More than 50 sustainable, socially responsible, and faith-based investment groups representing $458.67 billion in assets under management released a statement today expressing their support for the SEC’s final rule for Conflict Mineral Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. They also reiterated their disagreement to the lawsuit filed against the Securities and Exchange Commission (SEC) by the U.S. Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable.   

To see the press release related to this investor statement please see the PR & Mentions page in the Media section of our website.

Highlights of the statement:

• The group believes the SEC’s final rule of Section 1502 protects investors and has an effect on a significant public interest since the conflict in the Democratic Republic of Congo (DRC) has claimed more than five million lives and conflict mineral revenues are known to fund armed groups in the region.

• As investors and fiduciaries with a long‐term view of capital appreciation that must meet the interests of multiple generations of beneficiaries, it is important to protect investors through improved disclosure and reporting on social risk factors such as labor practices and human rights.

• Requiring disclosure within a company’s supply chain allows investors to evaluate supply chain policies and practices, to make company‐to‐company comparisons, to calculate the level of risk associated with conflict mineral sourcing, and to provide assurance that companies are not engaging in destabilizing activities.

• The final 1502 rule from the SEC appropriately considered the costs and benefits involved with implementation. The process for determining the rule was highly consultative and included comments from many industry leaders.

• Any stay in legislation would hinder a much needed leverage point to address one of the root causes of the ongoing violence that has plagued the Congo for many years.

To see the submissions by the investor group to the SEC regarding Dodd-Frank 1502 rule, see the Investors page in the Minerals section of our website.

Cotton Spinners Are The Key Supply Chain Link to Slavery-Free Apparel 

In the wake of the tragic deaths of over one thousand factory workers in Bangladesh, apparel companies are feeling a renewed urgency to eradicate human rights abuses from their value chains.

RSN’s new report  To the Spinner: Forging a Chain to Responsible Cotton Sourcing provides guidance for companies seeking to ensure their value chains are free of cotton picked with forced labor. This report provides detailed steps for brands which will allow them to move from “not knowingly sourcing” to “knowing and not sourcing” Uzbek cotton. 

To the Spinner stresses not only the importance of brands forging relationships with spinning mills to determine the country of origin (COO) of the cotton found in their value chains, but also the necessity of brand commitment to establishing internal procedures and verification schemes to guarantee the elimination of cotton picked with forced or child labor. 

In the fall of 2012 report co-author Valentina Gurney visited cotton spinning mills in China, Switzerland, and the United States to learn first-hand what steps responsible spinners are taking to eliminate Uzbek cotton. Those insights are included, along with a comparison of traceability tools currently available to brands.

To the Spinner follows From the Field: Travels of Uzbek Cotton Through the Value Chain, which describes the characteristics of Uzbek cotton, details the risks associated with this cotton, and outlines what brands can do to avoid it.

From yarn spinners to textile mills to sourcing agents, every supplier interviewed for this report demonstrated that it holds its customers’ values in high regard. As suppliers begin to answer the brand and consumer calls for transparency, accountability, and the protection of workers, we move closer to forging a responsible cotton value chain.

The lawsuit by industry trade groups against the Securities and Exchange Commission (SEC) regarding Conflict Mineral Section 1502 of the Dodd-Frank Act has had a recent change of events. The National Association of Manufacturers (NAM), U.S. Chamber of Commerce, and Business Roundtable, filed a motion on April 30th to transfer its conflict minerals case from the DC Court of Appeals to the DC District Court.

The plaintiffs decided to make this request because a similar case against the SEC for Extractives Transparency, Section 1504, was dismissed on April 26^th for lack of jurisdiction by the Court of Appeals and transferred to the District Court.

This change of venue will likely delay a decision of the lawsuit, much to the dismay of the industry groups that were hoping to have a decision to the 1502 legal challenge by the end of 2013.

Currently, corporations falling within the mandate of Section 1502 will have to file a Special Disclosure form and possibly a Conflict Mineral report with the SEC by May 31, 2014 regarding information about the materials in their products from fiscal year 2013.

If companies were planning to wait to implement their conflict minerals compliance program implementation until after the court makes a decision, they should rethink that strategy.  It could be awhile. And since there is no additional information at this time on the timing of the case, companies should start analyzing the conflict minerals in their products and collecting information from their suppliers on the source of their materials if they have not already begun to do so.

May 31, 2014 will be here before you know it.

The problem of forced labor in the Uzbek cotton industry is the topic of an investigative report by CNN aired on February 21, 2013.  RSN Director Patricia Jurewicz makes opening remarks.

On March 22, 2013, he was escorted by officials of the International Criminal Courts from the U.S. embassy in Rwanda, to The Hague, where he is wanted for crimes against humanity which include the conscription of child soldiers, murder and rape as a means of terrorizing civilian populations.

Profiting from several mining operations in the region, Ntaganda has lived what appears to be a charmed life, frequenting the finest bars and hotels eastern Congo has to offer. Apparently impervious to his fugitive status and a U.S. bounty of $5 million for his arrest, he has been known to slip across the border into neighboring Rwanda, with no officials attempting to apprehend him.

