Third of US firms unable to identify source of conflict minerals

9 July 2018

US companies are getting better at identifying the source of conflict minerals in their supply chains, according to a report.

The study by the Government Accountability Office (GAO) found that in 2017 a third (34%) of companies were unable to determine the country of origin of conflict minerals in their supply chain.

This was an improvement over 2016, when 41% of respondents were unable to determine country of origin. In 2015 the figure was 42% and in 2014 it was 67%.

And 2017 was the first year a majority of US companies could determine whether they were sourcing from war-torn parts of Africa.

US firms are required to report on certain minerals which have been linked to violence and human rights abuses in the Democratic Republic of the Congo (DRC) and neighbouring countries.

Half (53%) of companies reported in 2017 whether the conflict minerals in their products came from the DRC and adjoining countries.

This compares to 49% in 2016 and 2015 and 30% in 2014. The Securities and Exchange Commission (SEC) adopted its conflict minerals disclosure rules in 2012.

Earlier this year a group of investors protested after a number of companies failed to submit "thorough" conflict minerals reports because of what the group called “ambiguous” statements by the SEC.

Last year acting chairman of the SEC Michael Piwowar implied the agency would not seek enforcement for failure to submit “enhanced disclosure” documents, usually required by the law.

A statement issued by 47 investor groups, representing around $1.2tn in assets under management, under the Investor Alliance for Human Rights banner, said firms had failed to file due diligence forms as a "direct response" to the SEC statement.  

It said more than a dozen company filings had cited the SEC’s 2017 statements to justify why they had chosen not to file the supplemental conflict minerals report.

This Alliance said the statement "has created, at minimum, confusion among companies, and at worst, has given the impression that the SEC will not enforce the law."

The lack of consistent compliance "deprives investors of the valuable information" provided under the regulation, they said.

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