Last week, tucked away in the Financial Reform bill that passed both Houses of Congress (and now awaits President Obama’s signature), there appears a key provision that will create a significant supply chain regulatory compliance challenge for any company sourcing materials that contain tin, tungsten, tantalum and yes, gold! In short, these OEM’s (think Apple, HP, Intel pretty much any company that manufactures electronics, etc.) will need to state whether they source “conflict minerals from both Congo and neighboring countries and “report on steps taken to exclude conflict sources from their supply chains, backed by independent audits, according to The Enough! Project. The Securities and Exchange Commission will serve as the regulatory body and they will have nine months to create the regulations to implement this provision of the bill.
Getting past the fact that the SEC serves as a rather strange federal oversight group for a purely supply chain function (think FDA for food compliance issues, FAA for the aviation industry, etc.), we can’t help but wonder if there is anyone in the SEC with any knowledge at all of global supply chain management! Hopefully, the manufacturing industry will take an active role in helping shape the final regulations (maybe we can send Andy Grove in to assist?) to ensure we don’t see another Sarbanes-Oxley overly complex regulatory nightmare!
In a previous article on the subject, we talked about how DC advocacy group The Enough! Project presented a clear case in their report geared towards exposing the use of conflict minerals from the Congo in American electronics. Their argument called for a long-term plan focused on supply chain transparency and gradually implementing audits and regulatory practices that would eventually expose exactly where conflict metals were entering the supply chain, so that companies could progressively find alternate sources. Another crucial part of their suggested solution also called for action within the Congo and abroad to relegate the corrupt political system that currently controls the minerals to distribute the profits in a constructive way.
In some ways, they’ve come across a great victory in their campaign. A letter was recently released from John Prendergast, co-founder of the Enough! Project, that reads:
“Congress passed the Wall Street reform bill with the inclusion of a key provision on conflict minerals which will require companies to disclose whether they source conflict minerals from Congo or neighboring countries, and require companies to report on steps taken to exclude conflict sources from their supply chains, backed by independent audits.
We have to ask, though — is the Enough! Project claiming this a complete victory? While we fully support their mission, we support the version they present in their original report, the one that involves deep research into not only the supply chain, but also the Congolese governmental system and processes so that Congo can eventually function on their own as a viable economic power. Therefore this “victory to us seems a little hollow — more regulations for US businesses to comply with and really no solution aimed at policies to assist the Congolese, who need to rebuild their economic system literally from the ground up. But perhaps it is a start.
“We will be coming back to you with ideas of how you can continue to be involved in shaping the actions our government takes and the practices our electronics companies utilize in sourcing the minerals that power all of our electronics products. Peace in Congo is possible, Prendergast’s letter ends. We agree — calling attention to this issue is vitally important. But let’s hope the Enough! Project doesn’t stop here.
We’re catching fish for the Congo instead of teaching them to fish — and that could have far worse implications than even today’s horribly corrupt situation.
— Sheena Moore & Lisa Reisman