When the Dodd-Frank Act became law in 2010 most considered it as regulations exclusive to the financial services industry- regulating financial markets, instituting consumer protections and realigning federal agencies. So, many in the manufacturing and retail space are surprised to learn that Dodd-Frank applies to them too, with a ban on using Conflict Minerals. They better get down to business, as the first mandatory filings are due May 31.
Responsible sourcing and supply chain practices remain a fundamental component of Corporate Social Responsibility. That’s where Dodd-Frank rules on conflict minerals come into play.
Gold, tin, tungsten and tanalum can be considered conflict minerals if their mining, transport and profit are in any way linked to funding armed groups involved in conflict in the Democratic Republic of the Congo and surrounding countries. Dodd Frank requires SEC registrant companies to determine and disclose whether they are affected.
But here’s what a PwC Survey of 700 companies in 15 industries found when asking about their level of compliance in February (hint: there’s still a lot of work to do).
Many still lag behind. A quarter of respondents were still in the early stages of compliance.
Fewer than half have covered their entire supply base. Only 45 percent had sent an RCOI (Reasonable Country of Origin Inquiry) to more than three-quarters of their in-scope suppliers, and only 47 percent had received fully-completed responses from more than half of the suppliers queried.
Many companies have assigned full-time staff. 62 percent of respondents reported needing 1-2 full-time resources for their compliance efforts; 21 percent reported needing 3-5!
Companies are focused on compliance but are finding opportunities to make the best of it. Just about all – 90 percent – view their efforts as a compliance exercise, but many of those see benefits too for improving their supply chains and sourcing processes.
Many companies are pushing for conflict-free sourcing. Almost half of respondents have plans to become conflict-free.
The conflict free mineral rules for the supply chain are the latest in a string of human rights regulations in the supply chain. They come on the heels of the California Transparency in Supply Chains Act of 2012 which requires manufacturers and retailers to provide website information concerning their efforts to address the issues of forced labor, slavery, and human trafficking within the supply chain. Others are in the works.