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  • Service: Advisory
  • Type: Business and industry issue
  • Date: 11/19/2012

Conflict Minerals and Beyond – Part Two: a more transparent supply chain 

This KPMG report is the second in a four-part series that covers Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The first report, published in September, focused on developing a compliance strategy. This second report covers the minerals supply chain and argues that, although it is not easy to achieve a more transparent supply chain, the benefits are great.

Intended to curb the funding of militias in the Democratic Republic of Congo (DRC), Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act as relates to “conflict minerals,” requires companies reporting to the Securities and Exchange Commission (SEC) that use these products to declare the status of their materials as “DRC conflict free”, “not been found to be DRC conflict-free” or “DRC conflict undeterminable.”


The final rule calls for these companies to describe the measures taken to exercise due diligence on the source and chain of custody of such minerals, including an independent audit of the measures, if required. It also requires the companies to describe the products manufactured that have “not been found to be DRC conflict-free”. In addition, Section 1502 requires companies to describe the facilities used to process the conflict minerals, their country of origin, “and the efforts to determine the mine or location or origin with the greatest possible specificity.”


This KPMG report is the second in a four-part series that covers Section 1502 and focuses on the industry-wide implications of the conflict minerals provision, highlighting the importance of transparency and supply chain management, and includes key findings from those who are advanced in developing a DRC conflict-free supply chain. The report argues that, although it is not easy to achieve a more transparent supply chain, more transparency means more data which can be transformed into a competitive advantage.

 

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