How SEC Rules On Conflict Minerals Will Impact Corporations

English: DRC, orthographic projection.

English: DRC, orthographic projection. (Photo credit: Wikipedia)

When the SEC issued their new rules on conflict minerals last summer, my colleague Judy McLevey put together an excellent post, "Behind the SEC Rules on Conflict Minerals."

Six months on, what do we know about how these rules which regulate the use of conflict minerals (tin, tantalum, tungsten or gold mined from the Democratic Republic of the Congo) are affecting corporations? What must corporations do as they ready to officially report next year --- the first SEC conflict mineral filings on Form SD will be due by May 31, 2014.  (Note: companies unable to determine the source of conflict minerals in their product may report the source of their conflict minerals as “indeterminate” for 2 or 4 years, depending on company size.)

To provide additional assistance to listed and other companies, NYSE Euronext has partnered with conflict mineral compliance experts to hold a complimentary conflict minerals forum in Tokyo on April 9th.  For more information, please contact me at

Although the industries most likely affected by these rules include aerospace, automotive, communications, electronics, and industrial, even non-SEC registrants will be impacted by conflict mineral rules to the extent they are suppliers to SEC registrants that are subject to the conflict mineral rules.

Also of note:

  • Institutional investors with hundreds of billions of US dollars in combined assets under management have publicly expressed strong interest in companies’ decisions and actions with respect to conflict minerals. (See, e.g., Investor Statement Regarding Conflict Minerals from the Democratic Republic of the Congo).
  • A growing number of companies are adopting a Corporate Social Responsibility approach to compliance with the conflict mineral rules.
  • The conflict mineral rules are part of a global trend to motivate companies to maintain a conflict free supply chain that does not help perpetuate human rights abuses in the Congo.
  • The conflict mineral rules are intended to require transparency in sourcing practices and do not prohibit companies from sourcing from any specific mine.
  • In circumstances where an independent audit of supply chain due diligence is required, the focus of the audit is not to "second guess" whether sourced minerals are conflict free (or not), but whether the design of the company's due diligence conforms with that of a nationally or internationally recognized due diligence framework.
  • The independent audit can be an Attestation Engagement or a Performance Audit.

To assist NYSE-listed companies in their preparation for the conflict mineral rules, I suggest the following links:

While compliance with conflict mineral rules will be challenging, fortunately a considerable amount of leg work on how to comply has been done by industry associations and other interested organizations. Companies that successfully meet this challenge may be positioned to distinguish themselves on the global stage, in front of an audience of not only human rights advocates, but also investors and customers who are watching with growing interest.

For more detailed guides on compliance with conflict mineral rules, please see the following:

Davis Polk.& Wardwell

Shearman & Sterling

Ernst & Young


For information on global trend toward socially responsible capitalism, please see my earlier blog, Investing in Sustainable Development.

I would like to thank Masahisa Ikeda, Managing Partner, Shearman & Sterling in Tokyo; Kristen Sullivan, Partner/Stamford, Eric Hespenheide, Partner/Detroit, Elise Gautier, Principal/Dallas, Deloitte & Touche; and members of the Linkedin group, Conflict Minerals Consortium, for valuable communications on the topic.  I also would like to thank Monica Kolodziej, intern, NYSE Euronext, for valuable research.