Countdown to Conflict Minerals Reporting
In less than five months, U.S. companies whose manufactured products contain conflict minerals will have to file their first compliance reports with the SEC saying where the minerals are coming from, and, in some instances, whether the minerals are benefiting armed groups in some African countries. The SEC’s conflict minerals rule is complex, and many companies are struggling to comply. In fact, they will be challenged for some time to come. Here are PwC’s recommendations for the four stages of readiness.
The clock is ticking—loudly. By May 31st this year, public companies have to comply with the U.S. Securities and Exchange Commission’s Conflict Minerals filing requirement. This is not a job for the legal department alone: It will require active input from operations leaders—notably from supply chain executives. Nor is the filing just a one-off requirement: It will call for ongoing effort far into the future.
The rule is one of several SEC rules mandated by the Dodd-Frank Act that are intended to provide transparency into corporate practices. In the case of this regulation—Section 1502 of the Act—the ultimate intent is to reduce funding for armed groups involved in human rights violations in the Democratic Republic of the Congo (DRC), Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia (collectively, “the covered countries”).1,2
The four so-called “conflict minerals”—tantalum, tin, tungsten, and gold—are primary sources of funding for the armed groups. Also known as “3TG,” these materials are essential to the production of countless products. They are fundamental in electronics equipment of all types, to be sure, but they are also critical to the manufacture of everything from drill bits and golf clubs to jewelry, zippers, and buttons. They are even used in some types of PVC and glass.
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The clock is ticking—loudly. By May 31st this year, public companies have to comply with the U.S. Securities and Exchange Commission’s Conflict Minerals filing requirement. This is not a job for the legal department alone: It will require active input from operations leaders—notably from supply chain executives. Nor is the filing just a one-off requirement: It will call for ongoing effort far into the future.
The rule is one of several SEC rules mandated by the Dodd-Frank Act that are intended to provide transparency into corporate practices. In the case of this regulation—Section 1502 of the Act—the ultimate intent is to reduce funding for armed groups involved in human rights violations in the Democratic Republic of the Congo (DRC), Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia (collectively, “the covered countries”).1,2
The four so-called “conflict minerals”—tantalum, tin, tungsten, and gold—are primary sources of funding for the armed groups. Also known as “3TG,” these materials are essential to the production of countless products. They are fundamental in electronics equipment of all types, to be sure, but they are also critical to the manufacture of everything from drill bits and golf clubs to jewelry, zippers, and buttons. They are even used in some types of PVC and glass.
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