As we approach the end of conflict minerals compliance year 4 (with 3 years of reports behind us), companies are budgeting for how they will address conflict minerals in 2017. Since the SEC rule took effect, supply chain professionals and in-house lawyers have found that compliance is complicated, time-consuming, and still changing because of the increasing expectations of non-governmental organizations and other stakeholders. Companies are eager to find a compliance solution that will take less time and fewer resources. The “bad news” is that, although IT and software solutions can be an invaluable tool and provide great value, companies cannot expect to comply with the SEC rule’s requirements solely by entering into a relationship with a strong software provider.
To be sure, software and IT solutions can provide invaluable assistance to companies as they implement and improve their conflict minerals programs. But, there are many important elements of conflict minerals compliance and reporting that are simply not addressed even by the best IT or software systems. You will want to make sure that your board and senior management understand that signing the contract with a software provider is the start (and not the end) of your compliance work. They may need to understand that your budget contemplates additional resources to complete your annual reasonable country of origin inquiry, due diligence, and reporting. And, it would be wise to continue to include room in your budget for auditors and legal advisors. (We won’t discuss the independent private sector audit (IPSA) here, but there has been no change since last year and no additional guidance on IPSAs from the SEC.)