Dodd Frank and Conflict Minerals

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in July 2010 with the aim of improving accountability and transparency in the financial system.

Under one element of the legislation, listed companies in the US that make use of 'conflict minerals' in their production face a range of new transparency requirements. Companies affected will include those in the electronics, jewelry, pharmaceutical and automotive industries will be affected.

The legislation does not prevent the use of these minerals (coltan, tin, tungsten and gold) from 'conflict zones' within the African Great Lakes region (the Democratic Republic of Congo and its 9 neighbouring countries), but it does force companies to be transparent about their use of such minerals; hoping this level of accountability will force change in the working conditions of these mines, where often child and forced labour are used and poor health and safety standards are employed.

Since the law has been passed:

• Listed companies that use these 'conflict minerals' must disclose usage to the Securities Exchange Commission (SEC) as well publicly, on their company website.
• They must detail the due diligence measures they have in place with regards to the chain of custody in the sourcing of these materials (this should include details of audits and paper trails).
• Crucially, they must clearly disclose which of their products are not 'conflict free'.

For many companies this legislation means a much more detailed examination of their supply chains and a general movement towards greater transparency regarding how and where they do business.