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Home » Proposed SEC Rule on Conflict Minerals Could Really Shake Up Your Supply Chain

Proposed SEC Rule on Conflict Minerals Could Really Shake Up Your Supply Chain

October 25, 2011
CFO

Irma Villarreal, chief securities counsel and assistant corporate secretary for Kraft Foods, thought she could ignore a new disclosure rule that, at first glance, seemed to apply only to companies that deal with electronics products and jewelers. "We had no idea that this legislation was going to be covering companies like us," she said during a Securities and Exchange Commission roundtable about the rule.

But since some of the thousands of products Kraft sells (such as coffee and biscuits) are packaged in tin, the company will need to sift through its supply chain to trace whether minerals used in its final products came from the Democratic Republic of Congo or nearby regions and whether its purchases indirectly funded the ongoing violence there. As written, the SEC rule - which the regulator has yet to finalize - will require all public companies whose products contain "conflict minerals" such as tin, tantalum, tungsten, and gold to comply, no matter how much (or how little) of these metals they use. These minerals are included in various everyday products, such as smartphones, laptops, hearing aids, and jewelry.

The prospect has public companies pressing their suppliers for details they have never previously requested, as well as making requests for contract changes. They're finding the task, which may include hundreds of thousands of suppliers and thousands of parts, difficult.

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    KEYWORDS Business Strategy Alignment Global Supply Chain Management Industrial Manufacturing North America Regulation & Compliance SC Security & Risk Mgmt Supply Chain Analysis & Consulting
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