Conflict Minerals Rule Upheld
July 29, 2013
On July 23, the Federal District Court of the District of Columbia upheld the Securities and Exchange Commission’s (SEC) final rule on conflict minerals. Developed in 2012 to implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rule (13p-1) requires that companies file a new form (Form SD) with the SEC disclosing if the minerals used in their manufacturing processes originated in the Democratic Republic of the Congo (DRC) or an adjoining country.
Following release of the final rule in August of last year, the U.S. Chamber of Commerce, the National Association of Manufacturers and Business Roundtable filed a suit in federal court claiming that the rule was arbitrary and capricious and violated the first amendment. In upholding the rule, the District Court said it finds “no problems with the SEC’s rulemaking” and disagrees “that the disclosure scheme transgresses the First Amendment.” Significantly, the court defended the SEC rule as fulfilling “Congress’s interest in promoting peace and security in and around the DRC.”
Since 2008, Wespath has been advocating, through company dialogues and multi-stakeholder initiatives organized by the United Nations Principles for Responsible Investment and the Responsible Sourcing Network, that companies identify the source country of the minerals used in their products and develop policies and procedures to ensure that they do not source minerals from conflict regions. Wespath also wrote to the SEC in 2011 and 2013 to publicly voice its support of the SEC’s conflict minerals rule.
Unless appealed, the court’s ruling means that most companies must disclose the origin of any conflict minerals used in 2013 on or before May 31, 2014.