After my post earlier this week on the Security and Exchange Commission's delay in issuing the final rules to govern conflict minerals, I got a chance to speak with an official from the Information Technology Industry Council (ITI), a trade group that represents electronics companies. His take on the delay: the SEC commissioners probably didn't realize what an enormously broad impact these rules could have when they started the rule-making process. Now that they have realized (and I'm paraphrasing here), they're freaked.
Electronic companies have been deeply involved in the discussion of mineral extraction from the war-torn Congo because those minerals can end up in all the electronics they produce, and that we rely on. Once the SEC issues its final rules requiring companies to investigate their supply chains and determine if they're sourcing from the Congo's "conflict mines," companies like Apple, Dell, and HP will have to include the results of their investigations in their annual reports. (See our earlier coverage for the full story on how electronics companies have prepared for the conflict minerals rules.)
Rick Goss, ITI's vice president of environment and sustainability, says his group has supported regulations on conflict minerals for years, and says his group has met with both SEC commissioners and staffers to urge them to swiftly issue strict final rules. The SEC isn't facing any opposition from the electronics industry, he says. But electronics companies aren't the only ones that will be affected.
"There's a misperception in the public mind that this is all about electronics," says Goss. But the minerals covered under the law--tin, tungsten, tantalum, and gold--are actually used "throughout the global manufacturing base," he says, "from automotive to aerospace to appliances to toys. Any type of complex product is going to have a circuit board in it, so it has tin solder, and a few micrograms of gold."
While only big companies that file reports with the SEC will be required to report on their use of conflict minerals, that will quickly cause a ripple effect, Goss says. "The multinational companies will have to turn to their major suppliers and say, you have to provide me with information. They'll turn to their suppliers. All of sudden all these small businesses have to make certain investigations so they can sign conflict-free certifications for their major customers." Goss thinks that small businesses are deeply worried about compliance costs. This might explain the widespread rumor that the U.S. Chamber of Commerce is planning to sue the SEC over the conflict minerals rules.
Depending on how the SEC writes the final rules, small businesses in other broad sectors could get roped in as well, Goss notes. If the rules cover companies that use the minerals as catalysts in a production process, "it could pull in things like pharmaceuticals, plastics, pesticides," he says.
Goss says the ITI supports broad rules with no exemptions. "The only way that a supply chain audit and verification system is going to work is the combined pressure of all sectors," he says. But it remains to be seen if the SEC wants to force all the small businesses from all sectors to comply.
Image: Sasha Lezhnev / Enoughproject.org