Under Dodd-Frank, public companies may soon be required to report on their use of any of these minerals originating from the Democratic Republic of the Congo and nine other African nations. “The SEC adopted the rule, but it has been subject to a legal challenge to the validity of its rulemaking,” says Morrison & Foerster securities partner David Lynn. “A decision was reached in April holding that the statute and the SEC rule violate the First Amendment of the Constitution. If the rule ultimately requires reporting, the practical implication is to be ready to tell your sourcing story.”
Compliance could be potentially costly and complicated. Lynn suggests that companies know the country of origin; ensure that downstream suppliers (including mines, smelters, and refiners) are conflict free; review and revise sourcing policies and contracts as necessary; and raise awareness of this issue with your entire supply chain.