Unverified Executive Order Calls for Alternative to Dodd-Frank 1502

Unverified Executive Order Calls for Alternative to Dodd-Frank 1502

On February 8, 2017, UK-based The Guardian newspaper released what they allege to be a leaked draft of a Presidential Memorandum detailing a possible Executive Order (EO) on Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. While this leaked document highlights the uncertain future of the landmark conflict minerals rule, strong corporate due diligence on responsible sourcing remains a global business imperative.

In response to questions about this alleged EO, Assent’s regulatory and legal experts reviewed the document, and compiled an explanation and guidance for companies on its possible implications for their conflict mineral and responsible sourcing programs.

Details of the Alleged Executive Order:

  • The text of this alleged EO indicates the application of a temporary waiver. It is not a repeal of the rule.
  • The ability to officially trigger this temporary waiver is contingent upon a finding that  Dodd-Frank Section 1502 threatens the national security of the U.S.
  • Experts believe such a finding will be challenged in court and may receive an emergency stay.
  • If signed into law, the Secretaries of State and Treasury have 180 days to propose an alternative plan to address the conflict mineral trade in the DRC and adjoining countries.
  • This alternative plan, and other conflict mineral rules around the world, means companies will still be required to have a conflict minerals due diligence program in place.

Download Assent’s complete Dodd-Frank 1502 EO guidance here.

Implications for Your Business

In the wake of this alleged EO, companies currently affected by Dodd-Frank Section 1502 will still be obligated to address the risk of human rights violations in their operations. The global consensus on human rights due diligence is clear: due diligence on conflict minerals, as part of a wider human rights program, is essential to your company’s market access.

For example, some international responsible sourcing obligations that require conflict mineral due diligence and reporting include:

  • EU Conflict Minerals Regulation
  • EU Non-Financial Reporting Directive
  • Emerging Chinese conflict mineral guidelines
  • EICC members and their supply chain (electronics)
  • Any company in scope of the IPC-1754 standard (aerospace, defense and heavy equipment)
  • Any company in scope of the IPC-1755 standard (electronics)
  • U.S. state mineral sourcing disclosure obligations (California, Maryland and Massachusetts)
  • Company and Supplier Codes of Conduct
  • Corporate social responsibility, environmental and social governance programs
  • Institutional purchasing and public procurement
  • Sustainable investment funds and other investing requirements
  • CFSI members and their supply chain
  • Responsible Jewelry Council membership
  • London Bullion Market Association membership

Meeting Global Due Diligence Obligations

Assent’s regulatory and legal experts conclude the only workable framework for meeting these global due diligence obligations is the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Framework, with efficient information collection through the Conflict Minerals Reporting Template (CMRT). In order to meet the requirements of mineral sourcing disclosure obligations under other global regulations, such as the EU Non-Financial Reporting Directive and emerging Chinese conflict mineral guidelines, companies will still need to send and receive these CMRTs as well as conduct formal due diligence.

Companies will continue to request CMRTs throughout their supply chain as they strive to ensure compliance with various regulatory requirements, internal policies and standards. Many companies will also continue to voluntarily disclose mineral sourcing information publicly to provide reputational protection, consumer confidence and ensure uninterrupted business.

For more information, join our webinar on February 16th (1 PM EST) with Michael Littenberg of Ropes & Gray LLP and Jonathan Hughes, Director of Business Development at Assent Compliance, as they examine the language of the EO and provide an analysis of how this could practically impact your conflict mineral program over the coming months. Register now.

Assent is closely monitoring all developments in responsible mineral sourcing. Contact info@assentcompliance.com with any questions.