Icar letter of support for section 1502 of dodd frank

12 November 2015

The International Corporate Accountability Roundtable (ICAR) is a coalition of leading human rights, environmental, development, and labor organizations working to ensure corporations respect human rights throughout their global operations.

We, along with our member organizations, advocated for the passage and implementation of Dodd-Frank’s Section 1502 pertaining to conflict minerals sourced from the Democratic Republic of Congo and surrounding areas. We write today to urge continued support for this critical provision.

The responsibility of business to respect human rights, including through supply chains, is clear and well recognized. In the United States, advancements in corporate reporting on human rights have further clarified the materiality of human rights to corporate decision-making and disclosure in recent years. For instance, the Dodd-Frank Financial Reform Act was passed in 2008, and the final rules implementing Section 1502 from the SEC were adopted in 2013. This trend is further exemplified by increased enforcement of the Foreign Corrupt Practices Act, reporting obligations created through Executive Orders pertaining to procurement, and U.S. Department of State requirements related to investments in Burma, which require public companies to conduct due diligence and make issue- and sector-specific disclosures regarding their human rights and anti-corruption practices.1

The trend towards increased human rights reporting can also be seen in the EU. To give investors a more comprehensive understanding of company performance, the European Commission enacted Directive 2014/95/EU on December 6, 2014, which requires EU-listed companies with over 500 employees to disclose in their management reports information regarding policies, risks, and outcomes related to human rights, sustainability, bribery, and anticorruption issues.2

International institutions, including the UN and OECD, have also sought to develop substantive and procedural standards for disclosures related to human rights and sustainability, including through the OECD’s Guidelines on Multinational Enterprises, which emphasize and encourage businesses to integrate human rights and sustainability information into their routine 1

THE INTERNATIONAL CORPORATE ACCOUNTABILITY ROUNDTABLE (ICAR), “KNOWING AND SHOWING”: USING U.S. SECURITIES LAWS TO COMPEL HUMAN RIGHTS DISCLOSURE 18-19, available at http://icar.ngo/wpcontent/uploads/2013/10/ICAR-Knowing-and-Showing-Report4.pdf.

2 European Commission, Non Financial Reporting, http://ec.europa.eu/finance/accounting/nonfinancial_reporting/index_en.htm.

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disclosures.3 In addition, the UN Guiding Principles on Business and Human Rights (UNGPs), endorsed by the United States Government in 2011, call on businesses to report how they address human rights risks in their operations through a variety of methods, including formal reports to be made available to all affected stakeholders.4

Regulatory advancements aside, reporting results in clear benefits to companies. Research conducted by accounting firms Deloitte and Ernst & Young has revealed tangible benefits for companies disclosing non-financial information related to human rights and sustainability and how this information better informs investors about issues related to corporate reputation and risk.5 Recognizing this demand, leading financial information providers such as Bloomberg and Thompson Reuters have sought to incorporate human rights and sustainability information into their own analytics and reporting.6

We urge you today to indicate your strong support for Section 1502 of the Dodd-Frank Act, to stand up for a provision addressing serious and grave human rights conditions, and to understand that the trend towards corporate disclosure for human rights is increasing through regulatory regimes around the world. Section 1502 is not creating a burden on business.

Instead, it brings tangible value to companies and investors. The public also benefits when companies are motivated by disclosure requirements to map their supply chains, conduct human rights due diligence, and ensure that they are engaging responsibly in their activities.

Sincerely,

Amol Mehra, Esq. Director International Corporate Accountability Roundtable amol@icar.ngo

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ICAR, supra note 1, at 21.

John Ruggie, Special Representative of the Sec’y-Gen. on the Issue of Human Rights & Transnational Corps. & Other Bus. Enters., Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, U.N. Doc. A/HRC/17/31, Principle 21 (June 2011) available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

5 See Value of Sustainability Reporting, ERNST & YOUNG & BOSTON COLL. CTR. FOR CORPORATE CITIZENSHIP (May 2013), available at http://www.ey.com/Publication/vwLUAssets/ACM_BC/$FILE/1304- 1061668_ACM_BC_Corporate_Center.pdf; Disclosure of Long-Term Business Value: What Matters, DELOITTE (March 2012), available at http://www.deloitte.com/assets/DcomUnitedStates/Local%20Assets/Documents/us_scc_materialitypov_ 032812.pdf.

6 ICAR, supra note 1, at 22.

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