Investors With $3.75 Trillion Defend Conflict Minerals Rule

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By Andrea Vittorio

A global group of investors managing more than $3.75 trillion in assets is backing a U.S. regulation marked for possible rollback that requires companies to trace their use of minerals from war-torn regions in Africa.

“Conflict minerals disclosure is material to investors,” Boston Common Asset Management, Mercy Investment Services and about 100 other investors and investor groups wrote in a Feb. 17 letter to the Securities and Exchange Commission. The agency is now reconsidering how it implements the rule after its acting chairman questioned its effectiveness.

A leaked draft of an as-yet-unsigned executive order suggests President Donald Trump may also step in to temporarily waive the disclosures, which were called for in the 2010 Dodd-Frank Act. The president has already signed a resolution repealing another Dodd-Frank anti-corruption rule seeking payment disclosures from oil, gas and mining companies.

“These were some of the first disclosure rules on environmental, social and governance issues mandated by the SEC,” Lauren Compere, managing director at Boston Common Asset Management, told Bloomberg BNA. Similar regulations have since been adopted in the European Union and other parts of the world, so unraveling both rules would mean backtracking on several years of U.S. leadership on these issues, she said.

Assessing Risks

Also among the letter’s signatories were the heads of corporate governance at HSBC Global Asset Management in the U.K. and at Swedish national pension funds.

The letter says conflict minerals disclosures have “informed and improved” investors’ ability to assess social and reputational risks that companies face in their supply chains as well as what companies are doing to mitigate risks.

Companies from General Motors to General Electric must report to the SEC every year on their conflict mineral use. Many have found it difficult to fully trace their use of tin, tantalum, tungsten and gold, which have been linked to armed conflict and human rights abuses in the Democratic Republic of the Congo and neighboring countries.

Concerns have also been raised over whether the rule has had its intended impact in Africa. “We understand that the transformation to a peaceful and prosperous mining industry in the DRC region has been slow and challenging,” the letter says. But to achieve “maximum impact,” it says the SEC must “pursue robust enforcement of the requirements.”

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

For More Information

The investors' letter is available at http://src.bna.com/mlw

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