What is Section 1502 of the U.S. Dodd-Frank Act?

The global movement towards responsible sourcing has placed conflict minerals compliance at the forefront of corporate social responsibility. Section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act is one of the most significant steps taken to address the sourcing of minerals that have funded armed conflicts, especially in the Democratic Republic of Congo (DRC) and neighboring countries. This provision mandates transparency in supply chains to prevent mineral profits from fueling violence and human rights abuses.

Why the Dodd-Frank Act Targets Conflict Minerals

Enacted in 2010, Section 1502 of the Dodd-Frank Act was introduced to combat the exploitation of tantalum, tin, tungsten, and gold (3TG)—minerals whose trade profits have long contributed to conflicts in central Africa. These minerals are essential in manufacturing, used in products from electronics to automotive parts. By requiring public companies to disclose their mineral sourcing, the law aims to promote conflict-free sourcing and reduce funding for armed groups in the DRC and neighboring regions.

What is SEC Conflict Minerals Disclosure?

Section 1502 directed the U.S. Securities and Exchange Commission (SEC) to establish specific conflict minerals disclosure rules. Known as the SEC Conflict Minerals Rule, these requirements became law in 2012, with mandatory reporting beginning in 2014 (covering the 2013 reporting year). The rule compels companies to disclose whether conflict minerals in their products are “necessary to the functionality or production” of those products and to trace their origins if they originate from Covered Countries.

What are the Covered Minerals, Countries, and Companies under Dodd-Frank Act

1. Conflict Minerals (3TG): The rule applies to tantalum, tin, tungsten, and gold. The U.S. Secretary of State may add other minerals to the list if they are determined to fund conflict in the Covered Countries.

2. Covered Countries: These include the DRC and adjoining countries—Zambia, Angola, Republic of the Congo, Central African Republic, South Sudan, Uganda, Rwanda, Burundi, and Tanzania.

3. Companies in Scope: Public companies listed with the SEC that manufacture or contract to manufacture products containing conflict minerals necessary to production or functionality are required to comply. These companies must follow SEC reporting standards to assess the origin of their conflict minerals.

What are the Steps to Meet Dodd-Frank Act Section 1502 Requirements

To adhere to the SEC Conflict Minerals Rule, companies must follow a Three-Step Compliance Process:

• Step 1: Determine Applicability

First, a company assesses if it uses conflict minerals in its products and whether these minerals are necessary for production or functionality. If a company does not use conflict minerals or does not manufacture or contract to manufacture such products, it is exempt from further obligations.

• Step 2: Reasonable Country of Origin Inquiry (RCOI)

If conflict minerals are in scope, the company must conduct an RCOI to verify whether these minerals originate from the DRC or any Covered Country. The RCOI process is flexible, allowing companies to tailor it to their supply chain and supplier relationships.

A sufficient RCOI requires:

• Good Faith Efforts: The inquiry must be conducted with integrity and reasonably designed to identify the mineral’s country of origin.
• Reliable Representations: Companies can rely on supplier representations if they are reasonable and verifiable, such as sourcing certifications from conflict-free recognized industry bodies.

If the RCOI shows no evidence of minerals sourced from Covered Countries or confirms the minerals are recycled or from scrap materials, the company has met its due diligence obligations. In such cases, the company files Form SD with the SEC, discloses its findings, and makes the information publicly available on its website.

• Step 3: Due Diligence on Source and Chain of Custody

If the RCOI suggests that minerals may originate from Covered Countries, the company must proceed with additional due diligence. This due diligence must follow a recognized framework, such as the OECD Due Diligence Guidance for Responsible Supply Chains.

The due diligence process includes:

• Tracing Source and Chain of Custody: Companies must identify mineral processing facilities and verify their conflict-free status.
• Categorizing Product Conflict Status: Based on findings, products must be categorized as DRC Conflict Free, Not Found to Be DRC Conflict Free, or DRC Conflict Undeterminable.
• Filing a Conflict Minerals Report: If products fall into “Not Found to Be DRC Conflict Free” or “DRC Conflict Undeterminable,” the company must file a Conflict Minerals Report as an exhibit to Form SD and post it publicly on its website.

Download our Conflict Minerals eBook to learn more about the reporting requirements

What is the Special Reporting Rules for Recycled or Scrap Sources

Products containing minerals from recycled or scrap sources can be designated DRC Conflict Free if confirmed as such. In these cases, the RCOI suffices, and companies are not required to submit a full Conflict Minerals Report.

What are the CMRT Filing Requirements: Form SD and Conflict Minerals Report

The SEC’s Form SD is due annually by May 31 each year, covering the previous calendar year’s data. This form includes a summary of the RCOI conducted and any resulting findings. If further due diligence is required, a Conflict Minerals Report must accompany Form SD, detailing due diligence efforts, sources, and product conflict status.

Companies using minerals classified as “Not DRC Conflict Free” must also complete an independent private sector audit to verify the implementation of their due diligence framework.

How to Overcome Compliance Challenges in Conflict Minerals Reporting with Advanced Technology

Meeting conflict minerals reporting requirements, as mandated by Section 1502 of the Dodd-Frank Act and other global laws, can be a daunting task. Handling this process in-house, especially without dedicated tools or resources, places significant strain on internal teams, creates inefficiencies, and increases risks within the supply chain. This complexity is compounded as responsible minerals legislation expands, encompassing not only 3TG (tantalum, tin, tungsten, and gold) but also a growing list of additional minerals and regions.

For businesses seeking an efficient, scalable way to manage these requirements, conflict minerals compliance software and services provide a comprehensive solution. These platforms enable companies to streamline their compliance efforts by automating the collection and verification of supply chain data, enhancing traceability, and simplifying reporting processes.

These tools simplify supplier engagement, data analysis, and document generation, making it easier for companies to maintain compliance, especially as regulations evolve.

How can Acquis Streamline Conflict Minerals Compliance

Acquis provides one of the industry’s most comprehensive conflict minerals compliance solutions, designed to encompass not only 3TG minerals (tantalum, tin, tungsten, and gold) but also extended and emerging minerals of concern. Combining powerful software with fully managed service options, Acquis supports companies at every stage of the compliance process—from supplier engagement to regulatory reporting.

Key Features of Acquis’s Compliance Solution:

• Supplier Engagement: Acquis streamlines communication with suppliers, empowering businesses to efficiently gather the data required for regulatory compliance. This feature ensures timely, accurate responses from suppliers, minimizing data collection bottlenecks.

• Data Analysis and Reporting: With automated data analysis and robust reporting capabilities, Acquis simplifies the preparation of essential compliance documents, such as the Conflict Minerals Reporting Template (CMRT), along with newer templates like the Extended Minerals Reporting Template (EMRT) and Additional Minerals Reporting Template (AMRT). These tools help companies stay organized and compliant with minimal manual effort.

• Adaptable to Regulatory Changes: The Acquis platform is designed to evolve with regulatory changes, ensuring that businesses remain compliant with both current and future conflict minerals requirements. This adaptability reduces the risk of non-compliance and streamlines adherence to global standards.

With Acquis’s compliance solution, businesses can achieve conflict minerals compliance efficiently while reducing the strain on internal resources. Acquis offers full-spectrum coverage, making it an ideal, sustainable choice for companies committed to responsible and conflict-free sourcing.

Discover Acquis’s Conflict Minerals Compliance Solution to learn how this program can help your organization ensure ethical sourcing, maintain supply chain transparency, and stay fully compliant across all regulatory requirements.