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It’s been 18 months since the Dodd-Frank Act was passed yet the Securities and Exchanges Commission (SEC) remains bogged down in the detail of how to implement Section 1502, the requirement that companies declare if they source particular minerals from the Democratic Republic of Congo or its neighbouring countries.

Had it gone into force on time, the soonest disclosure would have been for the financial period ending 31 December 2012. Assuming the SEC can stick to its current schedule, the soonest reporting period would now be mid-2013.

Background

The impetus for this rule is a story that has been woefully under-reported in Western media. In the last fifteen years, about five million people have been killed in the Second Congo War which has raged through numerous central African countries. It’s the worst deathtoll of any conflict in nearly 70 years, yet barely registered a peep on most news channels. The Second Congo War had something like fifty times the death toll of the War in Afghanistan since 2001 yet would be lucky if it received one fiftieth of the coverage. Few people are even aware of it – so much for the information society!

Where did all the arms and ammunition come from? Apparently a good deal were purchased with earnings from the mining of certain rare minerals including coltan (a compound that includes the metal tantalum, used in nearly all electronics).

Today the warring parties are, officially, at peace now but in 2010 someone felt it would be a good idea to impose a reporting obligation on companies that source minerals from the Democratic Republic of Congo, so Americans’ money doesn’t end up buying guns for warlords. I can’t help thinking that this is a case of closing the stable door after the horse has bolted … long, long after the horse has bolted … but that’s the plan.

The SEC has been charged with the responsibility of implementing this requirement. The most recent public event was a roundtable in Washington last October. In it you can see various parties spelling out just what an impost it will be to adequately trace where a metal comes from. The reason is, the supply chain is far more complicated than Congress probably realised. Firstly, raw materials from all over the world get mixed together as the smelting stage so, unless you set up a separate, conflict-free smelter, you will find yourself bound by the reporting obligation. Secondly, tantalum and other rare metals end up in many, many products and not just the obvious ones like cellular phones. Basically anything that contains a circuitboard. It seems that the net is going to end up being cast extremely widely. It is turning out to be as broad as trying to make people report the presence of palm oil or phosphate in their supply chain.

California goes it alone

Meanwhile California has gone and passed its own law, the Transparency in Supply Chains Act, which requires all large California-based companies with overseas operations to disclose what they are doing to ensure that their suppliers adhere to environmental, labour and other standards and to post this disclosure ‘conspicuously’ on their website.

Hopefully this will provide activists with leverage to pinpoint where improvements aren’t being made. Looking at some of the disclosure statements so far, however, they seem to be written in flowery euphemistic language and no more useful than the existing CSR content of Annual Reports. It seems likely that test cases will have to be litigated.

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