Evolving Transparency: From Dodd-Frank

The rapid growth over the past 15 years of the electronics industry forced labor and has elicited focus to the industry.

Coupled with persistent pressure from non-profit advocates, legislators have passed both the Dodd-Frank Act Wall Street Reform and Consumer Protection Act in 2010, along with the California Transparency in Supply Chains Act in 2012 (SB-657).

The Dodd-Frank Act, originally meant to deal with problems of transparency in financial institutions, includes a provision on corporate responsibility in relation to”battle minerals”–cassiterite (or tin), wolframite (for tungsten), coltan (such as tantalum), and gold ore, which are generally extracted from the Eastern Congo and used in electronic equipment.

Provision 1502 of this Dodd-Frank Act stipulates public reporting requirements for those businesses producing or consuming those minerals mined in specified areas, along with due diligence reports and private sector audits. SB-657 enlarged the scope beyond the electronics sector, requiring all businesses working in California that exceed $100 million in global revenue to state the steps they’re taking to combat forced labor in their supply chains.

Since Natalie Pregibon, Director of Research at Concordia, said in her blog post earlier this month, corporations are now being called upon to proactively and creatively address forced labor in their supply chains. The introduction of both state and national legislation has put the onus on corporations. By focusing legislation on firms’ activities, it removes the burden. Authorities are forcing the private sector to internalize the externalities of the work by demanding that companies pick up the tab for these tests.

Companies are needing with the men and women who’ve been doing the side of the work for ages to fulfill these requirements. This expansion in legislation is starting to impact and strengthen initiatives.

Take the partnership between the Digital Industry Citizenship Coalition (EICC) and Worldwide e-Sustainability Initiative (GeSI) for instance. Both have worked together to set two evaluation tools that businesses can use to assess the status of the supply chains. The first, the Conflict Minerals Reporting Template, gives an in-depth survey that manufacturers may require their providers to complete so as to get information about the nutritional supplements that they use, the products made, as well as the smelters where they supply. The next tool is a voluntary scheme where smelters and refiners are audited by third parties in relation to their policies, practices and safeguards about the purchase and processing of battle minerals. Findings determine whether firms can be categorized as’conflict’.