The conflict minerals provision, contained in Section 1502 of the Dodd-Frank Act, has a direct bearing on reporting requirements on about one-half of all publicly traded companies in the United States.Complying with the due diligence requirements of the provision is daunting and unclear; many corporations are waiting for the SEC to issue the final rule before the end of the year. However, several corporations and industry groups have begun to trace conflict materials in their supply chain, rather than wait for the SEC’s final rules, due to the tight time line for implementation once the ruling is finalized. KPMG has developed a practical approach for conducting due diligence on conflict minerals.
Compliance with the provision will be a daunting task—many businesses will find it difficult to conduct due diligence on the origin of the conflict minerals. Considering the current ambiguity around the provision, the major hurdle for businesses will be to devise a strategy to determine the source of materials.