Publicly-held companies may have to increase their use of recycled gold in order to comply with the conflict minerals rule approved by the Securities and Exchange Commission.
“If you use recycled or scrap gold, your burdens are extremely minimalized,” says Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee. “There is a level of due diligence for companies using recycled gold, to insure that the representations being made to them are true, that it’s really recycled gold. But if that is what they are using, they can just make brief representations.”
The rule, approved by the SEC Aug. 23 by a 3 to 2 vote, requires that publicly-traded companies determine and then disclose whether they use conflict minerals, including gold, from the Democratic Republic of Congo and surrounding areas. If the company doesn’t know, it can report “origin undeterminable” for a temporary two-year period (four, for smaller companies).
The National Retail Federation said in a statement that some of the new rule’s provisions will “limit the impact” on its members, but it was disappointed that the SEC did not set a “de minimis” level below which products would not be covered.
Another notable element of the SEC’s rule: Companies will get two years to comply. The rule doesn’t take effect until May 2014.
“That will give companies some time to get their system in order,” says Gardner.
While that extended timeframe fell short of the three years some industry advocates like the NRF requested, it disappointed some advocates of the law, like NGO Global Witness.
“The minerals trade is fuelling violent conflict and human rights abuses in eastern DRC and delays in implementing the law postpone the moment at which companies take responsibility for the impact of their purchases,” the group said in a statement.
In addition to gold, the new rule covers tin, tungsten, and tantalum from the eastern region of the DRC or surrounding areas.
The new rule stems from a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed in 2010.