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armed conflicts through the trade of minerals . The EU regulation is expected to impose mandatory due diligence and disclosure for smelters and refiners and for importers of conflict minerals into the EU . That obligation is expected to cover over 400 companies . In addition , large EU business entities ( 500 employees or more ) will be encouraged to report on their due diligence and sourcing activities . Importantly , the EU regulation covers more than the US rule because it focuses on sourcing from all “ conflictaffected and high-risk ” areas , not just from areas in central Africa .

Expect more , not less Although results of required supply chain transparency efforts to date have been mixed at best , companies should expect the number , scope and burden of responsible sourcing obligations to grow . Expectations on companies to determine and improve the human rights impacts of their sourcing will grow as well – not only with respect to their own operations but for their supply chains .

Risks of increased disclosure To date , the SEC has not indicated much interest in taking action to enforce the conflict minerals disclosure rule . But , there are significant risks that come along with increased supply chain and sourcing disclosure . Those risks arise from the various stakeholders reviewing the disclosure , which include consumers , customers , regulators , investors and NGOs .

Now what ? Supply chain professionals and senior management need to determine how their organizations will respond

12 October 2016