The decision by a US court to uphold key conflict minerals disclosure rules at the Securities and Exchange Commission has been welcomed by sustainable investors.
The District Court in Washington earlier this week ruled to uphold the implementation of ‘Section 1502’ of the Dodd-Frank Act. It dismissed a lawsuit filed against the SEC by lobby groups the US Chamber of Commerce, the National Association of Manufacturers and the Business Roundtable.
“Finding no problems with the SEC’s rulemaking and disagreeing that the ‘conflict minerals’ disclosure scheme transgresses the First Amendment, the Court concludes that Plaintiffs’ claims lack merit,” ruled Judge Robert Wilkins.
‘Section 1502’ requires annual disclosure of supply chain links to the Democratic Republic of Congo and report on “measures taken to exercise due diligence on the source and chain of custody of those minerals, which must include an independent private sector audit”.
More than 50 socially responsible and faith investment groups – representing some $458.7bn in assets under management – came out in support of the SEC and against the lawsuit earlier this year.
“We applaud the decision taken by the DC District Court,” the investor group said in response to the ruling.“As investors, we believe that the Section 1502 of the Dodd-Frank Act provides a critical leverage point to address one of the root causes of the ongoing violence that has plagued the Democratic Republic of Congo (DRC) for many years.”
“We applaud the decision taken by the DC District Court”
The investors argue the rule provides the information needed to make sound investments and ensure that investee companies are not associated with human rights risks.
The group has been working on the issue for the last three years, led by Responsible Sourcing Network, Boston Common Asset Management, Calvert Investments and Trillium Asset Management. The investors commended the involvement of major corporations such as GE, Hewlett-Packard, Intel, AMD and Ford Motor.
Campaign group Global Witness called the ruling a “major victory for human rights and corporate accountability”. But the business groups said they were reviewing the court’s decision and their “options going forward”.
“We continue to believe this rule, while well intentioned, is unsupported by the Agency’s own record,” they said.