The term “conflict mineral” is defin ed in Section 1502(e ...
Conflict Mineral Webinar By Assent
-
Upload
matt-whitteker -
Category
Technology
-
view
905 -
download
1
description
Transcript of Conflict Mineral Webinar By Assent
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
SECTION 1502CONfLICT MINErALSFinal Rules Passed
– imPact uPdateassenT compliance
jonathan hughespHone: 613.290.8044
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
c u s T o m s o l u T i o n s f o r c o m p l i a n c y [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
agenda• IntroductiontoDodd-FrankActSection1502
•Requirements–ProposedRulesvs.FinalRules
•AssentComplianceinvolvementwithDodd-FrankAct
• IndustryApproach
•Risks
• StepstoCompliance
• FinalRulesFlowchart
•Timelines
•AssentComplianceServices
•Q&A
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTTHe basics•The Conflict Minerals (3TGs)
•Tin(CassiteriteOre)
•Tungsten(Wolframite)
•Tantalum(ColtanOre)
•Gold
•The Countries
•DemocraticRepublicofCongo
•CentralAfricaRepublic
• Sudan
•Zambia
•Angola
•CongoRepublic
•Tanzania
•Burundi
•Rwanda
•Uganda
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•Conflict Minerals Definition:
•Minedinconditionsofarmedconflictandabusesofhumanrights
Asper17CFRParts229and249“TheConflictMinerals”Rule:
“It is the sense of the Congress that the exploitation and trade of conflict minerals originat-ing in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual – and gender-based violence, and contributing to an emergency humanitarian situ-ation therein”
•This situation attracts Media attention
•ChildSoldiers
• Sexualassaultonamassscale
• Intimidationandabuseoflocalpopulace
•Armedcontrolofmines,tradingroutes,andotherstrategicareas
More Media attention = More Consumer attention
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTscope•CompaniesthatregisterwiththeSEC
• 10K(US)
• 20F(Foreign)
• 40F(Canadian)
LegalWording:Issuers that File Reports Under Sections 13(a) and 15(d) of the Exchange Act
•ConflictMinerals“necessarytothefunctionality or production”ofitsproductsmanufactured(orcontractedtobemanufactured)
• SupplierstoimpactedSECfilingcompaniesareaffectedbytheprocess,eveniftheyarenotanSECfilingcompanythemselves
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
PrINCIPAL rEquIrEMENTS (AS PArT Of ANNuAL rEPOrTINg TO SEC) – PrOPOSED ruLES•ReasonableCountryofOriginInquiry
•Tracebackofall3TGstocountryoforigin
• Ifall3TGsdidnotoriginateinDRCCountries:
•Disclosethedetermination
•Disclosetheprocess
•DisclosureonIssuerInternetwebsite
» Disclosethattheinformationisavailableonitswebsite
» Disclosetheinternetaddressofthesite
•Maintainreviewablerecordsoftheinvestigationanddetermination
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
• Ifany3TGsdidoriginateinDRCCountriesORIssuercannotidentifytheCountryofOrigin(IE:Unknownorigin):
•Alltheabovetasksplus
» CreateConflictMineralsReport
» Exhibittoannualreport
» MakereportavailableontheInternetwebsite
•Alloftheabovemustbeauditedbya3rdparty
• 10K/20FauditedasapartofoverallSECfiling
•ConflictMineralsReport,ifrequired,mustbeauditedseparately
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
PrINCIPAL rEquIrEMENTS (AS PArT Of ANNuAL rEPOrTINg TO SEC) – fINAL ruLES•ReasonableCountryofOriginInquiry
•Tracebackofall3TGstocountryoforigin
•Determineif3TGsarefromscraporrecycledsources
POSSIbLE SCENArIOS AND rEquIrEMENTS STEMMINg frOM ThE rCOI:Scenario 1:• IftheIssuerknows all3TGsdidnotoriginateinDRCCountriesorarefromscraporrecycledsources
OR
• IftheIssuer has no reason to believe thatthe3TGs may have originatedinthecoveredcoun-triesand may not be fromscraporrecycledsources.
Requirements:•DisclosureoftheRCOIonIssuerInternetwebsite
• FileFormSDwiththeSECaspartofannualfilings:
» Disclosethedetermination
» Disclosetheprocess
» DisclosetheinternetaddressofthesitewiththeRCOIInformation
•Maintainreviewablerecordsoftheinvestigationanddetermination
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
PrINCIPAL rEquIrEMENTS (AS PArT Of ANNuAL rEPOrTINg TO SEC) – fINAL ruLES CONT’DScenario 2:• IftheIssuerknows or has reason to believethatthe3TGsmay haveoriginatedinthecoveredcountries.
