Part II: Tips for Conflict Minerals Regulatory Compliance and Reporting

We looked at the changing regulatory landscape in PART I: CONFLICT MINERALS 2017 AND BEYOND and now we will discuss how you can best prepare your organization. Our product compliance management team has been helping companies develop Conflict Mineral Reports and filing Specialized Disclosure forms with the U.S. Securities and Exchange Commission (SEC) for the Dodd-Frank Act for several years. We have gained valuable insights on implementing internal procedures to comply with the law. As the U.S. awaits the outcome of the recently passed H.R. 10 bill brought forward by the Finance Committee of the House of Representatives, we wanted to provide some tips to help prepare organizations for changing regulations and ensure compliance. 

  • Investigate and learn what products and components you source that may contain 3TG. The best proactive approach is to require Full Material Disclosure from your supply chain on every sourced item. The high-tech and electronics industry are utilizing the IPC-1752A format to standardize this activity.
  • Document a policy and process for conflict minerals. Creating a “policy for intent” supports the goals of reducing funding of conflict minerals that supports the spread of terrorism and slave labor to produce and distribute conflict minerals.
  • Provide links to websites with policy statements available to public is a good way to document/publish your policy, provided your company maintains a public facing corporate website.
  • Develop templates to communicate each stage of the process to your supply chain. Require your suppliers to annually submit a product-level Conflict Minerals Report Template (CMRT) spreadsheet detailing the sources of all 3TGs in items (products and components) sourced by your company. This will reinforce your intent to fully comply with all applicable laws.
  • Review and communicate with each supplier on the completeness and accuracy of the data provided in the CMRT. Walk suppliers through the template fields that require rework to accurately complete the submission.
  • Ensure your templates thoroughly address the Reasonable Country of Origin Inquiry (RCOI) criteria.
    • Filer discusses its process, including qualitative, or quantitative, metrics that gives the reader insight into its conclusions.
    • Reader clearly understands filer’s reasoning for its RCOI conclusion.
    • Makes reference to the rule’s requirement to locate mine with “greatest possible specificity” and lists at least partial locations of origin.
  • Create a central location/department/contact for all supply chain communications. This includes a centralized database that contains links to key systems, email, network drives and website links. Develop a process that documents and stores the data for each part and supplier contacted.
  • Manually inspect all phases in the reporting process to ensure accuracy, completeness and trigger communications for edits, acknowledgements, acceptance and completeness.
  • Incorporate conflict minerals reporting into all basic Master Supplier Agreements (MSA) and all purchase order documentation to ensure complete requirements communication with all suppliers at the point of contacts for all material purchases.
  • Maintain membership in at least one of the industrial coalitions that focus on conflict mineral policies and compliance.
    • The Conflict-Free Sourcing Initiative (CFSI) administers the Conflict-Free Smelter Program which has become the gold standard for third party smelter audits.
    • The Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative are the parent organizations of the CFSI and offer other programs.

Validating your due diligence process and understanding both the strengths and areas for improvement are key to be a successful leader in the global initiative in addressing conflict minerals. For questions regarding conflict minerals reporting and how to ensure compliance and minimize risk in the supply chain, contact Tord Dennis.


Additional Resources and References:
SEC 17 CFR PARTS 240 and 249b
CFSI White Paper-Conflict Minerals Disclosure
IPC Blog Post – House Financial Services Committee Passes Bill to Repeal Conflict Minerals

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