Are electronics companies trying to have it both ways on conflict minerals legislation?
May 2012
The past few years have seen increased public attention on trade in minerals from the eastern Kivus region of the Democratic Republic of Congo (DRC) that finances armed groups and the Congolese military. The role of international companies in using the types of minerals mined in the Kivus has come under particular scrutiny. In July 2010 the U.S. Congress passed the Dodd Frank Act, which contained a provision – Section 1502 – which addresses the issue of conflict minerals and the role of companies that use tin, tantalum, tungsten and gold. Section 1502 requires SEC-registered companies to conduct supply chain due diligence on any such minerals sourced from Congo or adjoining countries, to submit an audited report on the measures they have taken to the SEC, and to disclose this information publicly.
Some members of the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI) are working hard to find ways of helping companies comply with Dodd Frank 1502. Most notably, these two industry associations have invested considerable time and resources in developing a Conflict Free Smelter scheme designed to audit the supply chain management practices of companies that smelt tin, tantalum, tungsten and gold.
EICC and GeSI members and other companies have also joined with NGOs and socially responsible investors in sending formal submissions to the SEC in support of Dodd Frank 1502. For example, on 2 March 2011, this ‘Multi-Stakeholder Group’ sent a letter to the SEC recommending that final rules accompanying 1502 should require companies sourcing from DRC and adjoining countries to carry out due diligence compatible with the standards set out in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. This letter was signed by EICC and GeSI members AMD, HP and Microsoft, as well as non-member firms Ford and General Electric. On 22 August 2011, the Multi-Stakeholder Group sent the SEC another submission urging no delay in the issuance of the final rules. This second letter’s signatories included AMD, Hewlett-Packard and Microsoft, as well as General Electric.
Over the same period, however, associations such as the US Chamber of Commerce and the National Association of Manufacturers (NAM) have been seeking to undermine the implementation of Dodd Frank 1502. The US Chamber of Commerce argues that the law will be too burdensome to implement, that the situation on the ground makes it too difficult to trace the origins of the minerals and that the law should be applied in a phased-in approach. In its 18 July 2011 letter to the SEC it calls for the rules to be withdrawn and for the rulemaking process to begin again. For its part, the National Association of Manufacturers has submitted comments calling for a three year phase-in of the law and claiming that the economic impact assessment undertaken by the SEC is inadequate. The Chamber of Commerce has indicated that it will pursue legal action if its concerns over the potential cost to businesses of the legislation are not met.1 This lobbying by the Chamber and NAM has hampered the completion of the
1 Reuters, ‘Five Endangered Dodd Frank Rules’, 8/4/11. law – the SEC was supposed to announce rules accompanying Section 1502 a year ago – and threatens its integrity and effectiveness. This has serious implications for the population of eastern DRC.
EICC and GeSI companies, together with non-members that signed the Multi-Stakeholder submissions to the SEC, appear to be taking a very different approach to conflict minerals and Dodd Frank to that of the Chamber of Commerce and NAM. However, some leading members of EICC and GeSI, as well as Ford and General Electric, have close ties to the US Chamber of Commerce and in some cases the National Association of Manufacturers too:
Dell is a member of the Chamber of Commerce. From 2008-2010 Intel is reported to have donated over US$750,000 to the Chamber of Commerce and approximately US$535,000 to the National Association of Manufacturers.2 IBM is on the Board of the Chamber of Commerce, on the Board of the Chamber’s Business Civic Leadership Center (BCLC) and the Board of the Chamber’s Institute for a Competitive Workforce (ICW). Verizon is on the board of the Chamber of Commerce and the Board of the National Association of Manufacturers. HP was previously on the Board of the National Association of Manufacturers.3 Motorola is on the Board of the Chamber’s Business Civic Leadership Center (BCLC). Over the last three years Microsoft has contributed almost US$425,000 to the US Chamber of Commerce.4 General Electric is a member of the Chamber of Commerce. From 2007-2009 Xerox donated US$190,000 to the Chamber of Commerce and is a member of the board.5 AT&T is on the Board of both the Chamber of Commerce and the National Association of Manufacturers. Ford is on the Board of the National Association of Manufacturers and is a member of the Chamber of Commerce.
To avoid any perceptions of hypocrisy, Global Witness believes it is very important that members of the EICC and GeSI, as well as Ford and General Electric distance themselves from the Chamber of Commerce and the National Association of Manufacturers. They should do this by making public statements against the positions taken by these associations on Dodd Frank 1502 or by cutting their ties with them altogether.
2 Center for Political Accountability, Intel contributions for 2008, 2009 and 2010. http://www.politicalaccountability.net/index.php? ht=d/sp/i/958/pid/958. 3 HP previously featured in a list of board members on the NAM website; however the company’s name is no longer included in this list. 4 Center for Political Accountability, Microsoft contributions for 2009 2010 and 2011. 5 Center for Political Accountability, Xerox contributions for 2007, 2008, 2009.