In 2010, the United States Congress passed the Dodd-Frank Act, directing the Securities and Exchange Commission (SEC) to require certain companies to disclose their use of conflict minerals when those minerals are essential to the functionality or production of a manufactured product. Since then, the connection between SEC reporting and supply chain compliance has become increasingly evident, starting with conflict minerals and expanding into the broader discussion on supply chain security, ethical sourcing, and responsible operations. Ultimately, these practices deliver significant benefits for both companies and their stakeholders.
What Are Conflict Minerals?
Conflict minerals are materials sourced from regions plagued by armed conflict and human rights abuses and designated by the SEC. These minerals known as 3TG (specifically, tantalum, tin, tungsten, and gold) are found in electronic devices such as smartphones, laptops, and other consumer electronics.
Recently, cobalt, mica, lithium, nickel, copper, and graphite were introduced to address minerals beyond 3TG. However, it’s important to note that while these minerals are tracked through the Extended Minerals Reporting Template (EMRT), the SEC does not require reporting for these minerals. In contrast, 3TG minerals are reported using the Conflict Minerals Reporting Template (CMRT), which is required by the SEC.
Why Does the SEC Require Conflict Mineral Reporting?
Section 1502 of the Dodd-Frank Act aims to shed light on how armed groups finance their operations through mining minerals. By requiring companies to conduct due diligence on their supply chains, the law seeks to reduce funding of these groups and promote ethical sourcing practices.
Conflict mineral reporting is not just a regulatory requirement; it’s a critical component of supply chain security and compliance. Understanding where your materials come from helps ensure your business operates ethically and legally.
Who does this affect?
SEC conflict minerals reporting is not limited to U.S.-based companies. The requirement applies to any issuer that files reports with the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934. This includes: domestic U.S. companies, foreign private issuers that are listed on U.S. exchanges and therefore file SEC reports, smaller reporting companies, and voluntary filers that submit periodic reports to the SEC. The determining factor in whether conflict minerals reporting is required is whether the company is an SEC registrant. Any company, regardless of where it is headquartered, must comply if it files with the U.S. Securities and Exchange Commission (SEC).
Where to go from here?
Conflict minerals reporting is far more than a yearly compliance checkbox; it’s a strategic opportunity to strengthen sourcing practices, establish strong due diligence frameworks, and gain full visibility into your supply chain. The conflict minerals reporting process enables you to trace minerals used in your manufacturing process, providing insight into suppliers, smelters, their locations, and any applicable sanctions. With the continued expansion of U.S. sanctions, such as Russian gold, this level of transparency is essential for mitigating risk and ensuring compliant operations.
