NGOs, Investors to Ramp Up Activities On Companies' Conflict Minerals Reporting

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By Yin Wilczek

April 23 — Engagement by nongovernmental organizations and socially responsible investors on conflict minerals will ramp up after this year's disclosures, an attorney warned April 22.

“I would expect that” NGOs and SRIs will do a “deeper dive into a larger number of filings this year,” said Michael Littenberg, a New York-based partner at Schulte Roth & Zabel LLP. That closer scrutiny will inform and drive their decisions around rankings, campaigns, shareholder proposals and other activities, he said.

Accordingly, in preparing their conflict minerals disclosures, companies must be careful about what they want to communicate, Littenberg added. “It’s going to be more than just checking the regulatory boxes and doing the minimum that the SEC requires.”

False Sense of Security?

Littenberg also urged companies to stay abreast of what the NGOs and SRIs are saying in their public statements, one-on-one engagements and published reports.

Companies shouldn't be “lulled into a false sense of security here by the relatively limited public engagement that we’ve seen to date from” such organizations, Littenberg added. As in the case of other social responsibility matters such as proxy access, board diversity and sustainability disclosures, it typically takes a few years for NGOs and SRIs to ramp up, he said.

Littenberg spoke at a Crowe Horwath webinar together with Christopher McClure, who leads the consulting firm's Midwest Forensics Accounting Practice.

Pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, public companies must disclose their use of tantalum, tin, gold or tungsten—the so-called “conflict minerals”—from the Democratic Republic of Congo and surrounding areas. Companies submitted their first-ever disclosures under the law in 2014.

NGOs previously contacted by Bloomberg BNA have said they want to see improvements in this year's filings, due June 1. The groups also have started gearing up to scrutinize the submissions. The Responsible Sourcing Network, for example, has developed a new methodology to review companies’ conflict mineral filings and activities.

Global Witness and Amnesty International April 22 released a report finding “alarming gaps” in companies' 2014 disclosures and issuing recommendations for the next submissions.

Other Drivers of Change 

At the webinar, Littenberg said that in addition to NGOs and SRIs, there are other drivers that will result in changes for most companies in their conflict minerals filings this year:

• issuers' review and benchmarking of the 2014 submissions of their peers and competitors may cause them to rethink their disclosure approach;

• many companies this year are further along in implementing their due diligence frameworks compared to 2014;

• there is more supply chain transparency this year compared to last year, when companies were preparing their first-ever disclosures; and

• companies that “held back” in their disclosures and subsequently suffered negative press will include more details in the next filings.


Littenberg also offered some tips for the 2015 filings. He urged companies to realistically assess their future action items to ensure what they disclose they would do is actually what they plan on doing.

Moreover, they should be mindful of what SEC officials have said about the 2014 filings and keep abreast of any new guidance from the commission, Littenberg said. He added, however, that while the SEC staff is working on a third set of “frequently asked questions,” that guidance likely will not be forthcoming while part of the commission's rule remains in litigation.

A panel of the U.S. Court of Appeals for the District of Columbia Circuit is rehearing its decision that portions of the rule violate the First Amendment.

Other Legal Issues

Companies further should heed the “hodgepodge” of other legal requirements that touch on supply chain matters and thus might impact their disclosures, Littenberg said. These include:

• trade sanctions enforced by the Office of Foreign Assets Control;

• the Federal Acquisition Regulation's new anti-human trafficking requirements for government contractors;

• the California Transparency in Supply Chains Act;

• the European Union's forthcoming conflict minerals legislation; and

• initial regulations from the United Kingdom to bar human trafficking.


Meanwhile, McClure observed that as the disclosures enter their second year and cross into the third year, companies now are putting a lot more rigor into their procedures for complying with the requirements.

The disclosures also are transcending from a project to a process, McClure said. He noted, for example, that companies are looking for more efficient ways to reach their suppliers, such as pushing disclosure requirements through new supplier contracts. The reporting is “becoming part of the way people do business,” he said.

Among other tips, McClure urged companies to review their conflict minerals policies to ensure they continue to align with the corporate profile and stakeholder expectations. “This assessment of what your visibility is around this issue is critical because that can impact what you're doing and how much time you're spending,” McClure said. He added that companies also should ensure that their filings reflect what they're trying to communicate.

Moreover, McClure noted that although their SEC filings are one “key outlet” for describing their processes, companies can try using other channels—such as corporate websites—to include other information that is not part of their disclosures, such as their outreach efforts.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Kristyn Hyland at