The European Commission issued a draft regulation on conflict minerals Wednesday, outlining a voluntary self-reporting system that’s not limited to central Africa.
The draft regulation (available here in pdf) focuses on the “upstream” portion of a company’s supply chain — that closest to the source of the minerals — and only targets companies that import conflict minerals into the EU.
Importers will report on the smelters and refiners in their supply chain by March 31 of each year and make their findings available to customers.
The EU will use the information from importers to publish an annual list of “responsible smelters and refiners.”
The draft regulation as proposed is a voluntary reporting system.
Several NGOs and politicians have expressed concern about a voluntary rule, saying it threatens to lower international standards on conflict minerals reporting.
The draft regulation offers incentives to importers that adopt recommended due-diligence measures. The incentives include financial support for small and medium-sized firms and “visible recognition” for companies that conduct sourcing investigations.
The draft regulation defines “conflict minerals” like the U.S. rule (contained in the Dodd-Frank Act of 2010) to mean tin, tantalum, tungsten and gold.
The EC’s proposed rule isn’t limited to the Democratic Republic of the Congo and surrounding countries but is instead global in scope.
The legislative process of the draft regulation can be monitored at the EU’s Legislative Observatory.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.