Companies Fall Short in Conflict-Minerals Reporting, Groups Say

Jun 03, 2014 12:01 am ET

June 3 (Bloomberg) -- Most U.S. companies failed to adequately investigate whether they sourced so-called conflict minerals from parts of the Democratic Republic of Congo, according to two organizations that monitored the process.

The exceptions included Intel Corp., Hewlett-Packard Co. and Apple Inc., which have provided case studies for other companies to follow suit, according to Claigan Environmental, a consultant to companies on government policy.

“They will be a lot harder on their suppliers,” Bruce Calder, vice president at Claigan Environmental, said by phone last week. “For those who did zero due diligence, this will create a bad perception, and it’s a year before you can fix this perception issue.”

Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, U.S. companies were required to disclose to the Securities and Exchange Commission by yesterday whether their products contained any gold, tin, tungsten or tantalum sourced from warn-torn parts of Congo or adjoining countries. The provision aims to choke off funding to armed militia groups responsible for human-rights abuses.

The majority of the U.S.-based companies provided few details about their efforts to keep supply chains free of conflict minerals, according to Global Witness, a U.K.-based advocacy group.

‘Supply Chain’

“We know that these were companies’ first-ever conflict minerals reports, and we didn’t expect them to say that they are all 100 percent conflict-free,” Carly Oboth, a policy adviser at Global Witness, said by phone from Washington. “But we expected them to describe what the situation is, what they’re planning to do to mitigate any kind of risk they find at their supply chain, and too often we didn’t see that.”

Public pressure will push the process forward, said Michael Littenberg, a partner at law firm Schulte Roth & Zabel LLP in New York who has worked on conflict-minerals compliance.

“What’s going to drive reporting expectations is going to be other external stakeholders such as NGOs, socially responsible investors, industrial customers, consumer groups rather than the SEC,” Littenberg said yesterday by phone.