NGOs Mixed on First Conflict Minerals Reports

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Yin Wilczek  

June 3 — Nongovernmental organizations are issuing a mixed verdict on companies' inaugural conflict minerals disclosures, finding that while some submitted strong filings, other issuers' submissions were deficient.

In a June 2 release, Global Witness said a majority of the more than 620 corporate filings it reviewed fell short of the mark. “The lack of information in most of the submissions we have seen suggests companies have not taken the necessary steps to find out what is really going on along their supply chains—so we can't tell if they are sourcing responsibly or not,” Global Witness campaigner Sophia Pickles said in the release.

However, Sasha Lezhnev, a senior policy analyst at the Enough Project, painted a slightly rosier picture. “Frankly, we expected some companies or many companies to say almost nothing,” he told Bloomberg BNA June 2. “And that's not what we're seeing—we're actually seeing a lot of data.”

SEC spokesman John Nester declined to say when the Division of Corporation Finance will review the filings, and when issuers may expect comments from the staff.

U.S. public companies and foreign private issuers are required by 1934 Securities Exchange Act Rule 13p-1 to disclose on Form SD their use of so-called “conflict minerals”—gold, tantalum, tin and tungsten from the Democratic Republic of Congo and adjacent countries—if those minerals are “necessary” to a product made by the companies. The requirements were mandated by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

By the June 2 deadline, around 6,000 issuers were expected to file their first-ever disclosures on the matter, covering the reporting period of Jan. 1 to Dec. 31, 2013.

Filings Vary

Meanwhile, Lezhnev told Bloomberg BNA that he is seeing a “wide stratification” in the filings. He said he was “pleased” by some reports, including those from Intel Corp. and Apple.

“I was actually pleased that Intel reported” the names of its smelters and that Boeing published “the number of its smelters,” Lezhnev added. However, others—including the submission from Ford Motor Co.—were “pretty weak,” he said. “It's obvious that some companies are being dragged into this process kicking and screaming and they're trying to do the bare minimum,” perhaps even less than that required by the “spirit of the law.”

In a statement e-mailed to Bloomberg BNA, Ford said it is “fully compliant” with the SEC's rule and has taken steps to ensure its minerals are sourced responsibly.

Impact of Requirements

In the meantime, the parameters of the SEC's requirements remain murky. In an April 14 decision, the U.S. Court of Appeals for the District of Columbia Circuit found parts of the commission rule unconstitutional to the extent they require issuers to report to the agency and to state on their website that any of their products have not been found to be “DRC conflict free”.

In response to the decision, the SEC April 29 issued guidance clarifying that for the June 2 filings, issuers do not have to identify their products as “DRC conflict free,” “not been found to be `DRC conflict free,'” or “DRC conflict undeterminable”.

The commission May 29 petitioned the appellate court to rehear the case, asking the court to hold its petition in abeyance pending the resolution of an unrelated First Amendment lawsuit.

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

To contact the editor responsible for this story: Phyllis Diamond at

Ford's conflict minerals report is available at

Request Corporate on Bloomberg Law