What is the Conflict Minerals Rule?
Since May 31, 2014, all U.S. Securities and Exchange Commission (SEC) registrants that use conflict minerals in their manufactured products will need to disclose if those minerals originated from the Democratic Republic of the Congo or any of its neighboring countries. Companies not directly regulated by the SEC are also impacted by the audit requirements. Both privately held and foreign-owned companies have reporting requirements that flowed down through the entire supply chain.
How difficult is it for you to gather needed information?
As many SEC registrants are far removed from the source of their minerals, they are reliant on companies in their supply chain to provide timely and accurate information to enable compliance to the reporting requirement. In addition, a new year and new administration may bring changes and updates to the Conflict Minerals regulation standards.
United States’ New Administration
With the swearing in of a new administration, there is a strong possibility that changes to conflict mineral regulations may occur. “In 2016, the U.S. House of Representatives passed H.R.5485, the Financial Services and General Government Appropriations Act (for fiscal year 2017), which included a provision to defund the implementation or enforcement of the SECs conflict minerals rules.” (Thomas, 31 Jan 2017) Another proposed bill is the Financial CHOICE Act, also introduced in 2016, that “would (among other things) repeal Section 1502 (conflict minerals) of Dodd-Frank Act” (Thomas, 31 Jan 2017).
On January 31, 2017, acting Chairman Michael S. Piwowar is reconsidering the Conflict Minerals Rule implementation. “Today, I directed the staff to reconsider whether the 2014, guidance on the conflict minerals rule is still appropriate and whether any additional relief is appropriate,” said Piwowar in a public statement posted to the U.S. Securities and Exchange Commission. A visit to Africa has lead Piwowar to reassess the rule and he asks to “hear from interested persons on all aspects of the rule and guidance” (U.S. Securities and Exchange Commission, 31 Jan 2017).
Just last Friday, February 3, 2017, the President signed an executive order that “offered broad principles to foster economic growth, vibrant markets and enable U.S. corporations to compete with foreign counterparts…[which] could eventually lead to a replacement of Dodd Frank” (Gara, 2017).
The feasibility of repeals being made and dates of such bills becoming law are yet unknown, therefore it is important to continue your Conflict Minerals reporting and filing!
Do you export goods to the EU?
Just recently, the European Commission, European Parliament and Council determined that it will require due diligence programs for “importers of conflict minerals from all conflict-affected and high-risk areas (not just central Africa)” (Thomas, 25 Jan 2017).
Adoption is expected to take place at the mid-February session. “After both the European Parliament and Council have formally approved the legislative text, the file will be sent for publication at the Official Journal of the EU and will enter into force 20 days after its publication” (Thomas, 25 Jan 2017).
Conflict Minerals Reporting Template
The Conflict Minerals Reporting Template, a free, standardized reporting template developed by the Conflict-Free Sourcing Initiative, was last release on November 30, 2016 with version 4.20. This update included changes to bugs and errors within the report, additions to instructions and definitions, and updated ISO short names for countries. The next version is expected to be released in April 2017 pending any reconsiderations from the SEC.
Use the CFSI drafting guide to complete your report.
Conflict Minerals Reporting in SiliconExpert Part Search and BOM Manager
Business Ethics magazine and journalist David Trilling shared the findings from the July 2016 academic study: “Challenges for Global Supply Chain Sustainability: Evidence from Conflict Minerals Reports” published by the Academy of Management Journal which discussed some of the challenges a company faces to know their suppliers conflict minerals statuses, such as:
- Companies with more suppliers found it harder to declare their products conflict free.
- Larger and older companies tend to find investigating their entire supplier bases more challenging
- A company can be non-U.S. based and be listed in the U.S. and thus subject to SEC rules
- Reputation forces highly reputed companies to actively look into their supply chains.
SiliconExpert works with component suppliers to gather data and keep the highest level of quality in our system. Suppliers are requested to share their Conflict Minerals status, EICC Membership Status, EICC-GeSI/CMRT Template, supporting documents, received/completed reporting templates and Smelter and Mining information, all of which can be located directly in our database.
SiliconExpert’s Environmental Data team watches closely for changes to Conflict Mineral reporting requirements and work diligently with suppliers to obtain and keep their current relevant status in our system.
Conflict Minerals documentation is easily retrievable from SiliconExpert’s web based tool!
Do you have limited resources?
SiliconExpert’s Professional Services team offers white glove service to obtain and compile all needed information for you to prepare your reporting!
Conflict-Free Sourcing Initiative. (n.d.) Conflict Minerals Reporting Template. Retrieved February 01, 2017, from http://www.conflictfreesourcing.org/conflict-minerals-reporting-template/
Gara, Antoine. “With A Stroke Of The Pen, Donald Trump Aims To Wave Goodbye To The Dodd Frank Act.” Forbes. Forbes Magazine, 03 Feb. 2017. Web. Retrieved February 6, 2017, from http://www.forbes.com/sites/antoinegara/2017/02/03/with-a-stroke-of-the-pen-donald-trump-will-wave-goodbye-to-the-dodd-frank-act/#416d91b25b64
Thomas, D. A. (2017, January 31). EU Conflict Minerals Regulation – Where do things stand? Retrieved February 01, 2017, from http://www.conflictmineralslaw.com/2017/01/31/eu-conflict-minerals-regulation-where-do-things-stand/
Thomas, D. A. (2017, January 25). Conflict Minerals in 2017 – What’s New? Retrieved February 01, 2017, from http://www.conflictmineralslaw.com/2017/01/25/conflict-minerals-in-2017-whats-new/
Trilling, D. (2016, September 20). Conflict Minerals and Firms’ Ignorance Over Their Supply Chains. Retrieved February 01, 2017, from http://business-ethics.com/2016/09/20/1237-conflict-minerals-and-firms-ignorance-over-their-supply-chains/
U.S. Securities and Exchange Commission (2017, January 31). Public Statement: Reconsideration of Conflict Minerals Rule Implementation. Retrieved February 01, 2017, from https://www.sec.gov/news/statement/reconsideration-of-conflict-minerals-rule-implementation.html
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