Federal Report Finds SEC Conflict Minerals Rule Compliance Difficult
The Government Accountability Office (GAO) recently released a report that found companies continue to have difficultly complying with the U.S. Securities and Exchange Commission’s (SEC) conflict minerals rule. This rule, which was put in place by the Obama administration, but scaled back somewhat by the current White House leadership, requires publicly-held companies to file a specialized disclosure report if they manufacture, or contract to have manufactured, products that contain conflict minerals.
The Metals Service Center Institute has opposed this rule, arguing that compliance would be costly and cumbersome.
The GAO found that, after conducting due diligence, in 2017 only 37 percent of the companies were able to determine that their conflict minerals came from covered countries or from scrap or recycled sources. That figure was down from 39 percent in 2016, but was an improvement from 2015’s 23 percent compliance rate. Almost half of companies (47 percent) last year reported they could not definitively confirm the source of the conflict minerals in their products, compared with an estimated 55 percent in 2016 and 67 percent in 2015.
Under 2017 guidance, the SEC indicated it would not recommend enforcement action if companies did not report on specified due diligence disclosure requirements.