OR
• IftheIssuerknows or has reason to believethatthe3TGsmay notbefromscraporrecycledsources.
Requirements:•Alltheabovetasksplus
•CreateConflictMineralsReport
• FiledasexhibittotheFormSD
•MakereportavailableontheInternetwebsite
•Same as proposed –Alloftheabovemustbeauditedbya3rdparty
• 10K/20FauditedasapartofoverallSECfiling
•ConflictMineralsReport,ifrequired,mustbeauditedseparately
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTreasonable counTry of origin inquiry –THe elemenTs remain THe same in THe final rules• Issuermustengagetheirsupplychaintodetermineifanypartsormaterialspurchasedfromtheirsuppliers thatcontain3TGs,areminedinconditionsofarmedconflictandabusesofhumanrights
•DueDiligencemustbeappliedtoensurethatIssuer’ssuppliersareprovidingaccurateandtimelyinformation
•Correctiveactionsmustbeappliedtosupplierswhofailtoprovideappropriateinformation
•Alloftheabovemustbemaintainedinreviewablebusinessrecords,disclosedtotheSECandonIssuer’swebsiteforconsumers
•NOTE: Issuer shouldhavean internaldocumentoutlining itsConflictMineralsCompliancePlanalongwiththeprocessIssuerusedtodeterminethefollowingitems:
• Suppliers/Productsinscope•ApplicableDueDiligence•CorrectiveActionPlan•ReasonableCountryofOriginInquiryMethodology• SupplyChainmapping•RiskAssessment• Long-termgoals(EvolutionofIssuer’sConflictMineralsCompliancePlan)
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTconflicT minerals reporT – updaTed•Companies that are required to file a Conflict Minerals Report would have to exercise due
diligence on the source and chain of custody of their conflict minerals.
•Adescriptionofthemeasuresthecompany(Issuer)hastakentoexerciseduediligenceonthesourceandchainofcustodyofitsconflictminerals,
•The due diligence measures must conform to a nationally or internationally recognized due diligence framework, such as the due diligence guidance approved by the Organisation for Economic Co-operation and Development (OECD).
•HastoincludeacertifiedindependentprivatesectorauditoftheConflictMineralsReportthatidentifiestheauditorandisfiledtotheSECaspartoftheConflictMineralsReport(as an exhibit to the Form SD).
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
If an Issuer’s products have not been found to be “DRC conflict free,” then the Issuer in ad-dition to the audit and certification requirements would have to describe the following in its Conflict Minerals Report:
•Adescriptionoftheproductsmanufacturedorcontractedtobemanufacturedcontaining3TGsthatarenot“DRCconflictfree1”
•Thefacilitiesusedtoprocessthoseconflictminerals,
•Thoseconflictminerals’countryoforigin,
•Theeffortstodeterminethemineorlocationoforiginwiththegreatestpossiblespecificity.
• IssuersarerequiredtoexerciseduediligenceinmakingthesedeterminationsintheConflictMineralsReport(IE. OECD Due Diligence Guidance).
1The minerals may originate from the covered countries but did not finance or benefit armed groups
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
NEW STATuS – fINAL ruLES•AnewstatusofDRCConflictUndeterminablenowexists:
•TobeusedwhentheIssuerdoesnotknowwheretheConflictMinerals(3TGs)camefrom
» Canbeusedfor2yearsforbigcompanies,4yearsforsmall
» Afterthat,youneedaconflictmineralsreportiftheissuerstilldoesnotknow
» Still need to provide evidence that Internationally recognized due diligenceprocedureswereused
•Example: Due diligence guidance approved by the Organisation forEconomicCo-operationandDevelopment(OECD)
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
Forthisnewstatus,theConflictMineralsReportelementsaresimilartothe“NotConflictFree”statusreport.Itmustcontain:
• A description of the products manufactured or contracted to be manufactured contain-ing 3TGs that are “DRC conflict undeterminable.”
•Thefacilitiesusedtoprocesstheconflictmineralsinthoseproducts,ifknown.
•Thecountryoforiginoftheconflictmineralsinthoseproducts,ifknown.
•Theeffortstodeterminethemineorlocationoforiginwiththegreatestpossiblespecificity.
