workshop 12 sept 11 presentations final
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An initiative of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative
Sponsors
3
Keynote:
Hiddo Houben Minister-Counselor,
Head of Trade Section, Delegation of the
European Union to the United States
Update on SEC Conflict Minerals Disclosure Requirements
September 11, 2013
Graham Zorn Beveridge & Diamond, P.C.
Rick Goss Information Technology Industry Council
Background
• Devastating conflict in eastern Democratic Republic of Congo (“DRC”) – Deadliest since WWII
– Extreme sexual- and gender-based violence
– Humanitarian emergency in eastern DRC and neighboring regions
• Revenues from mining seen as key driver of conflict
• NGO campaign to use consumer pressure on OEMs
• Part of general trend to use disclosure as tool to drive corporate policy
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Background: Dodd-Frank Law
• Conflict minerals provision included in massive U.S. financial reform law: Dodd-Frank Wall Street Reform and Consumer Protection Act (enacted July 2010)
• Sec. 1502 mandates public disclosure by certain companies if
– “conflict minerals” (or metals derived from them)
– are “necessary to the functionality or production of”
– a product that they “manufacture” or (in certain cases) that they “contract to manufacture”
• Disclosure, not restriction: transparency in supply chain will drive conflict-free sourcing initiatives, i.e., “name and shame”
• Applies directly to companies that report to SEC and indirectly to their suppliers: ripple effect through supply chain
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Conflict Minerals
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Cassiterite (Tin)
Columbite-Tantalite (Tantalum)
Wolframite (Tungsten)
Gold
• Tin cans
• Solder
• High performance
paint
• Electronics
• Airbags
• Jet Engines
• Drill bits & tools
• Electronics
• Semiconductors
• Jewelry
• Drill bits
• Metalworking tools
• Electrodes
• Welding applications
Rule Overview: Basic Three-Step Process
1. Determine applicability
2. Potentially: Conduct “reasonable
country of origin inquiry”
3. Potentially: Exercise due diligence on
supply chain and file an audited Conflict
Minerals Report
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Rule does not apply
Conduct Reasonable Country of Origin Inquiry (RCOI)
File a Form SD w/ description of RCOI
Exercise due diligence (e.g., OECD, CFS)
Are minerals scrap or recycled?
Are minerals scrap/recycled or not from Covered
Countries?
Conflict Minerals Report (CMR) w/ Form SD
CMR w/ independent private sector audit
CMR w/ list of “DRC Conflict Undeterminable” products;
consider whether audit required
File a Form SD w/ description of due
diligence measures
Issuer manufactures or contracts to
manufacture?
Determine whether minerals finance or
benefit militias?
<2 yrs (4 for smaller companies) after
effectiveness of Rule?
Issuer files reports with
the SEC?
NO NO NO
NO
NO
NO
NO
NO or UNKNOWN
NO
YES
YES
YES
YES
YES
YES YES YES
Conflict minerals outside supply chain before
1/31/13?
Conflict minerals “necessary to functionality or
production”?
YES
Minerals from Covered Countries?
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1. Determine applicability
2. Conduct “reasonable country
of origin inquiry”
3. Potentially: Exercise due diligence on
supply chain and file an audited Conflict
Minerals Report
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Step 2: Reasonable Country of Origin Inquiry (RCOI)
Designed to evaluate whether minerals in a company’s supply chain originated from:
• Recycled /scrap sources; or
• Outside Covered Countries.
Determines whether Step 3 due diligence
is necessary
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Step 2: The Disclosure
File Form SD to describe RCOI
and results; and
Post Form SD disclosure on
website
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Even if the issuer is not required to move on to Step 3, the issuer still must:
1. Determine applicability
2. Conduct “reasonable
country of origin inquiry”
3. Exercise due diligence on supply
chain and file an audited Conflict Minerals Report
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Step 3: The Conflict Minerals Report
Not all companies that advance to Step 3 must file a Conflict Minerals Report
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Like RCOI, if due diligence shows conflict minerals came from recycled/scrap materials or outside the Covered
Countries, then no Conflict Minerals Report is necessary
Company would then file Form SD with a description of due diligence and results
No CMR
No Audit
FAQ and Key Ambiguities
• Definition of product
• Contract to manufacture
• Other questions of scope
• Extent of due diligence required
• Applicability to non-US companies
• Timing
• Audit requirements during the phase-in period
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Litigation
• U.S. District Court struck down a challenge from the U.S. Chamber of Commerce, Business Roundtable, and National Association of Manufacturers
• Groups took issue with the SEC’s: – economic analysis; – failure to include a de minimis exception; – inclusion of non-manufacturers that "contract to manufacture"; – interpretation of the statutory phrase "did originate [in a
covered country]" to mean "reason to believe . . . may have originated [in a covered country]";
– structure of the transition period; and – compelled speech in violation of the First Amendment
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Litigation, cont’d
• The SEC countered
– The economic analysis is robust
– The final rule is reasonable, given the statutory mandate from Congress
• Intervenor and amici also filed briefs
– Amnesty International
– Global Witness
– American Coatings Association
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Litigation, cont’d
• The Court sided with the SEC on every issue
– Analysis of economic effects and reliance on Congress’s findings on humanitarian benefits of conflict minerals reporting are appropriate
– SEC’s interpretation of the statute is reasonable and the rule is not arbitrary or capricious with respect to
• RCOI
• Contract to manufacture
• Phase-in period
• Lack of de minimis exception
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Litigation, cont’d
• Rule has been and is still in effect
• Given the timing of the Court’s decision, the rule likely will remain in effect throughout the first reporting period
• Plaintiffs filed notice of appeal to the D.C. Cir.
