Credit: Sasha Lezhnev/Enough Project

On August 22, the U.S. Securities and Exchange Commission (SEC) approved final rules on Sections 1502 and 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1502 is specific to conflict minerals, while section 1504 applies broadly to natural resource extraction.

Adoption of these long-overdue rules is a milestone. For the first time, corporations whose stock is publicly traded in the U.S. will have to disclose the use of conflict minerals from the Democratic Republic of Congo (DRC) in their supply chains, as well as payments made to governments for the extraction of oil, gas and mineral resources.

We are still analyzing the full text of the rules. But, as they go into effect, investors and consumers will have an important new tool to assess how corporations exercise due diligence to avoid funding violence and atrocities in the DRC and other countries. Increased transparency around conflict minerals and resource extraction will help United to End Genocide and our Conflict Risk Network of institutional investors identify and pressure the economic enablers of mass atrocities and genocide.

Here are a few of the provisions our analysts will be examining more closely in the coming days and weeks:

  • We are dismayed that the final rule on Section 1502 will allow corporations to describe the origin of their conflict minerals—tin, tungsten, tantalum and gold—as “undeterminable” for two years (four years for small corporations). It has already been two years since passage of the legislation. If many corporations plead ignorance, implementation will be further delayed at a time of continuing violence and atrocities in eastern DRC.
  • On the plus side, the rules will apply to companies registered on U.S. stock exchanges regardless of their size, and corporations will be required to file their reports in a publicly accessible form. Such corporate disclosures will help investors to gauge reputational, regulatory, legal and operational risks associated with their investments in DRC and other resource-rich countries.
  • Under Section 1504, corporations are now required to make public any payments over $100,000 that they make to governments for the extraction of oil, natural gas or minerals. The SEC has chosen not to define “project”-level reporting, so further study is needed to determine whether the guidance will provide investors with the information they need to evaluate possible exposure to corruption, abuses and weak governance.
  • The SEC upheld the principle of transparency by not allowing corporations required to report under Section 1504 to hide behind the laws of countries that want to keep payments secret. Such laws can be used by despotic regimes to prevent citizens from finding out how their nation’s resource wealth is being used, protecting the flow of funds used to perpetrate atrocities.

Although the rules are finally in place, the work has only begun. Industry lobbies such as the American Petroleum Institute and the Chamber of Commerce have aggressively opposed these disclosure requirements, and they are not likely to give up easily.

United to End Genocide will join with partner organizations including Global Witness, the Enough Project, International Corporate Accountability Roundtable, and the Publish What You Pay Coalition to defend, strengthen and advance effective implementation of the new rules. Investor members of the Conflict Risk Network will be urging corporations to implement the rules quickly and comprehensively, and holding them accountable to their obligations to source minerals responsibly and operate transparently.


Enabling Peace in Congo

August 22, 2012

United States Launches Initiative to Address Gender-Based Violence

August 24, 2012
  • Betsy Kain

    Thanks for doing this extremely important work.
    And let us know, as well as you can, which companies should be avoided/shunned!

  • Betsy Kain

    Thanks for doing this crucial work. And keep us informed, as well as possible which companies we should avoid/shun!

  • Scott

    Glad to see this finally in place. Looking forward to making it even better.

  • Ken Lemberg

    These efforts are important toward corporate accountability and transparency. To the extent they help prevent or minimize human atrocities of innocents, they are critical in furthering the requisite economic incentives in favor of people’s lives. “Out of sight, out of mind” in other countries is not acceptable in this regard, and American citizens, investors, and companies can make a positive difference.