Of those companies that filed, 67% reported that they were unable to determine if they had conflict minerals in their supply chains. Approximately 1,300 companies filed, rather than the 6,000 the SEC predicted would need to file. In mid November, a congressional subcommittee met to address the effectiveness of the conflict minerals disclosure requirement.Īccording to testimony from witnesses, far fewer companies filed conflict minerals reports than the SEC originally estimated would file. Congressional reviewĪnd in fact, the SEC is failing to meet the elusive goal of this provision.
This goal is inappropriately tasked to the SEC, insofar as the justification for the conflict mineral provision relates to foreign policy, a role well outside of the SEC’s mission and expertise. In other words, the real goal is the reduction, and hopeful end, of the violence in Congo that is fueled by money from the illicit mineral trade. Instead, the stated congressional intent of the provision is to “further the humanitarian goal of ending the extremely violent conflict in the Democratic Republic of Congo.” The goal of the provision is not, as some have suggested, to inform the American public that certain consumer products may be helping finance a war in Congo. The fact that the fate of the provision turned on its First Amendment implications is likely due to a misconception about the goal of the conflict minerals provision. A fundamental problemīut more fundamentally, the contentious debate over corporate speech has obscured the bigger problem with the conflict minerals provision: the SEC is the primary agency currently tasked with reaching the congressional goal of reducing violence in Congo. These future challenges might address required disclosures about gas emissions, safety records and credit card fees, among others. This could prompt companies to challenge other mandated disclosures that force them to “taint” their own products. It has the potential to limit drastically the government’s ability to require corporate disclosure to consumers. The implications of the ruling could extend well beyond the conflict minerals provision.
Specifically, the court stated that requiring companies to label their products as “not conflict free” essentially forces them to “confess blood on their hands.”
The DC Circuit Court’s August decision upheld its earlier finding that the provision is unconstitutional because it violates the right to free speech by corporations. So far, oddly, the main challenge to the provision has been about free speech. Maxime FORT/Flickr, CC BY-NC-ND Free speech concerns Shoes like these contain minerals common in certain parts of Congo. But can a financial regulator whose main charge is protecting investors really be responsible for achieving such an aim, however laudable? And do so through consumer disclosure? That essentially put the Securities and Exchange Commission (SEC), Wall Street’s watchdog, in charge of achieving a humanitarian foreign policy goal. Hoping to put an end to the violence, Congress added a provision to the 2010 Dodd-Frank Act requiring public companies to disclose whether or not minerals in their supply chains are linked to militia groups in Congo or the surrounding region. Those minerals are commonly found in consumer goods, including most electronics such as smartphones and computers, as well as nonelectronic products such as packaging, automotive parts and even those children’s shoes that light up when they walk. A civil war has raged in the Democratic Republic of Congo for more than 15 years, resulting in the deaths of millions and displacing millions more.įueling the violence has been the illicit sale of minerals such as tin, tantalum, tungsten and gold, which are in abundance in certain parts of Congo, where most of the fighting has taken place.