•The steps it has taken or will take, if any, since the end of the period covered in its most recent Conflict Minerals Report to mitigate the risk that its necessary conflict minerals benefit armed groups, including any steps to improve due diligence.
• Forthoseproductsthatare“DRCconflictundeterminable,”theIssuerwouldnotberequiredtoobtainanindependentprivatesectorauditoftheConflictMineralsReportregardingtheconflictmineralsinthoseproducts.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTrequiremenTs – furTHer specifics• ContractManufacturing–ProvisionApplies
•Metalisnotfoundinthefinalproduct–Provisionappliesaslongasitis“necessary”inthemanufac-turingprocess(iscontainedintheproductatsomepointandtheneitherextrudedorwashedawayforexample)
•OrganisationforEconomicCooperationandDevelopment(the“OECD”)hasdevelopedduedili-genceguidanceforconflictmineralsupplychains.
•TheGAOGovernmentAuditingStandardsandothersimilardomesticandinternationalstandardsshouldbeusedasreference/tosetthebarfortheindependentaudit
• Reportingrequirementsareexpectedtoevolveovertime
• Inclusionofmoreminerals
• Increasinglevelsofduediligence
•Naturallyoccurringtraceamountsexempt
•Unintentionallyincludedtraceamountsexempt
• Recycled&scrapmaterialsareexempt There are special rules governing the due diligence and the Conflict Minerals Report for 3TGs from recycled or scrap sources.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
rECyCLED AND SCrAP MATErIALS – fINAL ruLES• Special rulesgoverning theduediligenceandConflictMineralsReport forminerals fromre-cycledorscrapsources:
• IfanIssuer’sconflictmineralsarederivedfromrecycledorscrapsourcesratherthanfromminedsources,theIssuer’sproductscontainingsuchmineralsareconsidered“DRCconflictfree.”
• IfanIssuercannotreasonablyconcludeafteritsinquirythatitsgoldisfromrecycledorscrapsources» Gold:
•Required to undertake due diligence in accordance with theOECDDueDiligenceGuidance,andgetanauditofitsConflictMineralsReport.
•Currently,goldistheonlyconflictmineralwithanationallyorinternational-lyrecognizedduediligenceframeworkfordeterminingwhetheritisrecycledorscrap,whichispartoftheOECDDueDiligenceGuidance.
» Tin, Tantalum, Tungsten:•Currentlynonationally or internationally recognizedduediligence frame-workfordeterminingwhetheritisrecycledorscrap
•Untiladuediligenceframeworkisdeveloped:» TheIssuerwillberequiredtodescribetheduediligencemeasuresitexer-cisedindeterminingthatitsconflictmineralsarefromrecycledorscrapsourcesinitsConflictMineralsReport.» SuchanIssuerisnotrequiredtoobtainanindependentprivatesectorauditregardingsuchconflictminerals.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
OThEr NOTAbLES frOM ThE fINAL ruLESde minimis THresHolds•Althoughmanycommentsweremadeforbothsidesoftheinclusionofdeminimisthresholds,thefinalrulesDONOTincludeany.Thereareseveralreasonsexpressedinthefinalrulesastowhythisdecisionwasmade,butthefirstandforemostis:
The Conflict Minerals Statutory Provision (includes) an express limiting factor – namely that a conflict mineral must be “necessary to the functionality or production” of an issuer’s product to trigger any disclosure regarding those conflict minerals…(T)his standard focuses on whether the conflict mineral is “necessary” to a product’s functionality or production; it does not focus on the amount of a conflict mineral contained in the product. We believe that Congress understood, in selecting the standard it did, that a conflict mineral used in even a very small amount could be “necessary” to the product’s functionality or production. If it had intended that the provision be limited further, so as not to apply to a de minimis use of conflict minerals, we think Congress would have done so explicitly.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
GenericProductsExemption(andotherconsiderationsaround“contracttomanufacture”):
•Anissuerwillnotbeconsideredto“contracttomanufacture”aproduct(andthereforewould be outside the scope of the Conflict Minerals Regulation)ifitdoesnomorethantakethefol-lowingactions:
1. the issuer specifies or negotiates contractual terms with a manufacturer that do not directly re-late to the manufacturing of the product such as training or technical support, price, insurance, indemnity, intellectual property rights, dispute resolution, or other like terms or conditions con-cerning the product, unless the issuer specifies or negotiates taking these actions so as to exercise a degree of influence over the manufacturing of the product that is practically equivalent to con-tracting on terms that directly relate to the manufacturing of the product; or