According to Time, “(w)ith Ntaganda in The Hague, his M23 hardline faction, which opposed the peace agreement with the DRC, is out the way. M23 Military chief Makenga may now be able to go ahead and re-incorporate his men into the state army. Whether that will lead to peace in eastern Congo–and perhaps a rapprochement between the DRC and Rwanda—remains to be seen.”

No one knows for certain why he surrendered but the Washington Post offers some possibilities:

http://www.washingtonpost.com/blogs/worldviews/wp/2013/03/18/why-did-infamous-war-criminal-bosco-ntaganda-just-surrender-at-a-u-s-embassy/http://www.washingtonpost.com/blogs/worldviews/wp/2013/03/18/why-did-infamous-war-criminal-bosco-ntaganda-just-surrender-at-a-u-s-embassy/

Now that the pledge is signed, many companies may be asking themselves “What’s next?”

Here are steps that some leading companies are requiring and that RSN recommends all companies require:

1. No Uzbek cotton is contained inside any sewn product, fabric, yarn, or fibers.

2. Trace Country of Origin (COO) of all cotton in products so it is known exactly where all cotton originates.

3. If a supplier does not provide COO, the company will not do business with them.

4. Providing COO is a prerequisite for placing an order with a supplier.

5. No yarn or textile mill that the company uses materials from can purchase Uzbek cotton. If Uzbek cotton is used at all, even for other customers, the company will stop doing business with that mill.  

6. Audit all of the mills at least once a year (unannounced) to ensure the mills are abiding by the above. If Uzbek cotton is found in the facilities whatsoever, current and future business with that mill will cease.

7. Publicly report on the steps taken, the number of mills being audited, and any violations to these requirements.

More multi-strategey action items can be found on the RSN page What’s Next.

Due to the Uzbek government’s control of all aspects of the cotton industry, including exports, it is critical that economic leverage is implemented to the fullest extent. This is the only way to put the necessary pressure on the Government of Uzbekistan so it is motivated to change its current structure and stop forcing children and adults to labor in the cotton fields.

• Implementing transparent and accountable supply chains;
• Participating in multi-stakeholder efforts;
• Supporting effective diplomatic action; and
• Contributing to sustainable economic development.

The paper also highlights specific efforts and projects various industrial sectors are supporting and names the companies involved in each initiative.

Since 2009 – predating the passage of the conflict minerals legislation (Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) - the MSG has been working together to develop an agenda for action to address the conflict in the Democratic Republic of Congo (“DRC”) by cutting off funding from trade in conflict minerals.  After the law was passed, the MSG began to develop consensus policy positions on the Securities and Exchange Commission (“SEC”) rulemaking to implement the provision. In the course of this rulemaking, we came together to file four separate comment letters[1], met with SEC Commissioners and staff six times[2], and several MSG participants sat on panels at the SEC’s Roundtable on Conflict Minerals in October 2011[3].  Our extensive efforts in this rulemaking were evidence of the shared concern we have about this issue and our belief that we could become part of the solution through bringing transparency to the supply chains for these minerals.

Recently, a petition was filed by the National Association of Manufacturers, the US Chamber of Commerce, and the Business Roundtable for judicial review of the final rule implementing Section 1502. The MSG would like to take this opportunity to urge all stakeholders to continue the important work underway to address the critical issue of transparency in the supply chains for these minerals.  Our organizations will also continue to work towards this end, as we strongly believe these efforts are a matter of corporate social responsibility.  In this context, we would like to make three points:

• As early as 2007, companies and industry associations, working with investors and advocacy groups, have developed programs that advance responsible sourcing of minerals. Several initiatives, such as those coordinated through the Electronics Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI) Workgroup were initiated before Section 1502 was enacted and many MSG members will continue regardless of this lawsuit.
• By establishing expectations within our supply chains, we are creating demand for responsibly sourced minerals. 
• Ultimately, a cross-industry approach to this issue is needed for responsible sourcing of minerals from the Great Lakes region in Central Africa.  The active participation of all stakeholders is needed to make meaningful progress. We welcome additional participation in the development and implementation of a common approach.

The organizations in the MSG will continue to work together to eliminate the link between violence and human rights abuses and the mineral trade in the DRC and surrounding countries regardless of the lawsuit. We all agree that the violence and abuse in this region of the world must end and that an important part of the solution is the efficient and responsible minerals sourcing process in which many MSG members are already participating.

Signatories

copy of statement with organization’s logos here

[1] MSG submissions: November 17, 2010, March 2, 2011, August 22, 2011, and November 10, 2011.

[2] MSG had in-person meetings and one group conference call with SEC staff, SEC commissioners, or Commissioner Schapiro on: Nov/17/10, Mar/11/11, Jun/22/11, Feb/13/12, Feb/15/12, and Feb/17/12.

[3] MSG panelists: Tim Mohin, Advanced Micro Devices Inc.; Bennett Freeman, Calvert Investments; Darren Fenwick, Enough Project; Sandy Merber, General Electric Company; Mike Davis, Global Witness; and Susan Baker, Trillium Asset Management.

