Conflict minerals reporting deadline: is your business ready?
The looming deadline for disclosing the use of conflict minerals from
the Congo is generating mixed responses from US businesses and
experts. Here are some reactions and advice
Most US public companies must report if they use conflict minerals
from the Congo or from neighboring countries by 2 June. Photograph:
Rob Lavinsky/iRocks.com
Jeff Leinaweaver
Tuesday 6 May 2014 19.44 BST
As US businesses scramble to meet the US Securities and Exchange
Commission's conflict minerals disclosure rule - with the first
reporting deadline rapidly approaching 2 June - some are complaining
of uncertainty and other concerns, while others say they are ready.
A PwC study (pdf) released in April found that many companies - 26% of
respondents - are running behind on preparing their disclosures, even
though 89% have at least one full-time staffer working on their
conflict minerals compliance efforts (and some have more than five).
The rule requires most US companies to report whether they use
conflict minerals from the Democratic Republic of the Congo (DRC) and
neighboring countries.
Last week, the SEC halted part of it's controversial conflict minerals
rule - at least for now - that would have required companies to
declare products that aren't free of DRC conflict minerals as "not
found to be 'DRC conflict-free'" or "DRC conflict-undeterminable". The
decision came after a US appeals court ruled the requirement to be
unconstitutional, saying it would violate First Amendment rights by
compelling commercial speech.
The Commission confirmed that the rest of the rule would remain in
effect, an order that was lauded by some and criticized by others.
"We're disappointed that the SEC's action has only added to the
confusion," a spokesman for the National Association of Manufacturers,
which petitioned for a stay of the entire rule, said via email.
Meanwhile, Julie Schindall, director of communications and stakeholder
engagement at the Electronic Industry Citizenship Coalition, told us
the rule is giving companies more transparency into their supply
chains than ever before. Companies are now being ethically and legally
compelled to find out what is in their supply chains, "literally from
the phone in your hand to the mine itself", she said. "This is very
powerful."
Let us know your thoughts - and your company's state of readiness - in
the comments below. Here's a roundup of advice and reactions from
experts in the field:
Sarah Altschuller, counsel for Foley Hoag's corporate social
responsibility practice:
Based on the latest SEC guidance (April 29th & May 2nd), companies do
not need to make a concluding statement in their conflict minerals
reports stating that products are either "not found to be DRC conflict
free", "DRC conflict undeterminable", or "DRC conflict free".
That said, you still need to file the conflict minerals report
including a description of your due diligence efforts, the facilities
located to produce the minerals, the country of origin, etc. The SEC
has essentially said that companies still need to do everything
required by the rule, except provide an ultimate concluding statement.
This new guidance raises an interesting question for companies that
were planning to file a reports stating that products were DRC
conflict undeterminable. Despite the SEC's guidance, companies may
wish to use this designation to clarify that products should not be
presumed to be "not DRC conflict free".
If a company is at the point where it's able to say that certain
products are DRC conflict free, and it was already going to have its
conflict minerals report audited, I don't see a reason why it wouldn't
continue to file a report using the "DRC conflict free" designation.
The company will get a benefit from that and it has already done the
work.
Patricia Jurewicz, director of the Responsible Sourcing Network:
In regards to the latest partial ruling, our advice is to report as
originally intended by the SEC. We, the sustainable responsible
investors, the human rights community and consumers, want to reward
companies who are doing the right thing, who are no longer hiding out
in the shadows and hiding behind any little word inside a legislation
or a rule, or a court decision about what companies don't have to do.
We're not interested in companies who are looking for the least common
denominator. We need to support companies who understand transparency
is important and who are willing to support the communities in the DRC
and buy their minerals when they are responsibly sourced.
We acknowledge and support those companies who have done the work
already who have done the due diligence and engaging the smelters, and
supporting the closed pipe system that are benefitting the people of
the Congo. And for people who are all wrapped up in the nitpicky
language of how the minerals is designated, [who are] staying in the
shadows, it's business as usual, and that's not the future. The future
is about transparency and accountability. We all understand we live in
a global, interconnected world and we all have some responsibility.
Start investigating what's in your supply chain.
The younger generation wants this data, the transparency. They want to
know their own values will not be compromised when they are buying
something like a smartphone. So by having this SEC disclosure is
important. But with this new partial ruling, not all the dots are
connected yet because if you're going through all of this effort to do
the due diligence anyway, why not report [it], state it?
Julie Schindall, director of communications and stakeholder engagement
at the Electronic Industry Citizenship Coalition and the Conflict Free
Sourcing Initiative:
There has been so much activity around this rule, and a lot of our
members have been asking if this impacts our work at the Electronic
Industry Citizenship Coalition and Conflict Free Sourcing Initiative.
We've wanted to make clear this effects your reporting obligation, if
you have one, but doesn't change what we're doing - supporting peace
building. We appreciate the companies who are working with us to
support conflict-free sourcing.
This is a complex and evolving landscape in terms of corporate due
diligence on conflict minerals. That landscape includes everything
from doing the right thing as part of [corporate social
responsibility] to expectations for various regulatory regimes to
guidance provided by standard setting and institutions and
expectations from customers. When a company gets out in front, and is
willing to say 'We are conflict free', [that] really sets up some
business competition.
Nancy Mancilla, CEO of ISOS Group:
Companies haven't moved as swiftly as needed to grasp a better
understanding of the exact percentage of elements sourced per product
from these conflict zones. Instead, companies have more quickly
committed to developing policies and the enforcement of them
individually and through industry associations. I don't think this
momentum will be lost, however, as it seems to be a strong indication
of the intention for true stakeholder engagement - companies and
regulators working together to set achievable and realistic targets.
Lisa Malloy, senior media relations manager at Intel:
Intel is deeply committed to eradicating conflict minerals from our
supply chain and we are glad to see momentum continue. Intel started
our work on this important issue before US legislation was enacted,
which has positioned us well to be ready to report to the SEC in June.
We would like to work with other companies and organizations to share
our experience. We think that the challenge of responsible minerals
sourcing requires a comprehensive solution that involves government
agencies in the US and internationally, non-profit groups and
industry.
The supply chain hub is funded by the Fairtrade Association. All
content is editorially independent except for pieces labelled
advertisement feature. Find out more here.
http://www.theguardian.com/sustainable-business/2014/may/06/conflict-minerals-reporting-deadline-is-your-business-ready
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