2. the issuer affixes its brand, marks, logo, or label to a generic product manufactured by a third party;or
3. the issuer services, maintains, or repairs a product manufactured by a third party.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTassenT compliance’s involvemenT wiTH dodd-frank secTion 1502•MeetingwithSEC
•OverthecourseofMondayDecember12thandTuesdayDecember13th,AssentCompliancemetseparatelywithCommissionerParedes,CommissionerWalterandCommissionerAguilarfor1houreachtodiscussthefollowingitemsinrespecttoDoddFrankSection1502
» NAMandTulaneReports
» Compliancecosts
» Practicalcomplianceactivities
» Impactonindustry
» Impactonsupplychains
» Feedbackonproposedrules
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•OnWednesdayDecember14th,AssentComplianceparticipatedinConflictMineraldiscussionpanelwiththefollowingpanelists:
•GE
•AMD
•BrookingsInstitute
•RIM
•ClaiganEnvironmental
•KEMET
•Thepanel discussed various issues surroundingConflictMinerals andfielded questions fromtheaudience(whichwascomprisedofcongressstaff,journalists,industrygroupsandbusinessrepresentatives)
•Assent Compliance is included 4 times in the Final Rules from the SEC based on our input at the meeting and on a separate submitted letter we provided to the SEC.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTindusTry approacH – piloT program•OECD Pilot Program
• PilotimplementationofOECD’sduediligencestandardsforprocuringconflictmineralinformationfromGlobalsupplychains
•Based on OECD’s 5 steps:
1. EstablishStrongCompanyManagementSystems
2. IdentifyandAssessRiskintheSupplyChain
3. DesignandImplementaStrategytoRespondtoIdentifiedRisks
4. Third-PartyAuditofSmelters/Refiners‘DueDiligencePractices
5. ReportAnnuallyonSupplyChainDueDiligence
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
• 30companies&industrygroupsparticipatedincluding:
•AlcatelLucent
•GE
•KEMET
•Nokia
• Panasonic
•TI
• IPC
• LockheedMartin
•HP
•Nokia
• Siemens
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTindusTry approacH – piloT program•Clarifications
•Companiescanusethelabel“DRCConflictFree”when:
• “…they and the mineral processors from which they source know and can show that they do not tolerate nor by any means profit from, contribute to, assist with, or facilitate the commission by any party of serious human rights abuses associated with the extraction, transport or trade of minerals.”
•Companiesshouldassesstheirupstreamsuppliersareinlinewithrecommendedmanage-mentstrategies(*thesestrategiesareoutlinedinthedocument)
• Bigfocuson“Evolution”ofConflictMineralscompliance
» AfullymappedConflictMineralchainofcustodyfromyourproductbacktothemineoforiginisnotrealisticorexpectedyear1
» Year1ConflictMineralactivitiesaregoingtolookatalotdifferentfromYear5aslocalAfricaninfrastructuregrowsandgeneralindustryknowledgeexpands.
» Ex:YourcorrectiveactionsinYears2and3andjustasimportantasyourplaninYear1
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•CurrentTools
• Allparticipantseithercurrentlyuseorplantouse1ormoreofthefollowingcompliancetools
» 3rdparty(Ex:AssentCompliance)
» Industrylevel(Ex:GeSITemplate)
» Internallydesigned
•Waitingforpromulgationoffinalrulesbeforeinvestinginasolution
• IPCisdevelopingadataexchangestandard
» AssentCompliancehasIPCasaoneofitscurrentstandardsforclientsanditisupdatedinlinewithanyupdatestoIPC
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTindusTry approacH – currenT impacTs•AdditionalInternalImpacts
• Largeglobalcompanieswithmanysubsidiaries/legalentitiesbut1holdingcompanymustrollupalltheirdatainternally
• Extremelychallengingwhentryingtocoordinatemultiplepurchasingdepartments,supplychainsandERPplatforms.
•Mustkeepmessagetosuppliersconsistentandallcorporatelydevelopedprotocolsmustberolledouttoallentities.
» Training
» Education
» Supplierreporting
» ITplatformintegration
» InformationconsolidationforSECreport
» Customer/Consumercommunication
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•CurrentPractices
•Majority of companies are using the GeSI Conflict Free Smelter template to gatherinformation
•MostcompaniesareintheComplianceDevelopmentphasewithmoreandmoremovingtotheCountryofOriginphaseasthevoteonfinalrulesapproaches
•Company solutions range from internal solutions to turnkey3rdparty solutions and acombinationofthe2.
