U.S.: SEC Regulations Requiring Disclosure of Conflict Minerals

The U.S. conflict minerals disclosure requirements will necessarily entail a sweeping review of and revision to many companies’ supply chain management policies, to implement the source-of-origin and due diligence requirements that the presence or use of these common materials will trigger.  The new rules provide little concrete guidance regarding the degree and type of source-of-origin tracking and other conflict minerals policies that will constitute due diligence. Instead, companies are likely to look to external standards for benchmarking and guidance. Significant work in this area has already been accomplished through OECD-sponsored efforts to develop responsible supply chain management standards for conflict minerals.  Because it is not currently possible to trace the source of origin of metals back up the supply chain prior to the smelter, the source of origin and due diligence measures for downstream users will turn in large measure on their ability to rely on smelters that have adopted responsible and auditable policies regarding the source of minerals. Ongoing work by industry groups such as the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative to develop a Conflict Free Smelter program, and related standards, will likely play a central role in the implementation of these new requirements.

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