Blog: New GAO Set Of Conflict Minerals Compliance

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By coincidence, within 24 hours the three-judge panel from the D.C. Circuit struck lower (again) part of the conflict minerals rule (check this out publish), the GAO issued a study to Congressional Committees titled “SEC CONFLICT MINERALS RULE Initial Disclosures Indicate A Lot Of Companies Were Not able to look for the Supply of Their Conflict Minerals.” The GAO is needed to report yearly on the potency of the SEC’s conflict minerals rule to promote peace and peace of mind in the DRC and adjoining countries (the “covered countries”) as well as on the speed of sexual violence in war-torn regions of the covered countries. The report examines conflict minerals disclosures filed by public companies using the SEC the very first time in 2014, in addition to Condition Department and USAID actions associated with the U.S. conflict minerals strategy within the covered countries. The GAO examined an arbitrary sample of company disclosures in the SEC database to gather the information. Even though the study examined data from 2014 filings – which isn’t probably the most current available – still it offers an interesting understanding of the outcomes in the government’s perspective, especially considering that this post is being furnished to Congress.

The GAO discovered that a lot of companies were not able to look for the supply of their conflict minerals. (Which conclusion appears unlikely to alter within the set of 2015.) Of individuals studied, 99% reported performing reasonable country-of-origin queries (RCOI) for that conflict minerals they used. The GAO spoken with a few of the companiesThat reported that they “difficulty acquiring information you need low cost due to delays along with other challenges in communication.” Based on the report, most companies (94%) also conducted research around the source and chain of child custody from the conflict minerals they used, but 67% reported they were not able to look for the supply of the minerals (i.e., whether or not they originated from the covered countries) and, unsurprisingly, “none could see whether the minerals financed or benefited armed groups in individuals countries.” The report also signifies that 24% reported the conflict minerals they used didn’t originate in covered countries, while 4% reported they did source in the covered countries, but “indicated that they’re or is going to be following through to deal with the potential risks connected using the use and supply of conflict minerals within their supply chains.” Only TwoPercent established that their conflict minerals originated from scrap or recycled sources.

The report estimates that just 47% of companies reported they received responses in the suppliers they surveyed, while only 19 companies within the sample had response rates of 100%. Some companies indicated to GAO the information which they did receive low cost was incomplete. The report also concludes the conduct of “due diligence around the source and chain of child custody of conflict minerals produced little if any more information, past the RCOI, concerning the country of origin of conflict minerals or if the conflict minerals utilized in 2013 in products by companies benefited or financed armed groups within the Covered Countries.” [emphasis added]

The report notes the Worldwide Save Committee estimates that, since 1998, greater than 5.4 million individuals have died within the DRC because of the crisis there. The Un has additionally reported the defeat of M-23, an unlawful armed group, in November 2013 hasn’t brought to significant gains in security and stability in 2014 in eastern DRC. Regarding Condition and USAID actions, the report signifies that efforts were created

“TO IMPLEMENT THE U.S. CONFLICT MINERALS STRATEGY, However A DIFFICULT OPERATING Atmosphere COMPLICATES THIS IMPLEMENTATION. The Companies REPORTED SUPPORTING A Variety Of INITIATIVES INCLUDING VALIDATION OF CONFLICT-FREE MINE SITES AND STRENGTHENING TRACEABILITY MECHANISMS THAT MINIMIZE The Danger THAT MINERALS Which Have Been EXPLOITED BY ILLEGAL ARMED GROUPS WILL Go Into The Logistics. Consequently, Based On The AGENCIES, 140 MINE SITES Happen To Be VALIDATED AND COMPETITION WITHIN CONFLICT-FREE TRACEABILITY SYSTEMS HAS BENEFITED ARTISANAL MINERS AND EXPORTERS. IMPLEMENTATION From The U.S. CONFLICT MINERALS STRATEGY FACES MULTIPLE OBSTACLES Outdoors THE Charge Of THE U.S. GOVERNMENT. For Instance, EASTERN DRC IS Affected By INSECURITY Due To The Existence Of ILLEGAL ARMED GROUPS And A Few CORRUPT People From The NATIONAL MILITARY, WEAK GOVERNANCE, AND POOR INFRASTRUCTURE.”

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