» SomecompaniessuchasTriQuinySemi-Conductor,arehiring1full-timepersontotrackandmaintainconflictmineral informationaspartoftheiroverallsub-stancemanagementsoftwaresystem
» Johnson&Johnsonexpectstospend$1,000,000witha3rdpartyconsultanttodevelopanddesigntheirprogram
» Afterthat,1full-timeProgramDirector
» 12part-timethatwillgrowandshrinkasneeded
» Xeroxhashired anoutside consultingfirm for about$100,000 to gatherdatafromtheirsupplychain(about$100persupplier)
» Willdotherest internally includingdataauditing,programdesignandsoftware
» TargetestimatestheONGOINGcostwillbe$600,000USDperyearplus1or2full-timepeopleaddedtotheir50personglobalcomplianceteam
» Fordestimatesitwillspend$100,000-$200,000tomodifyitsexistingdatabase
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•Atatop-level,mostcompliancemodelsfollowthisformat:
» DevelopaCompliancePlan
» AssessScope
» AssessRisk
» DetermineApplicableDueDiligencerequirements
» DetermineCountryofOriginandReportingmethodologies
» DetermineImplementationPlan
» DetermineCorrectiveActionPlan
» Determinelong-termgoals/continuityplan
» ExecuteImplementationplan
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
c u s T o m s o l u T i o n s f o r c o m p l i a n c e
rISkS• Supplierswhodonot/cannotprovideConflictMineraldeclarations
•MayrequirethatIssuersubmitaConflictMineralReport
•Alotofdifferententitiescouldbeinvolvedinternallywhichwillrequirealotcoordinationandtraining
• Potentiallylargeandgloballistofsuppliersthatmustbeassessed
• InformationMUSTbepostedONLINE–VeryPublic!
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTsuggesT approacH – 3 sTeps To compliance•Step 1 – Create a Compliance Plan
•AssessScope•AssessRisk•DetermineApplicableDueDiligencerequirements•DetermineCountryofOriginandReportingmethodologies•DetermineImplementationPlan•DetermineCorrectiveActionPlan•Determinelong-termgoals/continuityplan
•Step 2 – Conduct Reasonable Country of Origin Inquiry• Surveysuppliers•AssessDueDiligence• Storeasbusinessreviewablerecords•RollupreportsforSECsubmission–FORMSD•Provideinfoonyourwebsite• IfyourproductsdouseconflictmineralsfromtheDRC/adjoiningcountries,youprovideaConflictMineralReport.
• IfyouDONOTKNOW,youhave2years todetermineandthenyoumustprovideaConflictMineralReport
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•Step 3 – Conflict Minerals Report (if necessary)
•CompaniessubmittingaConflictMineralsReportmust:
• ExerciseduediligenceindeterminingthesourceandchainofcustodyofConflictMinerals
•Certifythata3rdpartyauditoftheReportwasobtained
• ListproductsthatarenotDRCfreeandareDRCConflictUndeterminable
• Listfacilitiesusedtoprocessthoseconflictminerals
•DetailtheCountryoforigin
• Showeffortstodetermineorlocatemineoforiginwithgreatestspecificity
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
fINAL ruLES fLOWChArTdoes THe issuer file re-
porTs wiTH THe sec under secTions 13(a) or 15(d) of THe
excHange acT?
does THe issuer manufacTure or
conTracT To manufacTure producTs?
is iT less THan Two years afTer THe effecTiveness of THe rule (four years
for smaller reporTing companies)?
on a reasonable counTry of origin inquiry (rcoi), does THe issuer know or Have reason To believe THaT THe conflicT minerals may Have originaTed in THe drc
or an adjoining counTry (THe covered counTries)?
exercise due diligence on THe source and cHain of cusTody of iTs conflicT minerals follow-ing a naTionally or inTernaTionally recognized due diligence framework, if sucH framework is available for a specific conflicT mineral.
in exercising THis due diligence does THe issuer deTermine THe conflicT minerals are noT from THe covered counTries or are from scrap or recycled.
file a form sd wiTH a conflicT minerals reporT as an exHibiT, wHicH includes a descripTion of THe measures THe issuer Has Taken To exercise due diligence.
in exercising due diligence, was THe issuer able To deTermine wHeTHer THe conflicT minerals financed or benefiTTed armed groups?
