Abstract
It is an unfortunate reality that violent conflicts in resource rich regions are often funded by trade in precious metals and minerals. Armed groups seek to control lucrative trade in these commodities in order to support their campaigns whilst engaging in human rights abuses ranging from rapes to killings. For instance, the diamond trade has been linked to conflicts in a number of countries including the Democratic Republic of the Congo (DRC), Angola, the Central African Republic (CAR), and Sierra Leone. More broadly, the extractives trade has an unfortunate record of human rights abuses and there are repeatedly documented instances of child labour, sexual violence, environmental degradation, displacement of people, and other abuses in communities which ought to have profited from the natural resources located there. Some of the worst excesses involving minerals have been documented by the UN in the DRC—home to the deadliest conflict since World War II with over 5.5 million deaths—where armed groups fund their activities by controlling mines and transport routes. This blood taint is not confined to far-flung regions in Africa and South America—‘conflict minerals’ find their way to local and international markets where smelters and refiners transform those minerals into metals. In turn, these metals are subsequently processed downstream of the supply chain into components for a vast number of end products including cars, electronics, mobile phones, packaging, construction, aeronautics, and jewellery.
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Notes
- 1.
Conflict Barometer (2012).
- 2.
Conflict Barometer (2012).
- 3.
UN Group of Experts Report of 12 November 2012 to the UN Security Council, S/2012/843.
- 4.
Commission Staff Working Document Impact Assessment Accompanying the document, SWD (2014) 53 final, 19.
- 5.
OECD Guidelines for Multinational Enterprises, OECD (2011).
- 6.
Guiding Principles on Business and Human Rights (2011).
- 7.
Intl Conference on the Great Lakes Region (ICGLR) Regional Certification Mechanism is geared at tracing the supply chain of cassiterite, wolframite, coltan and gold in order to ensure that production and supply channels are not being controlled by armed groups or criminal networks. The RCM is under the supervision of an independent auditor.
- 8.
OECD (2016).
- 9.
See https://eiti.org/.
- 10.
- 11.
Conflict Free Smelter Program, http://www.conflictfreesourcing.org/conflict-free-smelter-program/. The CFSP aims to identify smelters and refiners that produce conflict-free materials. Facilities that meet standards—based upon the OECD Guidance—are published online. Listing is based upon third-party audits to independently verify that these smelters and refiners can be deemed conflict-free.
- 12.
The EICC is a coalition of the world’s leading electronics companies working together to improve efficiency and social, ethical, and environmental responsibility. It operates a code of conduct for members. See http://www.eicc.info/eicc_code.shtml.
- 13.
The Conflict Free Supply Initiative (CFSI) was founded in 2008 by members of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative. It currently has over 150 companies and industry associations as members. The CFSI has adopted a Conflict Minerals Reporting Template. It provides a free, standardised reporting template to disseminate information about mineral country of origin and smelters and refiners in the supply chain. New smelters and refiners are also identified for audit under the CFSI’s Conflict-Free Smelter Program.
- 14.
Lusaka Declaration of the ICGLR Special Summit to Fight Illegal Exploitation of Natural Resources in the Great Lakes Region, 15 December 2010.
- 15.
Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010.
- 16.
On 29 February 2012, the DRC issued a Ministerial Order.
- 17.
On 28 March 2012, Rwanda adopted legislation.
- 18.
European Parliament resolution of 7 October 2010 on failures in protection of human rights and justice in the Democratic Republic of Congo.
- 19.
Commodity markets and raw materials, COM (2011) 25 Final.
- 20.
Trade, growth and development, COM (2012) 22 Final.
- 21.
‘EU political deal to curb trade in conflict minerals,’ Brussels, 16 June 2016. Although it is difficult to measure the precise scale of the conflict minerals trade because of its hidden nature, the potential magnitude of the problem can be gauged from the size of the total global minerals industry which is worth about €200 billion. Of specific concern for the EU, evidence indicates that companies are not taking their supply chain obligations seriously despite the proliferation of voluntary initiatives and fragmented domestic legislation.
- 22.
Commission Staff Working Document Impact Assessment Accompanying the document Proposal for a Regulation of the European Parliament and of the Council (2014).
- 23.
EU Impact Assessment, 24.
- 24.
Pub. L. No. 111–203, 124 Stat. 1376.
- 25.
Dodd-Frank s 1502(a).
- 26.
The Costs and Consequences of Dodd-Frank s 1502 (2012).
- 27.
15 U.S.C. 78m.
- 28.
Dodd-Frank s 1502(b).
- 29.
The SEC’s mission is ‘to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.’ See https://www.sec.gov/about/whatwedo.shtml.
- 30.
Dodd-Frank s 1502(3)(4).
- 31.
Dodd-Frank s 1502(3)(3).
- 32.
Dodd-Frank s 1502(b).
- 33.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 274, 277, 278.
- 34.
Conflict Minerals, 77 Fed. Reg. 56, (2012).
- 35.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 297, 298.
- 36.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 290–292.
- 37.
Conflict Minerals, 77 Fed. Reg. 56, (2012), p. 311.
- 38.
Conflict Minerals, 77 Fed. Reg. 56, (2012), p. 313.
- 39.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 313, 315.
- 40.
Conflict Minerals, 77 Fed. Reg. 56, (2012), p. 322.
- 41.
Conflict Minerals, 77 Fed. Reg. 56, (2012), p. 320.
- 42.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 320, 321.
- 43.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 324.
- 44.
Conflict Minerals, 77 Fed. Reg. 56, (2012), pp. 321–322.
- 45.