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SEC FAQs
• On May 30, the SEC’s Division of Corporation Finance issued a set of FAQs
• Offers guidance on various applicability, scoping, and compliance issues
• Not binding on the SEC but helpful:
http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm
• Future guidance possible
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SEC FAQs
(6) Question: • An issuer manufactures or contracts to manufacture a package or container that
contains a conflict mineral, and the issuer uses the package or container in the display, transport, or sale of a product the issuer also manufactures or contracts to have manufactured. Would a conflict mineral necessary to the functionality or production of the package or container also be considered necessary to the functionality or production of the product under the rule? What if the container or packaging is necessary to preserve the product until the time the product is purchased or used?
Answer: • No. Only a conflict mineral that is contained in the product would be considered
“necessary to the functionality or production” of the product. The packaging or container sold with a product is not considered to be part of the product. Once the consumer starts to use a product, the packaging is generally discarded. This conclusion is true even if a product’s package or container is necessary to preserve the usability of that product up to and following the product’s purchase. If, however, an issuer manufactures and sells packaging or containers independent of the product, the packaging or containers, in that circumstance, would be considered a product.
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Audit Applicability For Reporting Years 2013 & 2014
Origin of Conflict Minerals IPSA Waiver
Applies?
Due diligence exercised, but origin of all of the conflict minerals in a product or a product category is unknown
Yes
Due diligence exercised, but origin of some of the conflict minerals in a product or a product category is unknown; other conflict minerals are known to originate outside the covered countries
Yes
Some of the conflict minerals in a product or a product category are known to have originated in a covered country, but were sourced through a verified conflict-free supply chain
Likely Yes?
All of the conflict minerals in a product or a product category are known to have originated in a covered country, but were sourced through a verified conflict-free supply chain
Arguably Yes?
This approach is not free from doubt
Some of the conflict minerals in a product or a product category are known to have originated in a covered country, and are known to finance or benefit armed groups in a covered country
No
Other US Developments
• U.S. Congress – May 21 Hearing in House Financial Services subcommittee on
“unintended consequences” of Dodd-Frank
• GAO report on Dodd-Frank implementation • US States
– California and Maryland have enacted statutes that bar any company that does not fulfill its Dodd-Frank obligations from state contracting
– Similar legislation is pending in Massachusetts and Connecticut
• Private Procurement – Some universities and municipalities considering Dodd-Frank
compliance in purchasing
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International Developments
• EU – The European Commission concluded a public
consultation to inform recommendations on the nature of a potential EU due diligence initiative (June 2013)
• Canada – Legislation pending before the Parliament of
Canada that would impose reporting requirements similar to those in the US on Canadian companies
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Expectations for EU Proposal
• Commission proposal may be released by year end with final action possible in 2015
• Broad geographic reach to other conflict areas
• Expected to build on OECD work and Guidance
• Incentives for smelters and responsible sourcing (discourage unintended impacts)
• Avoid potential conflicts with SEC rule
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Tools and References
• Existing company supply chain management practices • Industry reporting tools
– EICC-GeSI reporting template – Conflict Free Smelter program – AIAG, IPC
• Reports on OECD guidance pilot – Practical feedback from on-the-ground – Examples of supplier engagement
• Industry compliance guides • Expectations for Companies’ Conflict Minerals Reports
(Enough, Responsible Sourcing Network)
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Looking Ahead
• Most companies are investing in compliance and will likely continue efforts to better understand supply chain
• Watch for EU proposal on conflict minerals - likely to differ from Dodd-Frank
• EICC-GeSI tools will remain touchstones of due diligence
• Anticipate growing stakeholder expectations for transparency around sourcing world-wide
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For Additional Information:
Rick Goss, Information Technology Industry Council
rgoss@itic.org Paul Hagen, Beveridge & Diamond, P.C.
