TheCorporateCounsel.net

Earlier this week, the US Government Accountability Office released its annual report on the effectiveness of the SEC’s conflict mineral rule in promoting peace & security in the DRC and adjoining countries. This year, the GAO did not bury the lede, naming the report: “Peace and Security in Democratic Republic of the Congo Have Not Improved with SEC Disclosure Rule.” In fact, according to the GAO, the data shows that the rule has actually contributed to the spread of violence at some mines. Here’s an excerpt from the 1-page highlights:

GAO found no empirical evidence that the rule has decreased the occurrence or level of violence in the eastern DRC, where many mines and armed groups are located. GAO also found the rule was associated with a spread of violence, particularly around informal, small-scale gold mining sites. This may be partly because armed groups have increasingly fought for control of gold mines since gold is more portable and less traceable than the other three minerals. Further, GAO found that the number of violent events in the adjoining countries did not change in response to the SEC rule.

Page 13 of the report gives a good overview of the troubled journey of the conflicts mineral disclosure rule and the current Staff and Commission indications about enforcement.

The GAO did find that the rule has encouraged companies to take a closer look at supply chains, and it’s raised awareness about the risks that mineral purchases will benefit armed groups. But the GAO says that minerals are only one factor contributing to conflict in the DRC and adjoining countries, so “transparent sourcing” is both extremely challenging and inadequate on its own to meaningfully improve peace and security.

Many of our friends and readers are preparing for Yom Kippur today. We are sending wishes to everyone for a peaceful year.

– Liz Dunshee