Magazine article Strategic Finance

Companies Submit First Conflict Minerals Filings

Magazine article Strategic Finance

Companies Submit First Conflict Minerals Filings

Article excerpt

Google, Apple, and Amazon were among the many companies that submitted their first filings to the Securities & Exchange Commission (SEC) regarding the use of conflict minerals in their products. The public disclosure is mandated by Section 1502 of the Dodd-Frank Act, and it relates to the use of tungsten, tin, tantalum, and gold mined from the Democratic Republic of the Congo (DRC) and surrounding countries. The sale of these minerals funds a long-time civil war in the DRC.

Many products contain conflict minerals, including jewelry, toothpaste, and hearing aids, but it's their use in electronic components that has the biggest impact. The filings from Google, Apple, Amazon, and others reveal conflict minerals may have been used in the production of their electronic devices. Google reports about 36% of its smelters in the DRC don't traffic conflict minerals, Apple reports 80%, and Amazon says a "majority"

Apple's report, "2014 Supplier Responsibility Report," states that the company "confirmed in January 2014 that all active, identified tantalum smelters in [its] supply chain were verified as conflict-free by third-party auditors." It continued to report that Apple is continually tracking the smelters and refiners in its supply chain to ensure they stay conflict-free. But tin, tungsten, and gold smelters are harder to track because Apple only uses a "small percentage" of them in its products.

Apple and Google, among other electronics companies, are members of the Conflict-Free Sourcing Initiative (CFSI). The CFSI's Conflict-Free Smelters Program "offers companies and their suppliers an independent, third-party audit that determines which smelters and refiners can be validated as 'conflict-free.'" The audit is conducted in accordance with the regulations in the Dodd-Frank Act.

Although the response to Section 1502 of the Dodd-Frank Act has been positive, it's very difficult for companies to accurately and efficiently track the origins of all the minerals they use. …

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