EU drafts conflict mineral compliance regulation

Many see the proposed regulations as not strict enough as they do not require compliance at each stage of the supply chain

Compliance regulations for companies that handle conflict minerals have been revamped over the last few years — mainly in Europe and the U.S — as awareness regarding the human rights violations that are regularly associated with conflict mineral mining and manufacturing have come to light. The Conflict Minerals Rule passed in the U.S. in 2012 and put into effect in 2013 has heightened the compliance requirements for such businesses that handle tin, gold, tantalum, or tungsten, and the European Union has just drafted rules regarding the same four minerals — with some differences in regulation. 

The Organization for Economic Cooperation and Development has created a definition for conflict minerals — or metals and minerals extracted from conflict afflicted or high-risk areas — by which the EU has constructed regulation. But many see the EU’s version of the rules as too slack. As The Guardian points out, the EU’s rules do not require compliance through each stage of a business’ manufacturing and processing operation, but rather only at the importation site. The Guardian quotes the OECD guidelines: 

"Conflict-affected and high-risk areas are identified by the presence of armed conflict, widespread violence or other risks of harm to people. Armed conflict may take a variety of forms, such as a conflict of international or non-international character, which may involve two or more states, or may consist of wars of liberation, or insurgencies, civil wars ... High-risk areas may include areas of political instability or repression, institutional weakness, insecurity, collapse of civil infrastructure and widespread violence. Such areas are often characterized by widespread human rights abuses and violations of national or international law."

Of course, critics say that the regulations are not strict enough; lack of compliance requirements in each stage of the supply chain could allow for too many loopholes. One point of contention is the lack of specified areas of conflict, as compared to U.S. regulation, which names the Democratic Republic of Congo and neighboring regions. Another huge point at play is the optional nature of the proposed rules. Naysayers claim that making the compliance optional will result in no abidance whatsoever, while proponents of the regulations say that reputation pressure will force companies to comply. The subject remains a charged one as the EU muddles over its position on the matter.

 

Further reading:

Security compliance protects assets, builds trust

GCs speak out on their 2014 risk and compliance concerns

SEC aggression to increase against compliance officers

Contributing Author

author image

Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.