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Disclosures on how companies manage risks from minerals in their supply chains that have been linked to conflict and human rights abuses in central Africa show “a troubling trend,” according to a new report from the Responsible Sourcing Network.
The Oct. 12 report, which scored companies based on what they said in required conflict minerals filings and in other public disclosures, found that the majority of the roughly 200 companies sampled—including Wal-Mart Stores Inc. and Unilever N.V.—received lower scores than they did the year before.
Scores fell for company efforts to identify products containing tin, tantalum, tungsten, or gold. Corporate disclosures, in their fourth year, also lost quality points for failing to properly verify suppliers’ responses.
There was improvement in companies’ adoption of conflict minerals policies. “Having a policy is the easiest and first step that a lot of companies take,” said Patricia Jurewicz, founder and director of the Responsible Sourcing Network, a project of the nonprofit As You Sow. “Acting on those policies is another question.”
“In the disclosures this year, we didn’t see as much transparency around implementation as we’ve seen in the past and compared to our expectations,” she told Bloomberg BNA.
Jurewicz said the Securities and Exchange Commission’s recently relaxed stance on enforcement of its conflict minerals disclosure rule likely contributed to this year’s “lackluster” filings. A spokeswoman for the commission declined to comment.
“I think it’s directly related to the recent flutter of activity” from Republican policymakers toward potentially rolling back conflict minerals rules, said Jennifer Kraus, co-founder and chief scientific officer at Source Intelligence LLC. Source Intelligence, a sponsor of the report, helps companies track the source of minerals used in their products.
The SEC is taking another look at its reporting requirement, which was the subject of a lengthy legal battle with industry groups that didn’t want companies to be forced to say if their computer chips, jewelry, and other products aren’t conflict-free. Human rights groups and some investors have defended the rule.
Kraus said the drop in scores doesn’t necessarily indicate that companies aren’t investing in supply chain transparency and due diligence. It could just mean they cut back on their reporting.
The company with the biggest year-over-year decline in its score was Wal-Mart, which didn’t file any disclosures with the SEC this year despite having done so in past years. A company spokesman didn’t immediately return a request for comment. Technology companies such as Intel Corp., Microsoft Corp., Qualcomm Inc., and Apple Inc. had the highest scores in the report.
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