Conflict Minerals: Lessons Learned for a Smoother Year Two Compliance Program

We are now well into the second year of the enforcement of Dodd-Frank section 1502, otherwise known as the “Conflict Minerals Provision”.  Year one was a bit of a roller coaster, with legal challenges and rulings that adjusted – although ultimately did not eliminate – the reporting requirements for SEC filers.

In early July, RGP’s Conflict Minerals Practice Leader, Kevin Deely, presented a webinar that presented the results of a careful analysis of the first year of SEC Conflict Minerals filings.  If you are subject to the conflict minerals provision, I encourage you to take time to listen to the recording of the session, as the results were extremely interesting.

Having a Conflict Minerals Policy is Key

CMPolicyStatsOne of the most interesting statistics that came from the research was that 25% of the companies that filed the Form SD report with the SEC indicated that they did not have a formalized Conflict Minerals Policy.  As Mr. Deely mentions in the session, this is surprising both because of the critical nature of having a policy that governs your conflict mineral program, as well as how simple it can be to create that policy.

Your company’s policy does not need require conflict free materials – nor does it need to enforce full reporting compliance for all suppliers.  The policy will define ownership of the initiative, outline your tolerance for non-compliance, set thresholds for suppliers above which you will require responses, and outline corrective action that should be taken for non-compliance.

Data Quality Makes a Huge Difference

In year one, RGP found that dealing with poor data quality created a large amount of effort for many organizations.  Companies that had poor tracking of suppliers, parts or contact information spent far more time on compliance, as they had to first track down information from multiple sources.  Organizations that spent that time wisely in year one creating more complete and consistent records of suppliers and parts will have a much easier time with year two compliance.

Supplier Outreach

Suppliers are not operating on even playing fields.  Large publicly held manufacturing companies who are SEC filers themselves had different challenges than small, independent suppliers in non-English speaking countries.  Language, timing, technology and urgency varied across the population.

Year one taught us that the supplier outreach is critical – and needs to be tailored to the audience.  Some suppliers will need more hand-holding through the process, and others will simply need more time to gather their response together.

Third Party Assistance and Technology

RGP’s Conflict Minerals Practice and our Reasonable Country of Origin Center of Excellence (RCOI COE) team have helped a number of clients through the year one process, developing policies, creating governance structures and serving as the outsourced team to manage the supplier survey process.  In year two, even more organizations are looking to partnerships to help them be more efficient and to provide the most cost-effective solutions.

If you need a partner or the technology to manage your surveys, please contact us today and we’ll connect you with our Conflict Minerals Practice to discuss those needs!

RCOICOE

This entry was posted in Industry News, Solutions and tagged , , by Chris Burd. Bookmark the permalink.

About Chris Burd

Chris is the Managing Director of the policyIQ group at RGP. She gets geeky about compliance and technology, and gets to spend every day working at the crossroads of the two. With policyIQ since 2005, Chris has worked with hundreds of policyIQ clients to implement technology and enhance their internal compliance environment. In the past few years, she's focused on enhancing policyIQ's offering as a Conflict Minerals and Anti-Corruption tool. In past lives, Chris worked as a system implementation consultant, a e-commerce specialist, a customer service call center manager, and - for one short but memorable summer during high school - a machine operator on midnight shift in a plastics factory. In her free time, she spoils her nieces, volunteers at her local food bank, and spends more time than she should taking photos of her cats. She would like to be a rock star when she grows up.

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