A group of sustainable and responsible investors and investment organizations, amongst which Triodos Investment Management, have sent a joint statement to the European Commission, the European Parliament, and the European Council. The statement urges EU policy makers to ensure more compatibility between the proposed EU conflict minerals regulation and Section 1502 of the US Wall Street Reform and Consumer Protection Act (known informally as “Dodd-Frank Section 1502”), which aims to prevent mineral sourcing revenues from fuelling the armed conflict in the Democratic Republic of Congo (DRC). The statement was initiated by a working group composed of Triodos Investment Management, Boston Common Asset Management, Calvert Investments, Eurosif, Responsible Sourcing Network, Trillium Asset Management and US SIF: The Forum for Sustainable and Responsible Investment and has been signed by other organisations.
Concern about human rights risks
As the new European Commission will be inaugurated in the coming weeks and the European Parliament is scheduled to discuss the proposed regulation in December 2014, the statement signatories are expressing their concern about human rights risks related to mineral sourcing and their views on how regulation can help to limit this risk. To reinforce positive developments following the U.S. rules and to maximize effectiveness, the proposed EU regulation requires two key changes. In their statement, investors call on the European legislative bodies to better align the proposed EU regulation with Section 1502, by making the regulation mandatory and including in its scope all companies that manufacture products containing “conflict minerals.”
Multi-sector reporting example
Eric Holterhues, Head of Socially Responsible Investments at Triodos Investment Management, regards the US conflict minerals disclosure rule as a ground-breaking example of mandatory human rights impact reporting. “It has turned conflict minerals disclosure in the United States from a reputation issue for a few leading brands to a multi-sector reporting requirement," said Holterhues. “We believe that European regulation of at least comparable strength is needed to make sure that both investors and consumers can make informed choices to avoid complicity in human rights abuses.”
Strong unified international standard
Alignment of the European and US regulations would set a strong unified international standard for conflict minerals due diligence and disclosure. This would stimulate widespread, robust supply chain due diligence and reporting that will limit investor risk, enhance the region’s legitimate extractives sector revenue streams, and help bring an end to the conflict in the DRC.
The investor group urges the European Commission, the European Parliament, and the European Council to adapt the EU legislation to better fit with the precedent set by the US rules to promote companies’ broad adoption of robust conflict minerals due diligence and reporting.