February 14, 2014 – February 21, 2014
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.
The Conflict Minerals Rule: More Questions than Answers
The conflict minerals rule was featured in the latest blog entry of the National Association of Environmental Management’s (NAEM) The Green Tie blog.
The NAEM staff, in its post Conflict Minerals Reporting Yields As Many Questions as Answers, highlights the complexity of certain supply chains. For example, Karen Yeadon, Manager of Environment, Health and Safety with Emerson Process Management, commented “We buy hundreds of thousands of electronic components…almost every component has a little finish on the little legs of the attachment points. Almost all of them are tin. They [the suppliers] have to figure out where all of their tin comes from.” Sam Waldo, Director of Environment, Health and Safety at Amphenol Corp. added, “From an end-product manufacturer, you could be talking about eight to ten layers of suppliers down below for one part. One of my operations has got eight million active part numbers.” Because of the complexity of companies’ supply chains, and the short time between adoption of the rule and the initial compliance year, many companies now find themselves with more questions than answers when it comes to the rule.
Conflict Minerals: A Reporting Trend for 2014
In her article titled 4 Top Sustainability Reporting Trends for 2014, Cindy Mehallow of GreenBiz.com recaps each reporting trend for 2014 identified by Ernst & Young (E&Y) in its publication Let’s Talk.
One of the reporting trends identified by E&Y is conflict minerals. Throughout her recap, Ms. Mehallow provides insightful tips. In regards to conflict minerals, she states, “For guidance on working with conflict mineral suppliers, the Electronics Components Industry Association (ECIA) position paper and template (PDF) is a great resource. EICA, working [with] [sic] the Global e-Sustainability Initiative, developed the only industry-wide standard reporting template. ECIA suggests that component manufacturers could use this template to post conflict minerals information on their internet sites to support supply chain members and end users.”
Note: Actually, there is at least one reporting template that is broadly used in one industry – iPoint’s iPCMP is the template of choice for the automotive industry.
Tips for Tackling the Conflict Minerals Rule
Rose Kelly-Falls, Senior Vice President of Supply Chain Risk Management at Rapid Ratings International Inc., wrote an article in Supply & Demand Chain Executive titled Conflict Minerals Disclosure Certain to Test Supply Chain Professionals’ Mettle.
In her article, Ms. Kelly-Falls provides background information about the conflict minerals rule. In addition, she provides the following tips for tackling the conflict minerals rule:
- Identify a leader and build a team. Corporations need to establish a leader to coordinate the many departments that are responsible for ensuring the accuracy of the information submitted to the SEC. Missteps can be costly and everyone in an organization needs to be on board. The leader should [have] a representative from every department to maintain a seamless [diligence process].
- Create a process. Reporting conflict mineral status is going to become a regular piece of a corporation’s compliance puzzle. It is essential to establish a repeatable process that examines the supply chain and the suppliers on an ongoing basis. Adopting a software platform or other means to effectively manage a supply chain’s conflict mineral status ensures accuracy, and eases the complexities that come with the deep analysis.
- Coordinate a public relations strategy. Conflict minerals are likely going to be uncovered in corporations’ supply chains. With public disclosure, a [supply chain containing conflict minerals] has the potential to earn negative media attention. An appropriate communications strategy is crucial to minimize the impact on a corporation’s value and brand.