May 9, 2011
April 30, 2011
The Honorable Mary L. Schapiro
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
Dear Chairman Schapiro,
I am writing to urge that the SEC immediately adopt strong transparency rules to implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) in File S7-40-10, 75 Fed. Reg. 80948 (Dec. 23, 2010).
As a consumer of electronic products, I want to know that my purchases and those of my employer the Catholic University of America do not fund or fuel war in the Congo. It is time to clean up the mineral supply chains, and create transparent, legal mining industries whereby the people of Congo can benefit from their labor and land, not warlords or corrupt officials. "Blood minerals" are not only morally repugnant, they are also a liability for businesses and investors, who do not want their significant investments in brands to be tainted by the world's deadliest conflict.
As an Advisory Board Member of the Catholic Peacebuilding Network, our members in the DRC (including the churches in the DRC, Catholic Relief Services, and Caritas Internationalis) want greater transparency to help reform mining profits and defund the violence. As Archbishop Mauroy of Eastern DRC has told me, "Every cell phone contains a drop of Congolese blood." Stringent reporting rules are urgently needed to carry out the intent of the Dodd-Frank reforms concerning Conflict Minerals Transparency.
Markets work best when they play by the rules. These new Dodd-Frank section 1502 rules should apply immediately and equally to all conflict minerals,gold, tin, tungsten and tantalum, (as set out in paragraph (c)(3) of the proposed Instruction (Question 1)), and to all who file reports under Sections 13(a) and 15(d) of the Exchange Act. No exemptions should be made (Questions 2 and 4-7). The rules should apply to those that manufacture or contract to manufacture products for which conflict minerals are necessary, including mining within the definition of manufacture, as proposed (Questions 13-15).
For consumers and investors to be able to make responsible business decisions with adequate information, companies must be required to provide conflict minerals disclosure and reporting in the body of their annual report as well as on their websites (Questions 25 and 31). The Conflict Minerals Report itself could also be filed as an exhibit (Questions 47 and 49). Companies must systematically describe the steps they took to arrive at the determination of whether their products and supply chains are conflict mineral free. This information should be made readily available by including it in the body of companies' annual reports (as proposed in Question 27).
Additional information, such as Audit reports, due diligence process (including for those issuers that conclude that their conflict minerals did not originate in the DRC region), and any other information useful to investors and the general public should also be posted on the issuers website. These records must be made available and maintained over time, and should be accessible in interactive formats, over many years, so that consumers and investors have access to needed baseline information and can detect patterns in the data. A thorough country of origin inquiry must be required to make the law real, and to determine whether an issuers conflict minerals originated in the DRC. Companies must retain proper records over time to verify their claims. Loopholes must not be allowed by which companies could omit making an inquiry or simply state that they are not aware that they are using minerals that are not DRC conflict free (Questions 34 and 36).
Markets need clear, reliable, and accessible information to work efficiently. Dodd-Frank supports strict criteria for a product to be labelled DRC conflict free. Such labeling will help manufacturers meet the demands of consumers for conflict free products, and will help industries to stake out a competitive advantage in an important new market. All information in support of the DRC conflict free label must be required to be made public. The DRC conflict free logo and label should be easily identifiable by consumers and others, and companies must meet a high standard of proof in qualifying for the use of such labels. Products made with recycled minerals should be subject to the same reporting and transparency requirements in order to be labelled "conflict minerals free."
In an information age, there is no excuse for the lack of transparency that currently exists in the market for conflict minerals and products made with them. The SEC must promptly issue strong, transparent rules to help consumers, and to help companies create and strengthen the "conflict minerals free" brand. Good morality in this case is also good politics and good economics.
The SEC must act quickly and thoroughly to fully implement section 1502 of the Dodd-Frank act, to help to develop the market for conflict mineral free products, and to help to bring an end to the rapacious, horrific conflict in the Congo. Lives depend on us.
I look forward to your response.
Dr. Maryann Cusimano Love
Associate Professor, Dept. of Politics, the Catholic University of America, Washington, DC, and
Board, The Catholic Peacebuilding Network