Dodd Frank Legislation: Protector of Civil Rights

There are many controversial provisions in the Dodd Frank legislation; however, one that seems to be going under the radar without much notice from the protagonists against this legislation is a provision that requires companies to disclose whether raw materials essential to their products include minerals from Congo and neighboring nations.

The Congo? What does the Congo have to do with legislation that was designed to overhaul the rules and regulations of the financial industry to prevent another financial market meltdown?

This is what happens in Congress. Many times random pieces of provisions are included in legislation that have no association with each other. For example, the unemployment benefits and employer payroll tax extension bills include provisions for the construction of an oil pipeline from Canada to Houston, Texas.

Here, there was pressure by human rights groups to some how fight back against the atrocities in the Democratic Republic of Congo. As a result, Congress ordered the US Securities and Exchange Commission in the Dodd Frank legislation to require companies to disclose this information about whether certain materials it uses for its products come from Congo and its neighbors. Clearly, this will not effect every company. The minerals from the Congo are casserite, columbite-tantalite, gold and wolframite. The only mineral here that I recognize is gold. Then again, I am not a geologist. However, if you take a look at your phone and many other electronic products around your house, including this computer that I am using to type this posting on my blog, many of these products include this minerals. Unfortunately, the mining industry in that region consists of corruption, kidnapping, child labor, racism, torture and murder.

The intent here is that if companies have to disclose that some of their suppliers are rapists, murders, kidnappers and just all around bad dudes, perhaps that will force the company to find a more friendlier, gentler and kinder supplier. Let's face it. In today's society, image is almost as important as the quality of the product. Does that mean there will be a shortage of iPhones and other electronic devices because companies stop doing business with the Congo. Most likely, the answer is no. The Congo only supplies 20% of the global demand for these raw materials. However, companies will face additional cost because of the added cost for auditing its suppliers in order to properly disclose on its 10K whether or not it has such a nefarious supplier. This also has not had an impact on companies' stock prices. For those companies that already disclosed this information, their stock was not impacted by this information. I guess investors are not concerned about companies being human rights stalwarts. As long as the company is meeting it numbers, investors are happy. However, that may become a different story with consumers. There is this hidden intangible capital about people feeling good. Perhaps, people will not feel comfortable to do his or her Facebook update on a computer that includes minerals that came from children mining the mines in the Congo. Maybe I should check Apple's disclosure. It would be contradictory for me to write this story and not confirm that this computer does not have any components with such Congolese minerals.

Then again, I have stock in Apple and there is no way I am going to sel that stock right when its 2012 growth projections are through the roof. What can I say, I am a pragmatist not an idealist.