This week the SEC announced two rules mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding conflict minerals (tin, tantalum, tungsten and gold) and the mandatory disclosure of payments by resource extraction issuers (companies that extract natural resources from the earth as their business). The first rule requires companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of Congo or an adjoining country. The second rule requires extraction issuers to disclose certain payments made to U.S. or foreign governments.
The Forum for Sustainable and Responsible Investment (US SIF) issued a statement in response to the announcements that congratulates the SEC for making decisions on these important issues. They pointed out that investment managers, advisory firms, mutual fund companies, financial planners and other asset owners will be better informed about the risks in investing in these companies as a result of these rulings.
“For the first time, investors will be able to evaluate these risks across industries and portfolios in ways that have not before been possible,” said sustainable funds firm Calvert. The SEC has estimated that some 6,000 public companies will be affected at an initial compliance cost of up to $4billion and annual costs of up to $609million.
US SIF is glad to see the first rule applies to all companies domestic and international, but wishes it would have been mandatory for the disclosure to be part of the annual report. Therefore, US SIF calls on companies to make this mandatory going forward so investors can better assess how the companies are managing their supply chains responsibly and avoiding human rights violations at all costs.
US SIF is also pleased to see the second ruling as it will hopefully provide for greater transparency and accountability in the extractives industry. However, like the first rule, this disclosure is not required in a company’s annual report. Overall US SIF is pleased with the rulings and believes this is a step in the right direction.
To read the final ruling on conflict minerals please click here.
To read the final ruling on disclosure of payments by resource extraction issuers please click here.
To read the US SIF letter to the SEC please click here.
Do you think the SEC should have required these disclosures in companies’ annual reports? Do you think these rulings will help provide more transparency and accountability in the affected industries? We want to hear your thoughts!
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