The U.S. Securities and Exchange Commission's Wednesday vote to require public companies to disclose whether they use conflict minerals from the war-stricken Democratic Republic of Congo and neighboring countries came under fire this week.
But not from people who opposed it -- from those who argue it doesn't go far enough.
Humanitarian groups said they were disappointed with the final rule, which included a provision allowing companies to report that they couldn't determine the origin of their products.
“It’s a huge loophole that undermines the rule,” said Corinna Gilfillan, head of the U.S. office at Global Witness, of the clause. “The SEC seems more interested in protecting the bottom line of these companies rather than helping the citizens of the Congo.”
The rule, called Section 1502, requires companies to trace their supply chains and disclose if their products use tantalum, tin, tungsten or gold from the DRC, minerals that are said to fuel the conflict in the troubled Central African nation.
The SEC voted 3-2 to adopt the controversial rule, a provision of the 2010 Dodd-Frank financial reform law.
The commission came under fire from humanitarian and environmental groups not solely for what they called a loophole, but also for taking so long to vote on the bill after missing the April 17, 2011 statutory deadline.
The delay was due in part to pushback from various business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, that claimed tracing their supply chain would be too costly and difficult for companies.
The SEC’s analysis found the initial industry-wide cost for companies to implement the new rule would run between $3 billion and $4 billion. The annual cost was estimated to be anywhere from $206 million to $609 million.
In what looked like a move to placate the business community, the commission granted companies two years, and smaller companies four years, to merely state that they could not successfully determine whether the minerals they use are conflict-free. Companies were also given flexibility on scrap or recycled minerals.
Next page: Too far, or not far enough?