US Govt. suspends enforcement of "conflict minerals" law - human rights groups testify on importance of keeping it

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7 April 2017

US Securities & Exchange Commission halts some enforcement of conflict minerals rule amid review

Author: Sarah N. Lynch, Reuters (UK)

SEC halts some enforcement of conflict minerals rule amid review

The U.S. Securities and Exchange Commission said on Friday it is suspending enforcement of the costliest requirements of its "conflict minerals" rule, after a court remanded it back to the regulator because part of it violates the U.S. Constitution. Acting SEC Chairman Mike Piwowar, a Republican, said he has asked staff for a recommendation on how to proceed with the rule, which requires companies to disclose if their products contain certain minerals from a war-torn part of Africa. For now, he added, companies will not be required to conduct a due diligence review or an audit, which are both part of the process used to determine the origin of the minerals...

The move sparked backlash from SEC Democratic Commissioner Kara Stein, who accused Piwowar of acting beyond his authority to gut the meat of a rule mandated by Congress, adopted by the SEC and reviewed by the courts. “It is unprecedented for one commissioner, acting alone and without official notice and comment, to engage in de facto rulemaking," she said.

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5 April 2017

A Progress Report on Conflict Minerals - US Senate Committee on Foreign Relations, Subcommittee on Africa and Global Health Policy - Testimony

Author: Mvemba Phezo Dizolele, Professorial Lecturer, Johns Hopkins School of Advanced International Studies (USA)

What are the merits of this law?...
Where did the law fail?...
Unintended Consequences...
What should be done?...

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5 April 2017

Testimony to the Senate Foreign Affairs Committee, Subcommittee on African Affairs and Global Health Policy Regarding Dodd-Frank Section 1502

Author: Arvind Ganesan, Director, Business and Human Rights Division, Human Rights Watch (USA)

Since 2005, we have documented the pernicious effect that the trade in gold has had on civilians in eastern Congo... Human Rights Watch supported and continues to support Dodd-Frank 1502. We never saw it as a panacea... Rather, we saw it as an important tool to help address a specific goal: stopping the flow of funds to abusive armed groups who were exploiting Congo’s lucrative mining resources through increased transparency and accountability. Today...Dodd-Frank 1502 may be suspended or even revoked. We know legislation can sometimes be a blunt tool and that it can have unintended consequences... [We] welcome a discussion on how Section 1502 can fulfill its objectives more efficiently; however, we strongly believe that its suspension or revocation would be damaging for security, human rights, and for responsible companies.  To be crystal clear: if the president suspends the law or if Congress revokes it, we believe that the repercussions would be very serious. 

This hearing comes at a critical time in Congo [with killings and violence linked to suspended elections and against international experts]... In this context, suspending or eliminating Dodd-Frank 1502 would make an already explosive situation in Congo worse. Abusive armed groups, factions of the security forces, and other opaque mafia-like networks allegedly linked to government officials could then easily return to the lucrative mines in eastern Congo to finance their activities... Suspending Dodd-Frank 1502 would also harm responsible American companies that have embraced the law and the principles that underpin it, including...Apple, Intel, and Tiffany. [also refers to steps by Richline Group (part of Berkshire Hathaway), London Bullion Market Association, Dubai Multi-Commodities Center, International Tin Supply Chain Initiative]  Unfortunately, the main industry critics, namely the National Association of Manufacturers, have not put forward specific proposals that would tweak 1502 to make it more effective.

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5 April 2017

Written Testimony Before the United States Senate Committee on Foreign Relations Subcommittee on Africa and Global Health Policy Hearing On “A Progress Report on Conflict Minerals”

Author: Rick Goss, Senior Vice President of Environment and Sustainability. Information Technology Industry Council (ITI)

...[My] testimony today will share our perspectives on three key points for lawmakers to consider:
• Expand existing diplomatic efforts to drive peace, security, and governance in Central Africa;
• Maintain U.S. leadership on sourcing transparency to support private sector progress in Central Africa and avoid unintended economic and political outcomes; and
• Consider removing the requirements of Section 1502 that have increased costs and burdens while failing to promote progress in the region.

[Additional] major themes:
First, ITI members recognize that the private sector has a defined role to play in helping drive transparency and responsible sourcing efforts throughout global supply chains, and we have embraced that responsibility through our public commitments and concrete actions...
Second, during congressional negotiations on this issue in 2009 and 2010, there was strong bipartisan support for the United States to take a more active role to confront the ongoing humanitarian crisis in Central Africa...

[Other key points:]

Section 1502 of the Dodd-Frank Act has had mixed success in cutting off funding to armed groups in the DRC and reducing violence in the region...

Section 1502 has generated unintended consequences that have detracted from the provision’s effectiveness...

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4 April 2017

Repeal and Replacement of Conflict Minerals Rule 1502 Undermines Peace and Stability in the Congo

Author: Lauren Compere, Boston Common Asset Management, and Patricia Jurewicz, Responsible Sourcing Network, in Huffington Post (USA)

The cell phone in your pocket or laptop you may be reading this on could contain minerals used to fund militia groups and war in the Democratic Republic of the Congo (DRC)... One of the few glimmers of hope that the Congolese people have had in recent years has been the ‘Conflict Minerals Section 1502’ of the Dodd-Frank Act – passed in the U.S. in 2010 with the aim of reducing revenue flows to DRC militia groups. The law helps create demand by multinational corporations to only source certified “conflict-free” minerals, thereby driving momentum for mines in the DRC to de-militarize and cease funding to the militia groups fueling conflict... 

