Global Attention to Conflict Minerals Established with EU Legislation
In a recent groundbreaking decision, the European Parliament voted in favor of adopting conflict minerals legislation. These new regulations will mirror that of their American counterpart, Dodd-Frank Act (Sect 1502). This comes despite previous recommendations from the European Commission that reporting be voluntary. Under this new ruling, it will be mandatory for a vast majority of European companies to issue reports regarding the source of materials that fall into the classification of conflict minerals (tin, tantalum, tungsten, and gold).
These requirements will also charge importers, smelters and refiners to gain certification from an independent, third-party audit stating their supplies are not sourced from conflict regions. The European Union encompasses more than 400 of these types of entities, which makes it one of the largest markets for minerals potentially sourced from conflict regions. Financial support will also be made available to SMBs wanting to obtain certification for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME).
European Parliament will model these reporting guidelines after the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. These are the same guidelines used for drafting Section 1502 of the Dodd-Frank Act. This is good news for future efforts and legislation, as it creates a foundation for globally standardized reporting.
This is a revolutionary decision not only for the European Union, but also the entire world economy. Once this ruling is rolled out, it will mean that companies functioning in two of the world’s largest markets will be tasked with reporting on whether or not they source conflict minerals. As a result, other nations may be pressured to adopt similar regulations.
As the spotlight for conflict minerals reporting becomes brighter and more widespread, acquiring means for managing the inherent tasks and processes will be a necessity. Solutions are now available that automate many of the involved tasks of conflict mineral reporting. GRC (governance, risk management, and compliance) solutions eliminate countless hours of human involvement surrounding supplier engagement and reporting, assessment/survey/review creation, and risk lifecycle management. Support documentation for reports can be consolidated into a singular repository. Additionally an internal, centralized system for managing processes and initiatives opens communication.
More importantly, a GRC solution can automate the process of assessing vendors for their conflict mineral exposure. This allows companies to perform greater due diligence on questionable suppliers and eliminate them from their supply chains, if necessary.
With the passing of European legislation, conflict mineral reporting has grabbed global attention overnight. As technologies are adopted to assist with related processes, conflict mineral reporting is quickly becoming an accepted part of the supply chain/third-party management agenda. Transparency is the new norm, and lack thereof could hold major implications for organizations. Moving forward, it is in the best interest of companies to join the global initiative of stomping out conflict minerals.
Learn about how HIPAA Compliance plays a role in protecting against cybercriminals.
Learn about Principled Performance: Why should your company pursue it?
Read about the GAO’s report on CRA oversight