IPC CMDD

Abstract

<strong>Introduction</strong> <br>Armed conflict and human rights abuses in the Democratic Republic of the Congo (DRC) have been linked to revenues derived from the mining and trading of the "conflict minerals" &#8212; cassiterite, wolframite, columbite-tantalite and gold. Growing global awarness of the sourcing of conflict minerals has encouraged electronics and other manufacturers and retailers to pay closer attention to the source of the metals in their products. <br>In 2002, the United Nations (UN) Group of Experts (GoE) on the DRC accused 85 companies of violating Organisation for Economic Co-operation and Development (OECD) Guidelines for responsible business conduct by multinational enterprises. In 2008, the UN GoE declared that sourcing from eastern DRC without "due diligence" is a "violation" of UN sanctions. In 2009, the OECD started work on due diligence guidance for conflict minerals, which was published in July 2011.¹ <br>In December 2010, the United States Congress passed the Dodd- Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act).² Section 1502 of the Dodd-Frank Act requires publicly traded companies to annually disclose to the U.S. Securities and Exchange Commission (SEC) if certain conflict minerals or their metal derivatives are necessary to the functionality of their manufactured products. Section 1502 also requires publicly traded companies to annually submit to the SEC an audited Conflict Minerals Report. This report describes the measures taken by the company to exercise due diligence regarding the source and chain of custody of such minerals if they were sourced from the DRC or adjoining countries. <br>Tin, tantalum, tungsten and gold (3TG) are necessary to the functionality of electronic and many other products. These metals are derivatives of the specific conflict minerals that are covered by Section 1502 (Table 1). These minerals are considered conflict minerals regardless of whether they are associated with any actual conflict activity in the DRC or adjacent country. <br>Section 1502 is intended to provide corporate accountability and public transparency to the sourcing of conflict minerals or their derivatives. Section 1502's disclosure and reporting provisions are designed to discourage companies from sourcing conflict minerals from mines controlled by armed factions located in the DRC or adjoining countries, thereby reducing the flow of money to the armed groups that are linked to human-rights abuses. <br>Section 1502's disclosure and reporting obligations will impact all entities involved in the use of conflict minerals or their derivatives. Although the legal disclosure and reporting obligations apply only to publicly traded companies, conflict minerals information and data requests are expected to rapidly spread through the entire electronics supply chain. Companies that must comply with Section 1502's disclosure and reporting requirements will need to engage their suppliers in order to demonstrate due diligence regarding the source and chain of custody of 3TG in their manufactured products. <br>Therefore, it is essential for all companies that supply a product, component or part that contains a conflict mineral, regardless of size or ownership structure, to prepare to respond to conflict minerals inquiries. While publicly traded companies will have legal obligations to disclose and report on the 3TG in their manufactured products, suppliers to those companies will have commercial obligations to disclose and report on the 3TG in the manufactured products that they supply. Suppliers, therefore, will want to establish their own due diligence programs for conflict minerals in order to meet their customers' requests. <br>This document establishes guidance for the formation of due diligence programs for supply chain conflict minerals tracking, management, disclosure and reporting. <br>This document is not, and should not be used as, a guide to legal compliance with Section 1502 of the Dodd- Frank Act. <br>¹ OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, July, 2011. http://dx.doi. org/10.1787/9789264111110-en <br>² See Appendix A for a detailed description of Section 1502 of the Dodd-Frank Act.