January 11, 2013 – January 18, 2013
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

AMSEC Releases Conflict Minerals Disclosure Multi-Part Form

In our Weekly Recap #6, we highlighted AMSEC’s release of its conflict minerals disclosure form, which requires suppliers to disclose whether conflict minerals are contained in products sold to it and if so, from where those conflict minerals originate. AMSEC also recently released its conflict minerals disclosure multi-part form. The conflict minerals disclosure multi-part form allows an AMSEC product supplier to list individually each of the products it supplies to AMSEC and whether each product contains necessary conflict minerals, is outside the supply chain, does not originate in a Covered Country, or is recycled or scrap materials. just to name a few.

Ohio University: Conflict Minerals Statement

Ohio University recently released its conflict minerals policy statement. According to the policy, Ohio University acknowledges the role of conflict minerals in the humanitarian crisis in the Democratic Republic of the Congo. It recognizes that “conflict-free” products are not yet widely available but indicates that it is using its best-efforts to purchase “conflict-free” products. Recognizing its significant expenditures for electronics products, it calls on all electronics companies with which it does business to source responsibly from legitimate Congolese mines.

Conflict Minerals Rule: A Silver Lining for CFO’s?

A Deloitte Insight for CFO’s blog post summarizes a Q&A with two Deloitte partners who stress that CFO’s may come across opportunities to cut costs while implementing conflict minerals rule compliance. Eric Hespenheide, Partner and Global Leader, Deloitte Sustainability at Deloitte & Touche LLP, states “While looking into their supply chain for compliance with the rule, CFOs may gain additional perspective on their supply chain and ways to generate future cost savings or better processes.” In addressing compliance with the rule, Kristen Sullivan, Partner, Deloitte & Touche LLP, stresses that companies should put in “place a cross-functional working group that engages different aspects of the organization…legal, procurement, supply chain, sustainability, public policy and investor relations.”

For more information, see potential cost savings that could be a by-product of the process of complying with the conflict minerals rule.

Ethisphere: Current Compliance Challenges and Strategies

Ethisphere Magazine, a quarterly publication of the Ethisphere Institute (an international think-tank), addresses some of the challenges companies are currently facing in complying with the conflict minerals rule. For example, Ethisphere poses the question: If a GPS navigation system using a tantalum capacitor is installed into a vehicle, what is the product – the GPS system or the entire vehicle? Many companies are struggling to identify what is a “product” under the rule.

Ethisphere proposes that there are a few alternative approaches to compliance with the conflict minerals rule. First, companies can conduct compliance in-house, using an Excel sheet or a similar database program to organize and store their data. Second, companies can outsource their compliance, which can be costly and might jeopardize confidentiality of information. A third option, according to Ethisphere, is to team up with a compliance software company.

Being “Frank” About Conflict Minerals

In an allAfrica opinion-analysis, Robert Borthwick and James Warwick state that the best-case result of compliance with the conflict minerals rule will be an “increased commitment from US-listed companies and their supply-chain partners to source minerals from conflict-affected countries in a responsible manner.” However, in reality, there may be more of a struggle as there is uncertainty surrounding the implementation and enforcement of the conflict minerals rule. In addition, the cost of compliance could range upwards of $16 billion and the prices of conflict minerals are likely to increase, and companies will pass along a lot of those costs onto the consumer.

For more of the opinion-analysis, see Being Frank About Conflict Minerals.

Business Groups File Conflict Minerals Brief

In a 75-page brief filed on January 16, 2013, the National Association of Manufacturers, U.S. Chamber of Commerce, and the Business Roundtable argued that “the Commission violated its statutory obligations to apprise itself of the costs and benefits of the rule and the available regulatory alternatives before saddling U.S. public companies with billions of dollars in regulatory burdens.” In an e-mail, the SEC defended its position, stating that its “legal interpretation and economic analysis are sound.”

The business groups also argued that the rules violate the companies’ First Amendment rights by requiring them to make affirmative statements. The business groups argue, “many of the companies forced to make [a disclosure] will not be manufacturing products containing minerals that funded armed groups. Rather, the companies will simply be unable to trace their supply chains to determine the minerals’ origins.”

For more information on the legal challenge, including the briefing schedule, see “A Review of the Docket.” The SEC is expected to file a response by March 1, 2013.

Also, the business groups’ legal brief challenging the conflict minerals rule can be found on the Business Roundtable website.

MAPI: Conflict Minerals Survey Results

In December of 2012, the Manufacturers Alliance for Productivity and Innovation (“MAPI”), surveyed companies regarding their preparedness for conflict minerals compliance. Over 80 member companies responded. Below are some highlights from the survey:

  • Sixty-four percent (64%) of the companies surveyed characterized the level of discussion within their company around conflict minerals to be “moderate.”
  • Eighty-four percent (84%) of the companies surveyed pointed to compliance with the SEC rules as their primary driver for action within the company.
  • Legal (31%) and Supply Chain (25%) departments were identified as the key departments responsible for implementing rule compliance.