When discussing conflict minerals and regulations, you will probably hear about the Dodd-Frank Act and section 1502. What is this Act and how does it relate to conflict minerals?
During the financial crisis of late 2007, the administration of President Barack Obama first proposed legislation that eventually became known as the Dodd-Frank Act in June 2009. The main focus of this Act was to place strict regulations on lenders and banks to protect consumers and prevent another economic recession. In its own words, the Dodd-Frank Act intends to “promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes” (source)
Dodd-Frank’s Conflict Minerals Provision
One of the other purposes is the aim to stop national army and rebel groups in the Democratic Republic of the Congo (DRC) from illegally using profits from minerals to fund their fight. Section 1502 of the Dodd Frank Act is know as the Conflict Minerals Provision. Section 1502 is a disclosure requirement only, meaning that US-registered or listed companies must report if they source conflict minerals from DRC or any adjoining countries. These minerals include the 3TG: tin, tantalum, tungsten and gold. Critics of the law have pointed out that section 1502 does not place a ban or penalty on the use of conflict minerals from the DRC. According to them it can backfire with procurement offices dropping suppliers in those countries, leaving them with more poverty and a worsening the situation.
Even though the vision of those critics has some merit, a different movement is happening. More and more companies are publicly communicating about their efforts to improve the situation in DRC. In addition, the Congolese government has publicly expressed its support for section 1502 of the Dodd Frank Act in a letter to the SEC.
The OECD framework
Where large companies are trying their best to meet the regulations and picking up their responsibility to improve the local situation, it is clear that many organizations are still struggling on where to start. Even though the OECD framework (on which you can read more in our solution paper) is not exactly the same as section 1502 of the Dodd Frank Act, it is a good starting point. Starting to understand your supply chain begins with mapping your supplier network. Through this framework you can build a more in-depth understanding, by adding extra information and linking other sources and systems. At ChainPoint we are open to discuss the possibilities according to your situation. Read more about our vision on connecting supply chains containing conflict minerals here or feel free to reach out to us here.