A bid by the US government to root conflict minerals out of consumer goods has fallen short, with most companies admitting that they have no clue about source origins, according to a federal watchdog report.
The Government Accountability Office reviewed new disclosures from companies having to file, for the first time ever, information about where they derive tantalum, tin, tungsten, and gold—minerals known to originate from conflict-ridden zones in war-torn countries like the Democratic Republic of the Congo.
Based on a review sample of the companies’ filings, about two-thirds “reported that they were unable to determine the country of origin,” according to the GAO.
Another four percent of companies reported that their mineral supply chain did trace back to African countries specifically identified by Congress to be plagued by violence and exploitation in their mines.
The disclosures were filed with the Securities and Exchange Commission, and were mandated by a provision included in the Dodd-Frank Wall Street Reform Act to “bring greater public awareness of the source of companies’ conflict minerals,” GAO notes.
The watchdog reported that 99% of filing companies conducted a “reasonable country of origin inquiry,” but most couldn’t produce actionable results due to the complex nature of their supply chains.
Of the companies that did discover problematic sourcing in their conflict materials, all indicated they would take remedial action, including notifying suppliers that they intend to stop doing business with them, and inserting new clauses in future contracts requiring suppliers to find alternative sources for minerals.
The GAO also reported that the total number of companies filing reports on the matter were far lower than the SEC had estimated.
In total, 1,321 companies reported on their conflict minerals—well short of the 6,000 companies that the agency estimated would be affected by the new regulation.
An SEC official told the watchdog that the estimate was “intentionally overly inclusive.”
Read the full GAO report here.
