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November 19, 2012

Stakeholder Group Speaks Out on Challenge to Conflict Mineral Legislation
    by Robert Kropp

The multi-stakeholder group, comprised of corporations, sustainable investors, and nongovernmental organizations, pledges to work to eliminate human rights abuses from the conflict minerals trade in the Democratic Republic of the Congo. -- Two important provisions of the Dodd-Frank legislation, both of which address transparency by US corporations in their dealings with foreign governments and other agents, have come under fire by industry trade associations led by the US Chamber of Commerce. One of the provisions—mandating that companies in the extractive industries disclose their payments to governments—took a significant step toward successful enactment earlier this month when the Securities and Exchange Commission (SEC) refused a request from industry trade associations to delay its implementation of the rule.

Yet, the fate of the provision remains unclear until a lawsuit seeking to overturn the rule, filed by trade associations including the US Chamber of Commerce and the American Petroleum Institute (API), is heard.

The second provision, as adopted by the SEC, requires US corporations to disclose whether their products contain conflict minerals, including tantalum, tin, gold, and tungsten, which have been smuggled out of the Democratic Republic of the Congo (DRC). Armed groups use payments for them to fund a conflict which has resulted in the loss of more than five million lives.

The conflict minerals regulation is also the subject of a lawsuit, filed by the Chamber, the National Association of Manufacturers (NAM), and the Business Roundtable. As with the rule governing disclosure of payments to governments, the plaintiffs argue that the cost of ensuring supply chains that are free of conflict minerals would amount to an overly burdensome cost to companies.

A multi-stakeholder group led by the Responsible Sourcing Network spoke out strongly in defense of the rule today. The group, which includes corporations, sustainable investors, and nongovernmental organizations (NGOs), stated in a press release that it urges "all stakeholders to continue the important work underway to address the critical issue of transparency in the supply chains for these minerals."

"We strongly believe these efforts are a matter of corporate social responsibility," the group stated.

In addition to a number of sustainable investment firms, the members of the group include the Interfaith Center on Corporate Responsibility (ICCR) and US SIF: The Forum for Sustainable and Responsible Investment. Corporate members of the group include many prominent companies from the information technologies sector whose products rely on the minerals exploited by armed groups and whose own industry associations—the Electronics Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI)—have, since 2007, "developed programs that advance responsible sourcing of minerals," the group stated.

"The violence and abuse in this region of the world must end," the group stated. "An important part of the solution is the efficient and responsible minerals sourcing process."

Also this week, Amnesty International USA announced that it has filed a motion to intervene in the lawsuit seeking to overturn the regulations in order to help defend them.

"Strict legal requirements are needed to prevent corporate interests and profit-seeking from fueling human rights abuses," executive director Suzanne Nossel said. "By seeking to invalidate current regulations, the US Chamber of Commerce and other corporate groups would reverse progress toward justice and accountability and line the pockets of armed groups that are committing unspeakable atrocities."

Enacting the regulations would help end the conflict in the DRC, Amnesty argues, and "provide critical information to investors and consumers who wish to make socially responsible choices."

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