The Trump administration is considering an executive order that could make it easier for violent militias in the Democratic Republic of Congo (DRC) to profit from the sale of gold. The new policy could allow jewelry companies to put “conflict gold” back in their products without revealing it to consumers.
We are committed to creating a transparent jewelry supply chain that is free from violence. This new policy would not advance that goal.
The policy under discussion would reverse an Obama administration rule that responds to a civil war in eastern areas of the DRC. The war has claimed millions of lives in the past two decades. A key factor fueling the conflict is the mining of gold, tin, tantalum, and tungsten in eastern DRC. Rebel militias have financed themselves by controlling the local trade in these “conflict minerals.” Once exported from DRC, the minerals make their way through the supply chain and eventually are used to manufacture jewelry, electronics, and other products.
In 2010, Congress decided to take action to cut off funding to Congolese militias. In Section 1502 of the Dodd-Frank financial reform law, Congress required companies to study their supply chains and file annual reports with the Securities and Exchange Commission (SEC) describing their efforts to discover whether their products contain conflict minerals. By requiring transparency, the law gives companies an incentive to avoid buying minerals that could be linked to conflict.
The law is working. Under an SEC rule that implements Section 1502, companies have been filing annual reports with the SEC since 2014. Companies have investigated their supply chains and taken steps to ensure they do not buy conflict minerals. Militias have lost a source of funding. The value that Congolese warlords now receive from selling tin, tantalum, and tungsten (“3T” minerals) has plummeted 30 to 60 percent, according to Enough Project, an NGO. The success of the law has prompted Massachusetts and California to pass their own conflict minerals legislation, and the European Union is considering its own conflict minerals law too.
The Trump policy, if enacted, would suspend the SEC’s conflict minerals rule for two years. The apparent rationale for the rule reversal would be to reduce the burden on U.S. businesses. But compliance costs were not as great as some companies initially claimed, and most businesses have already done what they need to do to comply. Now that companies are following the rule, it makes little sense to lift the rule and risk the progress that has been made.
Moreover, suspending the rule has costs that the administration may not be taking into account. Consumers are increasingly demanding socially responsible products. A step away from responsible business practices might not be so good for the industries that the Trump administration wishes to protect.
At Brilliant Earth, the suspension of the SEC’s conflict minerals rule would not change our commitment to transparent sourcing. (We are not subject to Section 1502, but we voluntarily go beyond what it requires.) And because of rising demand for responsible jewelry, we know that many companies would continue to exercise due diligence to keep conflict minerals out of their supply chains.
But keeping the rule in place would be the smart decision, both for U.S. businesses and for the people of the DRC.