The Conflict Minerals Experiment

55 Pages Posted: 12 Jan 2015 Last revised: 17 May 2015

See all articles by Jeff Schwartz

Jeff Schwartz

University of Utah - S.J. Quinney College of Law

Date Written: January 11, 2015

Abstract

In Section 1502 of Dodd-Frank, Congress instructed the SEC to draft rules that would require public companies to report annually on whether their products contain certain Congolese minerals. This unprecedented legislation and the SEC rulemaking that followed have inspired an impassioned and ongoing debate between those who view these efforts as a costly blunder and those who view them as a measured response to human-rights abuses committed by the armed groups that control many mines in the Congo.

This Article for the first time brings empirical evidence to bear on this controversy. I present data on the inaugural disclosures that companies submitted to the SEC. Based on a quantitative and qualitative analysis of these submissions, I argue that Congress’s hope of supply-chain transparency goes unfulfilled, but amendments to the rules could yield useful information without increasing compliance costs. The SEC filings expose key loopholes in the regulatory structure and illustrate the importance of fledgling institutional initiatives that trace and verify corporate supply chains. This Article’s proposal would eliminate the loopholes and refocus the transparency mandate on disclosure of the supply-chain information that has come to exist thanks to these institutional efforts.

Keywords: conflict minerals, 3TG, Dodd-Frank, Congo, conflict diamonds, Section 1502, social disclosure, empirical, conflict free, human rights, supply chains

JEL Classification: K22, K33

Suggested Citation

Schwartz, Jeff, The Conflict Minerals Experiment (January 11, 2015). 6 Harv. Bus. L. Rev. (2015, Forthcoming). Available at SSRN: https://ssrn.com/abstract=2548267 or http://dx.doi.org/10.2139/ssrn.2548267

Jeff Schwartz (Contact Author)

University of Utah - S.J. Quinney College of Law ( email )

383 S. University Street
Salt Lake City, UT 84112-0730
United States

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