Gold, tungsten, tantalum, and tin are essential to a wide array of today's products. Industries ranging from electronics to health care to defense rely on these minerals. A sizable portion of these minerals are sourced from Democratic Republic of the Congo (DRC) where funds raised from mining these minerals have fueled a decades-long civil war. Thus these minerals from the DRC are referred to as “conflict minerals.” Global supply chains have been designed to use DRC sources based on economics and logistics; although, there are alternative sources.
Some U.S. policymakers sought limit the conflict in the DRC by reducing the flow of conflict minerals. Initial Congressional action was unsuccessful; however the policy was incorporated into section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010. The legislation required the Securities and Exchange Commission (SEC) to establish a reporting requirement for publicly traded corporations using conflict minerals in their supply chains. These corporations could also certify their supply chains as DRC conflict-free through an independent private sector audit.
The primary focus of the case is on how supply chains can be modified by public policies to achieve desired social outcomes. The case can also be used to teach the policymaking process.
A postscript, HKS Case Number 2248.1, is available for this case.
Supply Chain Focused
1. Supply chains are designed to optimize economics, infrastructure, and risk.
2. Supply chain transparency is very difficult to achieve in global supply chains, especially in the extractive industries.
3. Government action can alter supply chains to achieve public policy objectives.
4. Such government actions must consider all stakeholders, unintended consequences, measures of success, and durability.
Policy Design and Delivery Focused
1. A spectrum of options from diplomacy to naming and shaming to legislation can be used to achieve policy objectives.
2. Measuring success and avoiding unintended consequences our key policy option evaluation criteria.
3. Policy durability is a key risk; broad support and/or minimal opposition are the best ways to ensure sustainability.