Mining the Disclosures 2019

An Investor Guide to Conflict Minerals and Cobalt Reporting in Year Six

For the sixth consecutive year, Responsible Sourcing Network (RSN) is analyzing corporate compliance under Special Disclosure Section 1502 of the Dodd-Frank Act (otherwise known as Section 1502 or the Conflict Minerals Rule), and companies’ efforts to take action and report their practices publicly. Due diligence by companies with respect to tin, tantalum, tungsten, and gold (3TG) again falls short from the intent of the law and the expectations of stakeholders. With a 2019 average score of 40.1., down from 40.3 in 2018, the scores of the sample group of companies analyzed by RSN keep decreasing. The comparison between 2018 and 2019 regrettably shows the lack of efforts of a large number of companies, highlighted by the decline or stagnation of 59.8% of the sample, and, even more regrettably, 63% of the sample scores at mediocre levels (categories of minimal and weak).

After six years of implementation of the law, these results continue to weaken efforts to tackle the financing of armed groups in the Democratic Republic of Congo (DRC). In April 2017, the Securities and Exchange Commission’s (SEC) former Acting Chairman, Michael Piwowar, concluded that the decision of the U.S. District Court for the District of Columbia was irreconcilable with the law makers’ intent. Following Piwowar’s conclusion, the SEC’s Division of Corporation Finance issued a statement saying it will not recommend enforcement action of Section 1502, which has eliminated the incentive for companies to implement the law. However, this uncertainty—brought by the Trump administration— should not hide the clear concerns about conflict minerals raised by consumers and investors.