minerals, and bring to the attention of the SEC and the public companies who are not.”
According to the brief, two of the major compliance concerns that advocates will closely monitor are whether companies that should file section 1502 specialized disclosures actually do, and whether each companies’ minerals country of origin inquiry produces a conclusive result. Due diligence is only triggered when a company knows or has reason to believe its minerals came from Congo or neighboring countries. Companies may perceive an incentive to conduct a country of origin inquiry that produces inconclusive results, believing they would not have to conduct due diligence in such a case. Advocates will need to monitor good faith compliance in the conduct of these inquiries.
“Section 1502 was never intended to address all of Congo’s ills, but was designed to deal with an immediate humanitarian crisis and create the space for needed reform,” said John C. Bradshaw, Executive Director of the Enough Project. “Section 1502 applies U.S. leverage to reduce the ability of armed groups to operate in eastern Congo, opening up the door to much-needed security sector and justice system reform, as well as sustained economic development.”
The policy brief is the first of a series of Enough Project briefs on the implementation of section 1502.
Read the full brief: “The SEC’s Ruling on Conflict Minerals: Reporting Requirements for Companies.”
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Enough is a project of the Center for American Progress to end genocide and crimes against humanity. Founded in 2007, the Enough Project focuses on crises in Sudan, eastern Congo, and areas of Africa affected by the Lord’s Resistance Army. Enough’s strategy papers and briefings provide sharp field analysis and targeted policy recommendations based on a “3P” crisis response strategy: promoting durable peace, providing civilian protection, and punishing perpetrators of atrocities. Enough works with concerned citizens, advocates, and policy makers to prevent, mitigate, and resolve these crises. For more information, please visit www.enoughproject.org.