Conflict Minerals and Dodd-Frank: An Update (Part 2)

In the first part of this post, we shared some background points on Dodd-Frank in the area of conflict minerals, looking at the current lack of company preparedness and aggressive plans for investment in 2012 as well as the role for supplier management technology platforms in helping automate the gathering, management and audit trail creation of related conflict mineral reporting assurance activities. For those unfamiliar with the legislation, Spend Matters' sister-site, MetalMiner, has created a free compendium of research and articles. MetalMiner's reporting of the act's enforcement suggests that companies regulated by the SEC must annually disclose whether conflict minerals originated from the Democratic Republic of Congo (DRC) or other adjoining countries and, where that is the case, submit a report conducted by an independent private sector auditor that includes:

  • A description of due diligence/audit process conduct
  • The name of the auditor
  • The facilities used to process the conflict minerals
  • Country or countries of origin of the conflict minerals (e.g. Democratic Republic of Congo (DRC), Angola, Burundi, Central African Republic, Congo Republic, Rwanda, Sudan, Tanzania, Uganda, Zambia)

How far along are companies in meeting these requirements? If a recent ISM/CAPs research study sample is indicative of most organizations, it appears that many are poised to make some substantial near-term investments. For example, in developing a "supply chain mapping program to determine the source of minerals classified as conflict minerals...only 13 percent of companies reported their organization has developed or implemented a supply chain mapping program. Of that group, only one company reported it can trace the source of these minerals to individual smelters or mines."

And when it comes to asking suppliers for "country of origin and chain of custody documentation," only "22 percent of the survey population reported asking suppliers" for this level of information. Curiously, however, "A small number of the survey population (approximately 9 percent) reported asking suppliers for this information despite lacking a supply chain mapping program to track the source of conflict minerals."

In the next post in this series, we'll share some of the remaining highlights of the ISM/CAPs report and a means in which, courtesy of MetalMiner, some organizations are attempted to circumvent the reporting requirements through the use of scrap metal.

- Jason Busch

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