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This 2023 Skadden alert notes that “many companies have continued to conduct due diligence and file full conflict minerals reports with the SEC, given already implemented diligence processes, existing contractual obligations and the expectations of interested stakeholders” since the April 2017 Corp Fin no-action statement indicating the Division would not recommend enforcement against companies for not complying with the requirements of the conflict minerals rules to conduct due diligence and file a report. After all, companies remain obligated to file a Form SD. That being said, I suspect conflict minerals reports have gotten less attention than before the no-action relief and, for some companies, have become a check-the-box exercise.

This Ropes & Gray alert describes how other external pressures have put attention back on conflict minerals due diligence since the information gathered is now relevant to other compliance considerations and ESG-related supply chain concerns. Specifically:

Over the last ten years, information reported by suppliers has required companies to consider the applicability of North Korea, Venezuela, Myanmar and Russia sanctions. Companies also have had to consider reports alleging forced and/or child labor in the 3TG supply chain, among other potential concerns, that potentially implicate supply chain and human rights policies and import restrictions.

The alert goes on to describe additional developments relevant to 2024 conflict minerals reports “that may have compliance and disclosure ramifications beyond the Conflict Minerals Rule.” Those include a new NGO report that alleged linkages between certain Chinese gold refiners and the Xinjiang region of China, which has implications under the Uyghur Forced Labor Prevention Act, and Russia sanctions — including relating to Russian gold and tungsten — which have been strengthened in multiple jurisdictions. Here are the takeaways from the alert:

– Consider the broader context of 2023 3TG smelter and refiner and other information reported by supply chains. Is the information potentially relevant to a sanctions or forced labor compliance analysis? Does reported information potentially implicate human rights risk assessments and/or human rights and supply chain policies?  Is the information being appropriately considered in the context of modern slavery transparency and mandatory human rights due diligence legislation and the EU’s new Corporate Sustainability Reporting Directive?

– Be mindful of data limitations. Most suppliers report 3TG sourcing information at the “company level,” i.e., for all their products rather than those supplied to the requesting downstream commercial customer. Therefore, smelters and refiners reported by a supplier may not be in the requesting downstream customer’s supply chain. Reported information also often presents other validation concerns.

– There isn’t a one-size-fits-all approach to address the watch-outs highlighted in this post. The analysis and appropriate compliance and risk mitigation steps (if any) will depend upon numerous company- and supply chain-specific factors, among other things. However, given the evolving regulatory landscape – both transparency and substantive compliance requirements – it is becoming increasingly important for companies to consider the broader implications of 3TG sourcing and compliance information received from suppliers.

– Meredith Ervine