THe conflicT minerals reporT musT also include and independenT privaTe secTor audiT reporT, wHicH expresses an opinion or conclusion as To wHeTHer THe design of THe issuer’s due diligence measures is in conformiTy wiTH THe criTeria seT forTH in THe due diligence framework and wHeTH-er THe descripTion of THe issuer’s due diligence measures is consisTenT wiTH THe process under-Taken by THe issuer. also, include a descripTion of THe producTs THaT Have noT been found To be drc conflicT free, THe faciliTies used To process THe necessary conflicT minerals in THose prod-ucTs, THe counTry of origin of THe minerals and THe efforTs To deTermine THe mine or locaTion or
origin of THose minerals wiTH THe greaTesT possible specificiTy. END
were THe conflicT minerals ouTside THe sup-ply cHain prior To january 31, 2013?
file does noT apply.
END
file a form sd THaT discloses THe issuer’s deTerminaTion and briefly describes THe rcoi and THe resulTs of THe inquiry.
END
file a form sd THe discloses THe issuer’s deTerminaTion and briefly describes THe rcoi and due diligence measures Taken
and THe resulTs THereof.
END
THe conflicT minerals reporT musT also include a descripTion of producTs THaT are “drc conflicT undeTerminable” and THe sTeps Taken or THaT will
be Taken, if any, since THe end of THe period covered in THe lasT conflicT minerals reporT To miTigaTe THe risk THaT THe necessary conflicT minerals benefiT armed groups, including any sTeps To improve due
diligence. no audiT is required. END
are conflicT minerals necessary To THe funcTionaliTy or producTion of THe producT
manufacTured or conTracTed To be manufacTured?
based on THe rcoi, does THe issuer know or reasonably believe THaT THe conflicT minerals come from scrap or
recycled?
Yes
Yes
no
Yes
no, if newlY mined
no, if potentiallY scrap or recYcled
no
Yes
no
Yes
no
no
no
no Yes
Yes
Yes
Yes
no
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTTimelines• StillwaitingonfinalruletobepassedbySEC–ithasbeendelayedmanytimesbutavoteisexpectedonfinalrulesonAugust22nd
• Firstreportingperiod:
• Firstfullfiscalyear(firstfiling)ending12monthsafterthefinalruling
Timelines esTablisHed•AllissuerswillfiletheFormSDforthesameperiod–acalendaryear–regardlessoftheirfiscalyearend.
• FirstspecializeddisclosurereportonMay 31, 2014 (for the 2013 calendar year)
•Annually on May 31foreachcalendaryearthereafter.
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
•Therecanbe5-10Layersbetweenthemineandtheendproduct
•Applehas125suppliersusingTinandtheysourcefrom43smeltersaroundtheworld
» Reasonableinquirythroughoutthissupplychaincantakemonths!
• Becauseofthesupplychaininvestigationcomplexitymanycompanieshavealreadystartedtheprocess
•Apple
• Intel
•Motorola
•Nokia
•Microsoft
•Acer
•RIM
• Philips
•Toshiba
• SanDisk
•LG
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
SECTION 1502 – DODD-frANk WALL STrEET rEfOrM AND CONSuMEr PrOTECTION ACTassenT compliance services•AssentComplianceoffers awide rangeofConflictMineral services ranging fromConsultingsupporttoSoftwaretofullTurnkeysolutions
•WecanhelpwiththefollowingitemsfortheIssuer
•DevelopmentofaCompliancePlan
• ImplementationandDevelopmentofinternalConflictMineralcontrolsandprocesses
• Softwareanddatabasesolutionsfor:
» ReasonableCountryofOriginInquiries
» MaintainingBusinessreviewablerecords
» Audittrails
» Reporting
• Integrationofmulti-site,multi-ERPdatabasesinordertorollupSupplierandpart/mate-rialinformationasneededforConflictMineralSECsubmissions
•ConflictMineralReportcreationandauditing
c u s T o m s o l u T i o n s f o r c o m p l i a n c e [ r e a c H | r o H s | c p s i a | r s l | p r o p 6 5 ]
i n f o @ a s s e n T c o m p l i a n c e . c o m w w w. a s s e n T c o m p l i a n c e . c o m T e l : 6 1 3 . 2 9 0 . 8 0 4 4
ASSENTCOMPLIANCE
quESTIONS?Shouldyouhaveanyquestionspleasefeelfreetoaskthematthistime.