These issues include serious human rights abuse, theft, extortion, forced child labour, deforestation and high taxation of mineral resources. Subsequently mining in the region contributes to a conflict that has claimed more than 5.4 million lives since it began in the late 1990's. Increasingly, the manufacturing industry is seeking to only source "DRC Conflict Free" minerals, defined as products that do not contain minerals or their derivatives determined to be directly or indirectly financing or benefiting armed groups.
3TG
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· is used in metal wires, electrodes and contacts which are used in a multitude of electrical and electronic devices, and the DRC is the world's 5th largest producer of the mineral.
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Over the past couple of years a number of organisations have been formed to help define processes on the clamping down of conflict minerals sourcing. The International 'Organisation for Economic Co-Operation and Development' (OECD) has designed a 5 step framework for identifying and removing conflict minerals from the supply chain. Additionally two bodies have been established to help high tech companies implement the OECD framework, the Electronic Industry Citizenship Coalition (EICC) and the Global eSustainability Initiative (GeSi).
To try and remove conflict minerals from global supply chains, the U.S congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. . Section 1502 of the act is a provision related to the sourcing of conflict minerals. This means that all companies submitting filings to the SEC must now complete forms to confirm that they are not using conflict minerals across their supply chain.
The first submission is due for 31st May 2014 and then annually by 31st May each year. Any company, there are estimated to be around 6000 of them, that file Forms 10-K, 20-F or 40-F with the SEC each year will be affected by this new law. In particular those that operate in the aerospace, automotive, high tech, defence and medical devices sectors will be impacted. According to Deloitte,"the complexity of today's supply chains combined with lack of visibility into sourcing practices will be one of the key challenges of ensuring that Dodd-Frank can be adhered to."
One tool that has been developed by EICC to help companies adhere to the Dodd-Frank law is the conflict minerals reporting template,which complies with the SEC's due diligence requirements. This Microsoft Excel based reporting template embraces the OECD's 5 step framework and asks specific questions to ensure that conflict minerals are not used across a supply chain. Given that conflict minerals reporting is now law for North American based SEC filings, it is in a company's interests to find an efficient way to conduct the reporting process with minimal effort and without disrupting the day to day operation of the companies being asked to complete the survey.
There are two key challenges to ensure successful reporting of conflict minerals. Firstly the company must ensure that it has up-to-date contact information for every company across the supply chain. Secondly all companies must complete the survey questions in a timely manner so as not to delay an SEC filing. Efficient contact management is therefore critical to the success of this reporting process, and to help ensure that a company remains within the law on conflict mineral reporting.
Supply chain directors need to recognise the role that they can play in the fight against mining of conflict minerals by ridding them from their supply chains. Using an effective community management tool they'll not only gain greater visibility of their supply chains and ensure they adhere to government legislation like the Dodd-Frank law, but they'll also be helping to rally the fight against the mining of conflict minerals in suffering regions.
