SEC Conflict Minerals Rule Deserves Reconsideration, AAFA Says
The Securities and Exchange Commission (SEC) should reconsider its conflict minerals reporting rule, which has imposed huge expenses on the apparel and footwear industry with few ground-level impacts, the American Apparel and Footwear Association (AAFA) said in March 16 comments to the SEC (here). The AAFA recommended that the agency “reconsider” the 2012 rule and 2014 guidance (see 14040907), which set reporting requirements. The rule demonstrates "that spending a lot of resources and time to implement a poorly designed regulation, instead of focusing on voluntary initiatives that work, has created questionable results,” the group said. “This is particularly true for the apparel and footwear industry, where the physical nexus to the issue of conflict minerals is tenuous at best.”
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The minerals in question appear only in trace amounts in apparel and footwear products, and AAFA members cite compliance costs of $50,000-$100,000 in connection with the regulation, it said. The association pointed to EU regulations that it said take into account that conflict minerals regulations have a chance of working only when focused on direct importers of the monitored materials, as direct importers are the only companies that have a direct connection to activities in conflict zones, AAFA said. But AAFA praised the rule for aiding supply chain traceability and transparency, and said the apparel and footwear industry is investing additional resources throughout supply chains to that end, including the Conflict Free Smelter Initiative. The SEC requested comments about possible reconsideration of the rule last month (see 1702030035). SEC didn't comment.