Recognizing that the exploitation and trade of conflict minerals  originating in the DRC is helping to finance conflict, in July 2010   The act stated that it is  Congress included a provision in section 1502(b) of the Dodd-Frank Act  that requires SEC to issue a rule for covered companies to disclose  whether necessary conflict minerals used in their products originated in  the DRC or in an adjoining country and, if they did, to provide an  additional report with certain disclosures. According to industry association and company representatives, in  practice, a company’s supply chain for products containing tin, tantalum,  tungsten, and gold can be complex and can vary considerably. SEC Has Taken Some Steps toward Developing a Rule but Has Delayed Issuing a Final Rule

SEC has published a proposed conflict minerals disclosure rule and has  taken steps to gather input from various stakeholders. Senator Richard Durbin and U.S. SEC’s Final Rule Delayed

Since SEC issued a proposed rule in December 2010, it has announced,  on several occasions, new target dates for the publication of a final rule,  as shown in table 1 below:  In its December 2011 announcement concerning the target publication  date for a final rule, SEC estimated that it would issue a final rule by June  2012; however, SEC did not issue a final rule by the end of June 2012. On July 2, 2012, SEC announced that the Commission will hold an open  meeting on August 22, 2012 to consider whether to adopt a final conflict  minerals disclosure rule. Intense stakeholder interest and input. Rigorous economic analysis in rule-making process. Stakeholder- Developed Initiatives May Facilitate Compliance with the Anticipated Rule, but Efforts to Improve Some Initiatives Have Been Hindered by the Absence of a Final Rule

Various stakeholders have developed and implemented initiatives that  may help covered companies and their suppliers comply with the  anticipated rule. However, due to the uncertainty regarding potential due  diligence and disclosure requirements stemming from SEC’s delay in  issuing a final rule, some stakeholders’ efforts to improve their initiatives  through expansion and harmonization have been hindered. Stakeholders Have Developed Initiatives

Although SEC has not issued a final rule, industry associations, multilateral  organizations, and other stakeholders have developed and implemented  initiatives that may help covered companies and their suppliers comply with  the anticipated rule. Stakeholder-developed initiatives—which  include the development of guidance documents, audit protocols, and in- region sourcing systems—support covered companies’ efforts to (1)  conduct due diligence of their conflict minerals supply chains, (2) identify  the source of conflict minerals within their supply chains, and (3)  responsibly source conflict minerals. Little Additional Information on the Rate of Sexual Violence in Eastern DRC and Neighboring Countries Has Become Available since GAO’s 2011 Report

Since our 2011 report, one population-based survey has been conducted  in Rwanda, while none have been conducted in eastern DRC, Uganda, or  Burundi. During our current review, we identified one new population- based survey—a 2010 Demographic and Health Survey (DHS) conducted  in Rwanda that estimates that 22 percent of women ages 15 to 49 have  experienced sexual violence in that country in their lifetimes. Other organizations have plans to conduct population-based surveys in  eastern DRC. Recommendation for Executive Action

To address the delay and uncertainty in finalizing a conflict minerals  disclosure rule regarding what covered companies will be required to do,  we recommend that the Chairman of SEC identify the remaining steps it  needs to take and the associated time frames to finalize and issue such a  conflict minerals disclosure rule. While SEC neither agreed nor  disagreed with our recommendation, in its comment letter, SEC said that  it would continue its endeavor to complete the rule making expeditiously  to provide certainty. In response to a requirement in the Dodd-Frank Wall Street Reform and  Consumer Protection Act that GAO submit an annual report that assesses  the rate of sexual violence in war-torn areas of the Democratic Republic of  the Congo (DRC) and adjoining countries, we identified and assessed any  additional information available on sexual violence in war-torn eastern  DRC, as well as three neighboring countries that border eastern DRC— Rwanda, Uganda, and Burundi—since our 2011 report on sexual violence  in these areas.
Why GAO Did This Study

In eastern DRC, armed groups continue to commit severe human rights abuses and profit from exploitation of minerals and other trades. In 2010, Congress included a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act to address the trade of conflict mineralstin, tantalum, tungsten, and gold. Section 1502(b) of the act requires SEC to issue a disclosure rule for companies using these minerals in their products. The act also requires GAO to assess the rules effectiveness and the rate of sexual violence in war-torn areas of DRC and neighboring countries.
Since a rule has not been issued, this report examines (1) steps SEC has taken toward issuing a conflict minerals disclosure rule; and (2) stakeholder-developed initiatives that may help covered companies comply with the anticipated rule. This report also examines (3) any additional information available on the rate of sexual violence in eastern DRC and neighboring countries since GAOs 2011 report on that subject.
GAO reviewed and analyzed reports and documents from SEC, other U.S. agencies, industry associations and other nongovernmental stakeholders; and interviewed representatives from those organizations.

What GAO Found

The Securities and Exchange Commission (SEC) has taken some steps toward developing a conflict minerals disclosure rule, but it has not issued a final rule. For example, SEC published a proposed rule in December 2010 and has gathered and reviewed extensive input from external stakeholders through comment letters and meetings. SEC has also announced, on several occasions, new target dates for the publication of a final rule. In July 2012, SEC announced that the Commission will hold an open meeting in August 2012 to consider whether to adopt a final rule. According to SEC officials, various factors have caused delays in finalizing the rule beyond the April 2011 deadline stipulated in the act, including the intensity of input from stakeholders and the public; the amount of time required to review this input; and the need to conduct a thorough economic analysis for rule making.
Various stakeholders have developed initiatives that may help covered companies comply with the anticipated rule, but some initiatives have been hindered by SECs delay in issuing a final rule. Industry associations, multilateral organizations, and other stakeholders have developed global and in-region sourcing initiatives, which include the development of guidance documents, audit protocols, and in-region sourcing systems. These initiatives may support companies efforts to conduct due diligence and to identify and responsibly source conflict minerals. In the absence of SECs final rule, however, stakeholders note that uncertainty regarding SECs reporting and due diligence requirements has complicated their efforts to expand and harmonize their initiatives. For example, in the absence of a final rule, one initiative is facing difficulty engaging additional participants, while stakeholders efforts to harmonize two initiatives have been hindered.
Little additional information on the rate of sexual violence in eastern Democratic Republic of the Congo (DRC) and neighboring countries has become available since GAOs 2011 report on that subject. For example, only one population-based survey has been published on sexual violence in Rwanda, and it reports that 22 percent of women ages 15-49 have experienced sexual violence there in their lifetimes. No additional surveys have been conducted in eastern DRC; however, one organization is currently conducting a survey and another is planning to conduct a survey there in 2012.

What GAO Recommends

GAO recommends that the Chairman of SEC identify remaining steps and associated time frames to issue a final rule. SEC neither agreed nor disagreed with the recommendation, but noted that it will expedite the completion of its rule making to provide certainty.