In a report to Congress under Section 1502 of the Dodd-Frank
Act, the Government Accountability Office noted that various stakeholders have
developed initiatives that may help companies comply with the anticipated SEC
regulations implementing the conflict minerals disclosure provisions of Section
1502. Prominent among the initiatives
cited in the report is the OECD’s due diligence guidance for responsible supply
chains of minerals from conflict-affected area. The GAO said that this and
other global and in-region
sourcing initiatives, which include the development of guidance documents and audit
protocols, could support companies’ efforts to conduct due diligence and to
identify and responsibly source conflict minerals.The OECD due diligence guidance sets out a five-step framework for detailed risk-based due diligence, including strong management systems and an independent third-party audit of supply chain due diligence.
Section
1502 of Dodd-Frank requires the SEC to issue a conflict minerals disclosure
rule requiring companies to disclose whether necessary conflict minerals used
in their products originated in designated conflict areas and, if they did, to provide an additional report with
certain disclosures. On July 2, 2012, the SEC announced that it will hold an
open meeting on August 22, 2012 to consider whether to adopt a final conflict
minerals disclosure rule.
The SEC proposal would require companies to
describe the due diligence used to make supply chain determinations. But the Commission
did not prescribe any particular guidance for conducting due diligence,
reasoning that the conduct undertaken by a reasonably prudent person may vary
and evolve over time. The SEC does expect that a company whose conduct
conformed to nationally or globally recognized guidance for due diligence regarding
conflict minerals supply chains would provide evidence that it used due
diligence in making its supply chain determinations. In that context, the proposing
Release No. 34-63547 cited the OECD draft due diligence guidance.