Responsible Sourcing Network (RSN) is thrilled to announce we surpassed 100 signatories to the RSN Cotton Pledge. The Pledge has united an unprecedented number of American and European apparel powerhouses, luxury brands and consumer favorites around ending forced labor of children and adults in the cotton sector of Uzbekistan.

The pledge builds on efforts that began in 2007 when Uzbek human rights groups sent out a call to action against forced child labor in their cotton fields. They reiterated their message again this year. The growing number of well-known brands and retailers publicly committing to avoid Uzbek cotton communicates to the Government of Uzbekistan that the apparel industry does not tolerate modern day slave labor. 

According to observers of the 2012 cotton harvest, including the Uzbek-German Forum, this year the Uzbek government intensified adult forced labor, continued forced child labor, and signaled that ending the practice will require stronger external pressure. Despite a statement by the Uzbek government that child labor would be prosecuted, the scale of forced labor of young school children (ages 7-14) was merely reduced. To keep more primary schools  open than in previous years, the burden of the harvest was shifted to older children (15-19) and adults. The older school children were threatened with expulsion, and adults with the loss of their job, salary and social welfare benefits if they refused to participate. And in some locations where the cotton fields are further away from main roads, the younger children were still sent to pick cotton.

It is promising that fewer young children were forced into the fields this harvest, a clear response to growing pressure from this alliance and other groups. This demonstrates that by taking a stand against an egregious practice and coordinating our efforts, consumers, businesses, and human rights groups together can make a difference. On the other hand, there has been no change to the state-sponsored system of forced labor in the cotton sector of Uzbekistan; therefore, we need to maintain and integrate our firm position.

The growng support for the Pledge is also sparking consumer awareness and rejection of the situation in Uzbekistan. Global anti-slavery group Walk Free recently launched a social media campaign to encourage Zara (INDITEX) to sign the pledge. After thousands of tweets and Facebook posts, the company signed the pledge last week. RSN is pleased to have such a prominent company help us surpass our 100th signatory milestone.

RSN welcomes working with the numerous brands and companies to take the next steps to implement the pledge. Businesses have a responsibility to conduct due diligence and put purchasing systems in place that ensure that human rights are respected throughout their entire supply chains. For companies to adhere to the pledge, we expect them to create an internal policy against purchasing cotton picked with forced child labor from Uzbekistan and then notifying all of their suppliers. The next step is to use contractual obligations to ensure their suppliers and sub-suppliers do not purchase Uzbek cotton. Traceability systems and social audits can then help with verification. These steps take time and commitment, but they are necessary to rid supply chains of slave-picked cotton. (Click here to read the specifics of a company’s role to end forced labor in the cotton sector of Uzbekistan.)  

RSN thanks and commends the 2012 signatories to the pledge: Aerie; American Eagle Outfitters; American Eagle Outfitters, Inc; ARN Mercantile; Blue Essence; Callula Lillibelle; Coop Cooperative; Cotton On Group; Econscious; Fifth and Pacific Companies, Inc.; Fremont Apparel; Fruit of the Loom; INDITEX (Zara and 8 other brands); Jack Spade; JCPenney Purchasing Corp.; Jerzees; Juicy Couture; kate spade; Lucky Brand; Mackays Stores Limited (M&Co); Marimekko; Naturaline; Nulu; Olasul; Patagonia, Inc.; PB teen; Planet Earth Clothing Co.; Pottery Barn; pottery barn kids; REDCAR SL; Rejuvenation; Revolution; Apparel; Russell Athletic; Sergio; Sophie Theallet; Spalding; SustainU; Tailgate Clothing Company; Target Australia Pty Ltd; Vanity Fair Brands; WE Europe BV; west elm; Williams Sonoma; Williams Sonoma Home; WILLIAMS-SONOMA, INC; Wilster Apparel Group; and Winter Kate.

RSN also thanks last year’s signatories for taking the lead among your industry peers: American Apparel & Footwear Association (AAFA), adidas; adidas Golf; Adidas Group; Alexander McQueen; ANN INC; Ann Taylor; ASDA; Balenciaga; Better Homes & Gardens; Bottega Veneta; Brooks Sports, Inc.; Burberry; By Design; C&A; Canopy; Carrefour; Carter’s; Columbia Sportswear Company; Crewcuts; Disney; Eddie Bauer; EILEEN FISHER; Faded Glory; Gap Inc.; George; Gucci; H&M; Home Trends; J. Crew; The Jones Group, Kohl’s Department Stores; Levi Strauss & Co.; Li & Fung Limited; Liz Claiborne Inc.; LOFT; Macy’s Inc; Madewell; Mainstays; Nautica; New Balance; No Boundaries; Nordstrom Product Group; OshKosh B’gosh; Peacocks London; Peacocks Stores Ltd; Pearl Lowe for Peacocks; PPR Group; PUMA; Puritan; PVH Corp.; Redcats; Reebok; Sam’s Club; Stella McCartney; Target Corporation; Taylor-Made; The TJX Companies, Inc; Volcom; Wal-Mart Stores, Inc.; White Stag; Your Zone; and Yves Saint Laurent. 

Together we can put an end to modern day slavery in Uzbekistan!