EU Parliament Votes to Expand Scope of Conflict Minerals Legislation to Reach 880,000 Companies
On May 20, Members of the European Parliament (MEPs) voted to end the importation of conflict minerals into the European Union. In a vote of 400 votes to 285 with 7 abstentions, Parliament strengthened both the Commission’s original proposal and the proposal forwarded by the International Trade Committee. Parliament has instead opted for a scheme requiring mandatory compliance for “all Union importers” sourcing 3TG in conflict areas in addition to obligatory disclosure requirements detailing supply chain risk mitigation efforts for “downstream companies.” This scheme falls in line with a recent statement issued by global sustainable and responsible investors urging MEPs to expand the scope of the original proposal to include mandatory requirements for “downstream” (end-user) companies.
With this vote, MEPs have taken the opportunity to substantively and significantly advance the EU’s role in the growing campaign to promote responsible sourcing around the world. In the vote, MEPs opted for a strengthened scheme in which smelters, refiners and importers of 3TG must undertake supply chain due diligence and obtain an independent third-party audit validating these processes. Likewise, “downstream” companies associated with 3TG mineral sourcing will also be required to disclose information regarding the steps they have taken to identify and mitigate risk in their supply chains.
In a press release issued by the Group of the Progress Alliance of Socialists & Democrats, major proponents of a mandatory scheme, S&D President Gianni Pitella praised the vote.
“A special day to be proud of being European. We all won. Europe won. All those who fight for the respect of human rights beyond and over multinational interests have won. People of DR Congo and of all areas affected by war and violence today won. After a long and hard campaign, the S&D Group convinced the rest of EU Parliament to secure a legally binding scheme to ensure the traceability of minerals, to make sure that products sold in the EU do not fuel armed militias or foster human rights violations in conflict areas. We proved that the European Union cares about human rights and human dignity beyond empty declarations.”
In contrast to Dodd-Frank, the proposed law is global in its geographic scope rather than focused only on tin, tantalum, tungsten, and gold sourced in the Democratic Republic of the Congo (DRC) and surrounding countries. If passed, the legislation could affect over 880,000 EU firms.
The European Parliament now enters into discussion with Member States and the Commission to come to a final agreement on the law. With obvious divisions demonstrated between parties, the negotiations going forward may prove very difficult.
It is our hope that the outcome of this vote will hold through negotiations with the Commission and Council so that mandatory supply chain due diligence requirements applicable to companies throughout the entire supply chain will pass into law. In compliment with US legislation, robust EU legislation will effectively generate global company due diligence activities in line with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. This will tangibly limit investor risk and increase legitimate extractive sector revenue streams in conflict-affected and high-risk areas, helping to bring an end to resource-related conflicts in the DRC and around the world.