What is the Dodd-Frank Wall Street Reform and Consumer Protection Act and how does it relate to conflict minerals?
The Dodd-Frank Act is a regulation passed by the Obama Administration in 2010 to increase liability among companies and curb unethical business practices. Section 1502 of the Dodd-Frank Act requires U.S. publicly-traded companies to perform due diligence on their supply chain, identify whether conflict minerals are present within their products and submit a report (containing details on upstream sources of origin and associated risk) to the U.S. Securities & Exchange Commission. These reports are public disclosures and must be made available on U.S. publicly-traded company websites.
Who is in scope of the Dodd-Frank Wall Street Reform and Consumer Protection Act?
The Dodd-Frank Act only applies to U.S. publicly-traded companies. However, because regulatory requirements trickle down through the chain of production, private companies that do business with their public counterparts, or private organizations that do business with public companies, will also be affected.
In terms of conflict mineral reporting, suppliers to U.S. publicly-traded companies will be required to submit reports to their customers concerning the sources of tin, tungsten, tantalum and gold (3TGs) that exist within their products. Publicly-traded companies require this information to fulfill their regulatory filing and due diligence requirements. Therefore, in many cases, participation in these due diligence processes are a stipulation in contracts.
What does the Dodd-Frank Wall Street Reform and Consumer Protection Act mean for private and/or non-U.S. companies?
If you do business with a publicly-traded U.S. company, you will be required by your customer to take action. They have specific legal requirements they must meet and require your cooperation to do so. As such, participating in these due diligence processes is often essential to doing business with these firms and written into the service agreement.
Even if you do not have tin, tungsten, tantalum, or gold (3TGs) in your supply chain, you must still submit that information to companies that request it, given it is a requirement of the U.S. Securities & Exchange Commission.