Conflict minerals are, by definition, minerals like tin, tantalum, gold and tungsten that have been sourced from war-torn parts of Africa. Thanks to regulations like the Dodd-Frank Act, companies around the world are having to take a harder look at their supply chains in order to reduce the amount of minerals sourced from conflicted areas like the Democratic Republic of Congo.
According to Spend Matters contributor Kaitlyn McAvoy, the human rights organization The Enough Project reported in 2016 that these regulations have been effective in reducing or eliminating the amount of conflict minerals sourced from the affected areas. However, the regulations are getting ready to undergo some changes, with the U.S. president's office looking to roll back parts of the Dodd-Frank Act.
The proposal has a lot of executives and supply chain operators wondering how this will impact their businesses moving forward.
The more things change…
Reuters reported that a leaked copy of the proposed changes to the Dodd-Frank Act would have the conflict minerals portion of the rule suspended for two years. While it is currently only speculation, the act does contain the provision that it can be suspended for that period of time if it is in the interest of national security.
For the most part, the incoming administration has focused on the parts of the Dodd-Frank Act that govern Wall Street and the financial sector, but changes to the conflict minerals part of the legislation would impact supply chains worldwide. However, it's not necessarily going to have that much of an effect on businesses in the long term that have already made changes to make their supply chains more transparent.
…The more things stay the same
It looks like the U.S. government may make some changes to the Dodd-Frank Act and possibly others like it. However, according to Sustainable Brands, even if the U.S. government rolls back the regulations or at least suspends it for some time, this activity won't halt the trend toward greater supply chain transparency. In fact, while some organizations may disengage from following the Dodd-Frank rule, most will continue to focus on sourcing materials from better areas and maintaining a higher level of transparency. At the very least, changing the rule won't affect the 2017 conflict mineral filing requirements.
"In some ways [the conflict minerals portion of the Dodd-Frank Act] has achieved much by launching a global debate on where we get our raw materials from," said Harrison Mitchell, director of RCS Global. "It has spurred other investigations into sourcing, and as a result, whole industries have moved beyond the limits of the legislation."
The fact of the matter is, organizations should still be cognizant of conflict minerals as they plan and execute their supply chain strategies, and keeping a transparent operation is more important than ever. Even as the U.S. government takes a harder look at the Dodd-Frank Act, transparent supply chains aren't going to fall by the wayside, so it remains critical to invest in the right kinds of tools to maintain that transparency.
Get in touch with the experts at Inspirage today for more information about our conflict mineral solution and how the possible changes to the Dodd-Frank Act will affect you.