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SEC Urged to Release Delayed Rules on Conflict Minerals Trade

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SEC Urged to Release Delayed Rules on Conflict Minerals Trade

Posted by Enough Team on May 10, 2012

Contact:
Global Witness: Jana Morgan at 703 795 8542 or jmorgan@globalwitness.org
Corinna Gilfillan at 202 725 8705 or cgilfillan@globalwitness.org
Enough Project: Matt Brown at 202 468 2925 or mbrown@enoughproject.org

WASHINGTON – The Securities and Exchange Commission (SEC) needs to issue regulations to tackle the trade in minerals fuelling conflict and human rights abuses in the eastern Democratic Republic of the Congo (DRC), a group of non-profits, investors and companies said today. A provision directing the SEC to publish rules on conflict minerals by April 2011 was passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The law includes a disclosure requirement that calls on companies to determine whether their products contain conflict minerals by carrying out supply chain due diligence and to report this to the SEC. For over a decade, rebel groups and senior commanders of the Congolese national army have made millions of dollars through the illegal control of mines and trading routes, while inflicting appalling human rights abuses on the local population, including gender-based violence such as rape and sexual slavery.

“The passage of the Dodd-Frank Act has led to positive developments in eastern Congo to demilitarize mining areas,” said Corinna Gilfillan of Global Witness. “The Congolese government recently adopted a law requiring all mining and mineral trading companies operating in the DRC to carry out due diligence measures. The long delays in the rule-making process threaten to reverse this progress and undermine efforts to develop a clean minerals trade.”

Amol Mehra of the International Corporate Accountability Roundtable, said: “Armed groups and factions of the Congolese army continue to profit from the minerals trade at the expense of the civilian population. The SEC must come out with rules now to tackle this deadly trade and to provide consumers and investors with important information about companies’ efforts to take responsibility for their supply chains and sourcing practices,”

Industry groups are also spearheading due diligence programs across the global supply chain to comply with Dodd-Frank and further delays in the rules risks slowing this momentum.

“A few industry leaders are ahead of the pack basing their actions on the rules as originally proposed. Unfortunately, most companies have been reluctant to move ahead given the uncertainty of the final wording which will dictate the compliance requirements. This is an unfortunate situation and demonstrates the need for the SEC to act swiftly and issue the final rules.” said Dr. Daniel Persico of KEMET Electronics Corporation.

“Leading companies are moving forward with preparation based on the proposed rules. However, uncertainty about compliance requirements will only continue to grow until finalized regulations are issued,” said Tim Mohin of Advanced Micro Devices.

“We support the timely release of this rule as this issue is too important to delay action,” said Gary Niekerk of Intel.

“Congress has a responsibility to act to ensure that the SEC issues timely rules on conflict minerals. Congress passed the conflict mineral provision to address a humanitarian crisis, and until the SEC issues rules, Congressional intent will continue to be compromised” said Darren Fenwick, Senior Manger of Government Affairs for the Enough Project.

Companies, investors and NGOs believe that getting the rules out is an important step forward in breaking the link between conflict and minerals and that all stakeholders must work together to address the dire humanitarian crisis in eastern DRC.

It is important for the SEC to release strong rules now to ensure all affected companies bring the requisite pressure to bear to incentivize responsible sourcing from the region.

"Investors will benefit by gaining confidence that companies they own– or may own– are moving rapidly to ensure that their supply chains and products are free of conflict minerals", said Bennett Freeman, SVP-Sustainability Research and Policy at Calvert Investments. "Investors and consumers alike need to know that companies are undertaking appropriate due diligence to diminish this risk," Freeman added.