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Washington, DC—The Securities and Exchange Commission voted last week to implement the “conflict minerals” provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed in 2010. The minerals provision requires publicly traded companies to both determine and disclose if they use any minerals that 1) originated in either the Democratic Republic of the Congo or any of nine neighboring countries or 2) might have financed or benefited armed rebel groups there. Gold is one of the minerals on the list that comes under the law.

While the law is to be phased in over the course of two years for large companies and four years for small companies, industry organizations including Jewelers of America and the Jewelers Vigilance Committee have been lobbying for changes to some of the requirements.

Both JA and JVC see the new laws impacting the entire industry supply chain. But the luxury sector actually may find the changes less intrusive than other segments of the industry. The only companies required to file mineral reports are publicly traded companies, of which there are relatively few in the sector. Those that are already have been proactive about corporate social responsibility: Tiffany, for example, has a long-standing commitment to responsible sourcing and tracing of materials used in its products. Both Richemont (parent of Van Cleef & Arpels, Montblanc, IWC, and other top luxury watch brands,) and LVMH (parent of Chaumet, Hublot, Tag Heuer, and De Beers Jewellery) also are committed to responsible business practices, including human rights. Lazare Kaplan has been certified by the Responsible Jewellery Council, the organization dedicated to setting standards for social responsibility in the jewelry industry worldwide. The Canada- and Florida-based luxury jewelry chain Birks & Mayors adheres to tight guidelines for both its diamond and precious metals sourcing.

While the new conflict mineral reporting regulations apply only to public companies, many leading independent luxury jewelers, such as Borsheim’s, Hamilton Jewelers, MJ Christensen, and Hyde Park Jewelers, also have policies around responsible sourcing, including both human rights and environmental care. But like the conflict diamonds issue a decade ago, it behooves any luxury jeweler, no matter how big or small, to ask their suppliers about ethical sourcing and be ready to answer questions from both customers and media. 

The new rules exempt companies that don’t have direct control of the manufacturing of their products and also exempt existing stocks of gold that were refined prior to January 1, 2013 or that were mined outside the designated area of Africa.

NGOs have objected to the “no direct control” exemption, saying many large retailers do exercise firm control over manufacturing of the products they sell, so why not enforce human rights guarantees? But since most of the public luxury brands that do control production already have existing social responsibility policies, the new reporting requirements shouldn’t significantly alter their business practices.

The law requires companies that use any of the designated minerals to conduct a country-of-origin inquiry on them, or, alternately, use minerals from a scrap or recycled source. Companies that do use scrap, recycled, or minerals they believe are not from the conflict areas must state so and describe why they believe the minerals are conflict-free. Companies that do use minerals from the areas in question must perform due diligence, including an independent audit, to determine the chain of custody for the mineral.

Read National Jeweler’s report about the law here, or go directly to the 332-page SEC document here.

Top image from the Epoch Times: Workers standing on a muddy cliff of a gold mine in northeastern Congo. Click here to read the article.