phagen@bdlaw.com Graham Zorn, Beveridge & Diamond, P.C.
gzorn@bdlaw.com
Conflict Free Sourcing Initiative (CFSI) Program Update
Bob Leet
Intel, CFSI Lead
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Agenda
• CFSI Governance Update
• Conflict-Free Smelter Program (CFSP)
• Company Assurance
• Due Diligence Practices
• Summary
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Governance Changes for the CFSI
The initiative is undergoing continued improvement:
• Name change completed, CFSI is the umbrella
• Continue work on future structure (upstream / downstream / NGO)
• Revenue generation options being implemented (membership and royalties)
• CFSP improvements
Overall development and implementation will continue in 2013 and into 2014
31
Partitioning of CFSI Information: Public Vs. Private
• Current rate of companies joining CFSI is not providing adequate revenue to expand the initiative quickly enough
• New revenue sources being established: – RCOI information from CFSP audits only to be provided to
CFSI member companies (Compliant smelter/refiner lists will remain public) [available in October 2013]
– Use of the CFSP Compliant smelter/refiner list(s) (copyrighted work) in public documents or for-sale information systems will be available to members only, or for CFSI sponsoring vendors [deadline before end of 2013]
• Member identification program being created • Considering discounts for partner association members
32
In-Region Programs
Conflict-Free Smelter Program (CFSP)
Company Assurance
Finished Product
MINE SMELTER/REFINERY OEMS
CFSI Conflict-Free Sourcing Approach
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Upstream
Smelters / Refiners
Downstream
Conflict-Free Smelter (CFS) Program
Raw Materials
Finished Products
Supply Chain Focal Point – Smelters/Refiners
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Why Here? Conversion of distinguishable starting material
into an indistinguishable product Small Numbers – tantalum, tin, tungsten and
gold smelter/refiners total less than 500 companies globally
CFSP Audit Focus
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Company Mass Balance - Includes all inventory - Includes all facilities
Ore / Concentrate
Recycled / Scrap
Toll Customer
Finished Products
Toll Supplier
Conflict Free
Policy
Intermediates
Unfinished Products
Company Program Validation - Conflict Free Policy - Conflict Free Sourcing Systems
Sourcing Processes Validation
Program Improvements • 3Ts harmonized protocol improvements nearly complete (expecting
release – Addressing tin industry concerns (definition, ASM, secondary
materials, slags) – Definition of a Tin smelter will expand due to crude material paths – Improving standardization, readability and clarity – Explicit alignment with U.S. SEC Rule – Working with Tungsten industry requests very late, may require a
sequential revision
• CFSP Program-Manual generation in progress – Procedural/Decision-making documentation – ISO, IEC, ISEAL alignment improvements
• Auditor Accreditation Program generation in progress – Team kicked off, investigating options – Currently expecting to deliver program in mid 2014
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CFSP Online Indicators / Active List
• Active = signed agreements, audit progress being made
• Presently no Tungsten smelters active
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http://www.conflictfreesmelter.org/cfshome.htm
In-Region Programs
Conflict-Free Smelter Program (CFS)
Company Assurance
Finished Product
MINE SMELTER/REFINERY OEMS
CFSI Conflict-Free Sourcing Approach
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Company Assurance Development, integration and maintenance of tools and processes which support a down- stream company’s management system and risk assessment activities: – Policy language included in the EICC Code of Conduct
(http://www.eicc.info/eicc_code.shtml )
– Created; maintaining a tool to collect information about a supplier’s due diligence processes and sourcing: Conflict Minerals Reporting Template
– Establishing resources and processes to support data collection and analysis
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Conflict Minerals Reporting Template Flow
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Smelter Smelter
Smelters
Sub-Suppliers
Sub- Suppliers
Sub-Suppliers
Template User
Direct Suppliers
Direct Suppliers
Direct Suppliers
1. Sends request to direct suppliers
2. Sends request to sub-suppliers
3. Cascades through supply chain until smelters identified. Sub-suppliers return template to suppliers. Direct
Suppliers Direct
Suppliers Direct
Suppliers
Original User
Customer
4. Direct suppliers return aggregated roll up template
5. User returns final aggregated roll up template
Company Assurance Program Updates • Conflict Minerals Reporting Template (CMRT) & Dashboard
– Revision 2.03 released June 2013
– MRPRO Dashboard (free) improved to accept all 2.xx versions as well us upgrade Rev.1 templates (available here)
– Supporting Solution Providers creating database versions
