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The Potential Hidden Benefits of Conflict Minerals Disclosures

Joe Mont | September 9, 2014

A surprise development from the inaugural batch of conflict minerals reports filed with the Securities and Exchange Commission in May is that nearly 65 companies—among them IBM, Hewlett-Packard, and Williams-Sonoma—reported that materials they used were sourced from North Korea.

While the information doesn’t raise conflict minerals problems—North Korea, of course, is far from the war-torn Congo and the militia groups government officials created the rule to strike against—it could indicate violations of U.S. trade sanction laws and raise other supply chain problems.

Many of the companies that reported North Korean smelters later determined that the disclosure was in error, but the revelations still underscore a point that advocates of the conflict minerals rule have made from the start: greater scrutiny of a company’s supply chain can help it better manage reputational risk, comply with other regulations, and offer business benefits.

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