Private companies exempt
While private companies need to do the same reasonable country of origin inquiry and due diligence work, they do not need to file with the SEC. They will, however, need to trace their supply chains to provide required accountability information to upstream customers and public companies.
Although there is no legal requirement for private companies to participate in the SEC mandate, Jones expects that assisting the public sector in compliance reporting will put pressure on companies like Apple, who have a long supply chain.
"Pressure is going to come not from the SEC filing, it is going to be coming from a lot of these large corporations that have basically said that there’s significant human rights issues here, we’re firmly in support of ending it, and we want our vendors to fall in line," Jones said.
As there’s no requirement for any company to become conflict mineral-free -- and Jones suspects the SEC won’t levy heavy fines for the first few years of reporting -- there has been much discussion about the real effects of legislation.
"There’s often mention of the real teeth in this thing is the guilt issue and potential business interruption it could cause if you choose not to play by the rules," Jones said. "I think the guilt and public spotlight will actually swing people to do this rather than the fear of being blacked by the SEC."
Democratic Republic of the Congo has minerals worth $24 trillion USD though 71 percent of the country lives below the poverty line, according to 2006 CIA estimates. While the CIA states that the economy is “is slowly recovering after decades of decline,” some fear that pressure to stop sourcing conflict minerals might worsen the situation in a nation with 15 years of civil war.
"What is said in the legislation is that we don’t want to stop sourcing out of the conflicted area. If people stop sourcing out of there, they’re going to take one of the poorest regions in the world and make it worse," Jones said of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is the basis for SEC filing. "They want to bring enough pressure to bear that these armed camps, doing awful things, can no longer do that."
Jones continued that reaction to the legislation has been mixed, with many companies waiting to begin compliance reports because, until recently, they hoped the requirement would go away. With the filing deadline of May 31, 2014 approaching, companies are getting serious about "doing their homework."
"It’s hard to tell how this whole thing is going to shake out. It’s a good plan and going to take a couple years to see what kind impact it will have, positive or negative," Jones said.
— Jessica Lipsky, Associate Editor, EE Times