Most of us have seen or heard of the movie Blood Diamond, where diamonds are mined in African war zones and sold to finance internal wars and conflicts. The movie brought awareness to a lot of businesses and consumers across the world and now other minerals such as, tin, tantalum, tungsten, and gold are being sold to finance the same destruction and violence in Africa. According to Fox Business, as part of the new Dodd- Frank financial law, the aim is to pressure companies to not purchase “conflict materials” from the eastern Congo where these materials are being used to fuel and support violence.
Stores such as Wal-Mart and Target are trying to battle the new law which will make public companies using the aforementioned materials report the steps they have taken in order to authenticate that the minerals weren’t controlled by the rebel groups. Verifying and tracing the source of the minerals is difficult and may be costly since there are many intermediaries between the mines and final products.
Although it’s great to see the government stepping in and forcing corporations to take responsibility for the effects of their supply chain decisions this law could also create an economic downturn for the African region. If companies become too apprehensive about the mineral requirements they may not purchase any of the minerals from the region, including ones that were not controlled by rebels. Rick Goss, vice president of the Information Technology Industry Council says in the article US Retailers Seek to Limit ‘Conflict Materials’ Disclosure found on www.foxbusiness.com, “This is the only form of economic activity and subsistence for hundreds of thousands. The challenge is to allow our supply chains to continue sourcing from the region but to do it properly.”
Another large issue with this law is how the government will define the level of due diligence that companies will need in order to verify the minerals are conflict free. As this law takes into effect over the next couple of years I think we will see even more push back from large US companies about the verification process and the amount of due diligence involved. Many large companies are unaware of where most of their raw materials are sourced from; Tiffany & Co. is reportedly seeking a waiver from the new law, claiming that it’s impossible for jewelers to know whether gold bars they purchase have been recycled with tainted gold from the conflict.
Even though the new law may impose a difficult requirement on companies I think it’s a step in the right direction for company supply chain responsibility and consumer awareness.
Stores such as Wal-Mart and Target are trying to battle the new law which will make public companies using the aforementioned materials report the steps they have taken in order to authenticate that the minerals weren’t controlled by the rebel groups. Verifying and tracing the source of the minerals is difficult and may be costly since there are many intermediaries between the mines and final products.
Although it’s great to see the government stepping in and forcing corporations to take responsibility for the effects of their supply chain decisions this law could also create an economic downturn for the African region. If companies become too apprehensive about the mineral requirements they may not purchase any of the minerals from the region, including ones that were not controlled by rebels. Rick Goss, vice president of the Information Technology Industry Council says in the article US Retailers Seek to Limit ‘Conflict Materials’ Disclosure found on www.foxbusiness.com, “This is the only form of economic activity and subsistence for hundreds of thousands. The challenge is to allow our supply chains to continue sourcing from the region but to do it properly.”
Another large issue with this law is how the government will define the level of due diligence that companies will need in order to verify the minerals are conflict free. As this law takes into effect over the next couple of years I think we will see even more push back from large US companies about the verification process and the amount of due diligence involved. Many large companies are unaware of where most of their raw materials are sourced from; Tiffany & Co. is reportedly seeking a waiver from the new law, claiming that it’s impossible for jewelers to know whether gold bars they purchase have been recycled with tainted gold from the conflict.
Even though the new law may impose a difficult requirement on companies I think it’s a step in the right direction for company supply chain responsibility and consumer awareness.
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