Conflict minerals seem to be the buzz word in compliance today in terms of third-party risk, and why wouldn’t they be? In 2010, Senator (now Governor) Sam Brownback (R-KS) added language to section 1502 of the Dodd-Frank Act that would require companies to report any use of conflict minerals in their products. But, it was only this year that companies were required to comply, with the first reports due in May 2014. Currently the Act only names four minerals – coltan (tantalum), cassiterite (tin), wolframite (tungsten) and gold – but does that mean corporations should disregard other problem materials? Not necessarily.
Conflict minerals have quickly become the new global compliance challenge. Now that companies are focused on complying with the new US Conflict Minerals Law, they are digging deeper into their supply chains and examining operations – policies, procedures and third-party risk – with a more critical eye. So while you are auditing your production process to identify the use of conflict minerals in your operations or via your third-party partners, why not keep an eye out for other materials marked as future targets?
Compliance Week identifies problem materials that could be next generation conflict minerals:
- Blood Diamonds: Everyone has heard of them and the stigma attached to them. While efforts by the Kimberly Process are in place to eliminate the use of blood diamonds, activists complain that the process is failing.
- Death Metal: Tin from Indonesia, termed “death metal,” is becoming increasingly controversial. Could financing from death metals be aiding military violence? The name would imply the answer is yes.
- Palm Oil: An activist watch list item due to its “environmental destruction and the abuse of human rights.” According to Bloomberg Business Week, palm oil has been linked to human trafficking, violence and slavery.
Blood diamonds, death metal and palm oil are not the only problem materials out there. Compliance regulations for wood, cobalt and even water could be on the horizon as well. Take advantage of this knowledge, and while conducting you conflict mineral audits, note the use of these products, too. While not always easy to do in compliance, looking ahead and staying in front of the next big thing will help your company avoid undue legal issues.
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