Buried in the Dodd-Frank financial reform legislation passed by Congress two years ago is a clause that requires any publicly traded company to disclose whether its products contain minerals from conflict-torn nations.
The legislation, designed to shame companies into shunning such commodities and products — particularly those from the Democratic Republic of the Congo, where rare earth mining has funded years of civil strife — goes into effect in May. But despite the opportunity for a two-year waiver, it’s already a headache for increasingly cost-conscious companies that draw components from a globalized supplier base.
Its impact will be felt across the supply chain, from prime contractors to the smallest suppliers. It also constitutes the latest metals-related legislation that contractors must struggle with. Since 1973, firms have been required to use specialty metals produced in America absent a waiver from DoD for insufficient supply, problematic pricing or quality, requiring constant monitoring.
However well-meaning, such restrictions are invariably costly, less than effective and onerous.
Clearly the international community has an obligation to help resolve conflict whenever and wherever possible. But the solution lies in collective international action, such as sanctions and other mechanisms, not legislation that yields red tape and higher costs — and that fails to deliver on the law’s intent.