In accordance with federal regulations, Cabela’s began investigating its suppliers to determine if any were using conflict materials. Only two percent of the retailer’s partners failed to respond with adequate information, thus forcing the company to file with the U.S. Securities and Exchange Commission.
According to Source Intelligence, the term “conflict minerals” refers to raw materials that come from a particular part of the world where a conflict such as a civil war is occurring and impacts the mining and trading of those resources.
Today, those raw elements generally originate from the Democratic Republic of the Congo and are metals used in consumer electronics, sports equipment, automobiles and jewelry. Tantalum, tin, tungsten and gold are the most frequently used minerals for consumer products.
Much like “blood diamonds,” conflict minerals are controversial because the material generates revenue to support terrorists or militia groups that use child or slave labor for production, often at gunpoint.
Under section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, companies are required to reveal any possible materials smuggled from conflict regions.
Failure to comply with the SEC regulation carries financial risks from government-imposed penalties and diminished sales due to a damaged image.