National Association of Manufacturers v Securities and Exchange Commission, (2015) 800 F.3d 518.
- 46.
Narine (2013).
- 47.
EU Report, 54.
- 48.
EU Report, 55.
- 49.
EU Report, 61.
- 50.
EU Report 77.
- 51.
‘Intel lead on conflict minerals helps, challenges other firms’, Reuters article (2014).
- 52.
Speech by Commissioner Gallagher (2012), available at http://www.sec.gov/News/PublicStmt/Detail/PublicStmt/1370542577745.
- 53.
Jensen and Meckling (1976).
- 54.
See O’Kelley (2006).
- 55.
Eisenberg (1999).
- 56.
Eisenberg (1999).
- 57.
Easterbrook and Fischel (1989).
- 58.
Easterbrook and Fischel (1989), p. 1419.
- 59.
- 60.
Brown and Gopalan (2009).
- 61.
Sarbanes-Oxley Act 7201–7266 (2006).
- 62.
Brown (2006).
- 63.
Company Law Review Steering Group (1999), Consultation document, February 1999, p. 130.
- 64.
Companies Act 2006 (UK) Clause 46, s 172(1).
- 65.
EU Public Consultation Report showed that 84.2% of companies and 98.3% of trade associations representing businesses were favourably disposed towards responsible sourcing.
- 66.
Report on the Public Consultation on a Possible EU Initiative on Responsible Sourcing of Minerals Originating From Conflict-Affected and High-Risk Areas, July 2013.
- 67.
EU Public Consultation Report.
- 68.
EU Public Consultation Report.
- 69.
The European Commission defines CSR as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’. See COM (2001) 366.
- 70.
Communication from the Commission to the European Parliament, COM (2011) 681 final. In the Commission’s view, ‘CSR at least covers human rights, labour and employment practices, environmental issues, and combating bribery and corruption. Community involvement and development, the integration of disabled persons, and consumer interests, including privacy.’ See also, the Commission’s Green Paper (2001), p. 366; the European Alliance for CSR (2006), p. 136.
- 71.
European Parliament, COM (2011).
- 72.
EU Public Consultation Report, p. 26. 42% of respondents said no.
- 73.
Conflict Due Diligence by European Companies (2013), p. 9.
- 74.
SOMO, p. 5.
- 75.
PwC 2014, p. 29.
- 76.
PwC 2014.
- 77.
Companies Act 2006 (UK), s 172(1).
- 78.
Kay (2010).
- 79.
United Nations Human Rights Council (2011). The ILO was established in order to set labour standards for the international community.
- 80.
- 81.
EU Press Release (15 April 2014) Improving corporate governance: Europe’s largest companies will have to be more transparent about how they operate. Available at http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm. The EU's press release quotes the Internal Market and Services Commissioner as saying ‘Companies, investors and society at large will benefit from this increased transparency. Companies that already publish information on their financial and non-financial performances take a longer term perspective in their decision-making. They often have lower financing costs, attract and retain talented employees, and ultimately are more successful.’
- 82.
EU Press Release (15 April 2014) Improving corporate governance: Europe’s largest companies will have to be more transparent about how they operate. Available at http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm.
- 83.
EU Press Release (15 April 2014) Improving corporate governance: Europe’s largest companies will have to be more transparent about how they operate. Available at http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm.
- 84.
Ioannou and Serafeim (2012). Page 32 clarifies that within the context of this study ‘sustainability report’ is defined as a ‘firm issued general purpose non-financial report that provides information to investors, stakeholders (e.g. employees, customers and non-government organisations) and the general public about the firm’s practices involving environmental, social and governance issues’.
- 85.
Ioannou and Serafeim (2012), p. 3.
- 86.
Ioannou and Serafeim (2012), p. 19.
- 87.
- 88.
- 89.
Gruppen, TopplederundersØkelse om Corporate Social Responsibility (CSR): top leader report on CSR (2003) Oslo Argument Grupo AS www.argument.no. cited in Falkenberg and Brunsael (2011), pp. 12–13.
- 90.
Noked (2011).
- 91.
Falkenberg and Brunsael (2011).
- 92.
Ioannou and Serafeim (2012).
- 93.
- 94.
Orlitzky and Benjamin (2001).
- 95.
Waddock and Graves (1997).
- 96.
Orlitzky et al. (2003): ‘Based on this meta-analysis integrating 30 years of research, the answer to the introductory question posed by Business Week is affirmative. The results of this meta-analysis show that there is a positive association between CSP and CFP across industries and across study contexts.’
- 97.
Ioannou and Serafeim (2012). Page 32 clarifies that within the context of this study ‘sustainability report’ is defined as a ‘firm issued general purpose non-financial report that provides information to investors, stakeholders (e.g. employees, customers and non-government organisations) and the general public about the firm’s practices involving environmental, social and governance issues’.
- 98.
Ioannou and Serafeim (2012), p. 21.
- 99.
Ioannou and Serafeim (2012), p. 3.
- 100.
Ioannou and Serafeim (2012), p. 19.
- 101.
For example, Siemens (2014) views sustainable supply chain management as a means of minimising the off balance sheet risks associated with supply chains in emerging markets.
- 102.
Ioannou and Serafeim (2012).
- 103.
Griffin (2013).
- 104.
Vilanova et al. (2009).
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Gopalan, S. (2017). From Sustainability to Conflict Minerals: The Creeping Codification of Non-financial Disclosure. In: du Plessis, J., Low, C. (eds) Corporate Governance Codes for the 21st Century. Springer, Cham. https://doi.org/10.1007/978-3-319-51868-8_8
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