ISO 9001 requires that you manage your products and processes to minimum legal levels and to meet customer requirements. Customers will need assurance that these ISO 9001 compliance obligations are met. In order to meet the new and changing legislation for Conflict Minerals, your ISO 9001 processes for Design and Procurement in particular will be affected. For example, your Design processes will specify the performance requirements of components, and it may be the situation that you specify parts that include Tin, Tantalum and Tungsten or Gold (3TG). In that situation, you will be asked to provide evidence that the actual parts you procure do not use materials that originate from the Democratic Republic of Congo (DRC) and its neighbouring countries.
The primary conflict minerals legislation is currently based in the US, and is the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010. The Act was signed and imposed by then-president Barack Obama in response to the 2008 Global Financial Crisis and its aftermath and overhauled the established US financial regulations. The Dodd-Frank Act 2010 applies to conflict minerals through the provisions made in section 1502. The section requires US publicly-listed companies to check their supply chains for what is known as 3TG, tin, tungsten, tantalum and gold, and to see if they might originate in Congo or its neighbours, take steps to address any risks they find, and to report on their efforts every year to the US Securities and Exchange Commission (SEC).
Despite the initial and continued success of the Act, it has recently been threatened with changes by President Trump’s Administration. In January 2017 the then-head of the SEC announced a reconsideration of certain provisions imposed by the Dodd-Frank Act, and ordered further discussion to determine whether the rule is appropriate in the current socio-economic and geopolitical climate. The largest legal change to Dodd-Frank came in May 2018, with assurances that no significant provisions were removed from section 1502. The new bill did not repeal or replace Dodd-Frank as the primary conflict minerals good practice legislation, nor did it diminish any of the power Dodd-Frank has in prosecuting businesses for breaches. Furthermore, the new bill extended the reach of Dodd-Frank to small, regional businesses, ensuring that even they kept their supply chains uncontaminated.
Starting on 1 January 2021, EU importers will be subject to the new EU conflict minerals regulation, which has specific mandatory requirements and consequences. The EU conflict minerals regulation is expected to cover over 1,000 European Union importers and distributors and will both directly and indirectly impact tens of thousands of economic actors in the European Union, which is significantly more than those covered by the US conflict minerals legislation and regulations. The EU regulation covers more forms of minerals and metals and has a much broader geographic focus than the US rule, which tends to focus primarily on the Democratic Republic of Congo and its neighbours.
European Union importers and distributers should be taking action now to supplement their compliance programs to address the due diligence, risk mitigation and audit requirements of the new regulations set out by this upcoming EU legislation. What steps should an EU business operator take to expand its already existing compliance program to fulfil the requirements of the upcoming EU regulation? As a start EU businesses should strongly consider some best practices in building their own compliance programs. Examples of these measures employed in establishing an internal compliance program include:
Nic Farrell
Published on 26 August 2020
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