Unfortunately however, a Congressional Hearing this week is part of a concerted attempt by current decision makers in Washington to dismantle 1502... We believe many of the arguments cited for repealing and replacing Section 1502 are misinformed... The most recent study conducted by the International Peace Information Service (IPIS) found that 79% of tin, tantalum, and tungsten miners surveyed now work in conflict-free mines; 204 mines have been officially certified as conflict-free; and 75% of smelters/refiners worldwide for the four conflict minerals have passed audits by the Conflict-Free Sourcing Initiative (CFSI) or associated programs. All of the momentum from the past six years will be lost if companies no longer feel the pressure to source responsibly because they don’t have to submit annual mandatory disclosures... On March 7, 129 investors and investor groups managing total assets close to $5 trillion, called upon the SEC and Congress to continue widespread and comprehensive implementation of Section 1502... Numerous companies and corporate trade associations also submitted statements to the SEC supporting Section 1502 such as KEMET ElectronicsSignet JewelersCFSI, and Information Technology Industry Council (ITI).

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4 April 2017

“A Progress Report on Conflict Minerals” - Written Testimony to the US State Senate Committee on Foreign Affairs

Author: Boston Common Asset Management (USA)

On March 7, a group of 129 investors and investor groups managing total assets close to $5 trillion, called upon the SEC and Congress to continue widespread and comprehensive implementation of Section 1502. Lead investors included Boston Common Asset ManagementInterfaith Center on Corporate Responsibility (ICCR), Mercy Investment Services, Inc.Responsible Sourcing Network (RSN), Trillium Asset Management, and US SIF: The Forum for Sustainable and Responsible InvestmentEngaged with the implementation of the law since it was first passed in 2010, investors expressed their support in a statement (attached) to the SEC specifically calling on the agency to pursue robust enforcement of the requirements to achieve maximum impact.

Spurred by American leadership on conflict minerals which goes back to disclosure amendment 3997 championed by Senator Brownback (R-KS), and a bipartisan coalition of nine senators, supply chain due diligence is becoming a global norm for responsible sourcing... Lead U.S. investors were therefore joined by asset managers from around the world including APG Investment Management, Hermes EOS, Legal & General Investment Management, MN, NEI Investments, Robeco, Triodos Investment Management, and pension funds such as New York City Comptroller Scott M. Stringer, PGGM, and Sweden’s AP1, AP2, AP3 and AP4.

The 1502 rule has been the driving force for the momentum and action by corporations to research their supply chains, be transparent about their actions, and be responsible to the communities that deserve to prosper from the electronics craze sweeping across the world... No single law can solve all the underlying problems that are causing conflict in the DRC region, but since 2010, this law has demonstrated success in diminishing revenue flows to militia groups... Now is not the time to repeal and replace but to enforce and replicate 1502 to drive responsible manufacturing and empower local communities in conjunction with necessary government diplomacy and economic development activities. 

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23 February 2017

Why Apple and Intel don’t want to see the conflict minerals rule rolled back

Author: Todd Frankel, Washington Post (USA)

Apple doesn’t want to see it scrapped. Neither does Intel or Tiffany & Co. But the U.S. conflict minerals law — which requires American public companies to avoid using minerals that fund war and human rights abuses in the Congo region — is widely seen today as facing its most serious threat since its passage in 2010. The White House is considering a suspension of the law, part of President Trump’s pledge to cut government regulations and a long-held goal of the U.S. Chamber of Commerce... [Several] major companies say they will not abandon the standard even if the law is gutted... That is because something interesting has happened since the law took effect: Companies say the conflict minerals law has created an expectation both inside their corporate headquarters and among consumers that their products will be “conflict-free.”... But they worry their efforts will be undermined without the law to support them. “We do this because it’s the right thing to do,” Apple said...[adding that] it plans to keep those protections “regardless of whether or not the law requires it.” Apple said it is pleading its case behind the scenes to White House and SEC officials... 

From the start, the law was assailed as too burdensome and expensive by [industry groups]... They also say the law is ineffective. A 2015 Government Accountability Office report found that no companies could determine whether their minerals financed or benefited armed groups in the Congo region.  But supporters of the law say that is not unexpected...and that the compliance efforts have had an effect. More than 200 mines and smelters in the Congo region have been certified as “conflict-free.” “We have seen real change on the ground,” said Karen Hayes, senior director at Pact, a nongovernmental group that coordinates verification efforts in Congo... Several African groups, including the International Conference on the Great Lakes Region and a collection of 41 Congolese civil society organizations, recently announced their support for the conflict minerals law.  [also refers to positive statements by Richline (part of Berkshire Hathaway); neutral position of Boeing; opposition to law by ArvinMeritor, Neotech]

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12 February 2017

Weakening of Dodd-Frank Act will not affect general trend towards responsible mineral sourcing, says RCS Global

Author: RCS Global

“Stakeholder Update: Dodd-Frank 1502 Consultation”, 10 February 2017

While clearly significant, any changes to Dodd-Frank 1502 would not drastically affect the general direction of travel for responsible mineral sourcing…Many of the biggest players in the market are adhering to Dodd-Frank 1502 requirements through their implementation of the OECD Due Diligence Guidance, which…is being established as the global market entry standard for all minerals and metals from high-risk and conflict-affected areas. Persistent advocacy pressure and the opportunity for brands to differentiate their products by sourcing responsibly is a clear…trend…Industries…have also started to raise compliance standards even further through voluntary enhanced due diligence programmes…Currently legislative pressures are also not exclusively tied to Dodd-Frank 1502, as legislation at the EU level…and moves in China have all signalled…that the expectations on companies engaging in minerals and metals from high-risk and conflict-affected areas…has risen considerably. Any weakening of Dodd-Frank 1502 will not affect the general direction of travel which is going towards more transparency, responsibility and accountability throughout the minerals supply chain…

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