The acting chairman of the U.S. Securities and Exchange Commission (SEC) announced this week that the agency would reconsider how to enforce the conflict minerals rule contained within the Dodd-Frank Act, Dodd-Frank Section 1502.
Under the directive, SEC staff will now review possible changes to the requirements and SEC written guidelines for compliance. The SEC is also accepting public comments for 45 days. The directive does not relieve companies of their reporting requirements for 2017, but simply provides “additional relief.”
Dodd-Frank 1502 has been challenged in court by various industry stakeholders since its enactment in 2010. This culminated in a 2014 judge ruling that key portions of the regulation violated companies’ First Amendment rights. However, other industry stakeholders have fully embraced the spirit of the rule even though they are not required to file; for instance, Schneider Electric publicly states, “while Schneider Electric is not subject to SEC reporting, Schneider Electric fully supports this legislation and its position to avoid the use of conflict minerals.”
The SEC action is widely viewed as part of a broader effort to scale back many portions of the Dodd-Frank Act, and to take an assessment as to whether the reporting requirement is actually achieving its goal of reducing the flow of money to armed groups waging a deadly civil war in the Democratic Republic of the Congo.
Source Intelligence has assisted many companies in filing their annual SEC reports, enabling firms to provide some of the most thorough and comprehensive data and analyses on supply chain transparency. With only a few months left until this year’s filing deadline, companies should take full advantage of free program assessment resources which provide tips for improved efficiency and results, based on benchmarking data from industry peers.
Since Dodd-Frank was enacted, however, Source Intelligence has encouraged a shift to broader procedures and objectives for overall legal and ethical sourcing. Activities required under Section 1502 of Dodd-Frank, such as supply chain risk mitigation and data collection, have prompted many global enterprises to adopt infrastructure which provides improved supply chain transparency and material traceability. Companies should focus their attention now not only on the 2017 filing deadline, but also on leveraging the progress already achieved through conflict minerals due diligence to drive ethical sourcing initiatives, such as sourcing sustainable palm oil.
To learn more about Source Intelligence’s ethical sourcing and global compliance solution for supply chains, click here.