– Considering a quarterly update schedule; primary purpose is revision of the Standard Smelter List; next major release contingent on IPC Standard
• Online training for completing the CMRT is available in English; additional languages in process
• Supporting FAQs released related to use of the CMRT, CMRT versions and collection of data from suppliers
• Standard Smelter List Management – Activities initiated to refine smelter identification and list management process
CMRT and supporting materials available at http://www.conflictfreesmelter.org
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Company Assurance Program Updates Continued
• CMRT Release 2.03 Noteworthy Improvements – Addressed incompatibility issue with Excel 2003
– Additions / edits to the “Standard Smelter List”
– File now available as Excel 2003 version to ensure backward compatibility
• Standard Smelter List Management – Activities initiated to refine smelter identification and list
management process
CMRT and supporting materials available at http://www.conflictfreesmelter.org
42
IPC1755 Standard
• EICC and GeSI collaborating with the IPC (www.ipc.org, “Association Connecting Electronics Industries”) with the objective to: – Develop a standard for exchange of data related to
conflict minerals used in manufactured products to facilitate efficient data exchange across companies, supply chain levels, and industries • Not an actual data collection tool – but a set of due diligence
information requirements and “instructions” to allow different tools to communicate
• IPC facilitating an open ANSI standard process
43
IPC Progress and Next Steps
• Work began in November 2012 and continues: – Standard revised per committee decisions in February
– Circulating Proposed Standard for Ballot to the Ballot Committee: Deadline September 26, 2013
– EICC and GeSI as organizations will also be voting
– If the standard passes the ballot, publish final by EOY 2013
• Contact:
– Stephanie Castorina: scastorina@ipc.org
44
CFSI Due Diligence Practices • Release of White Paper that provides practical
steps for downstream companies to: – Interpret the OECD DDG
– Link to SEC reporting obligations (how to..)
– Incorporate use of CFSI tools and programs
• Release of Trigger Document regarding Independent Private Sector Audits (IPSA)
• Release of Frequently Asked Questions (FAQ) Document on company assurance and conflict minerals disclosure
45
http://www.conflictfreesmelter.org/cfshome.htm
Summary
• The CFSI continues to drive improvements in its programs to enable companies in their ability to source conflict-free minerals
• Improving governance of the initiative, both in structure and revenue generation are key to sustainability and health
• Company assurance activities of the CFSI are focused on improving company capabilities to validate responsible sourcing of materials by creating common standards, tools and processes
46
Options for CFSI Participation • EICC or GeSI Membership
– Full Membership provides access to CFSI and all EICC/GeSI WG’s ( http://www.eicc.info/Membership_Application.shtml ) ( http://www.gesi.org/Membership/tabid/59/Default.aspx )
• CFSI Partner Company Participation ( http://www.eicc.info/documents/ExternalWGMembers-Companies.pdf )
– $5K fee annually – Voting rights, access to all Work Groups, access to RCOI information
• CFSI Partner Association Participation ( http://www.eicc.info/documents/ExternalWGMembers-Organizations.pdf )
– $20K fee annually – Voting rights (one vote for organization) – Up to two participants to CFSI Meeting or CFSI Work Groups, responsible for
disseminating all information (staff or constituent members welcome)
• White Paper on the Extractives WG (now the CFSI) available (www.conflictfreesmelter.org)
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“To be or not to be DRC- or GLR-free”: Perspectives on strategies to
comply with Dodd-Frank
Sasha Lezhnev, Enough Project Steffen Schmidt, Wolfram Bergau und Hütten
Mike Loch, Motorola Solutions Brad Brooks-Rubin, Holland & Hart
Afternoon Breakout Sessions: In-region sourcing Reporting Basics
Conflict-Free Smelter Program Independent Private Section Audit
Software Demonstrations
DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example
• Brenda Baney, Delphi • Jay Celorie, HP
Tues. 9/10 3:30-5:15pm
Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE
Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network
Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer
Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
DD Break-out Session Kick-off
• Who is upstream? • Who is a smelter/refiner? • Who is downstream? • Who is an EICC or CFSI member company? For CY2013 • Who has completed the Conflict Minerals
Reporting Template? • Who knows they must file with SEC? • Who believes they will file a CMR? • Who believes they need an IPSA?
Conflict Minerals Reporting Basics
Bryan Fiereck – Intel
David Hancock – Boeing
Sept. 11, 1:30-3:00pm
Agenda
20 minutes: Reporting Basics and Examples 20 minutes: Q&A 15 minutes: NGO Expectations document 15 minutes: Q&A
SEC 3-Step Compliance
• Step 1: Determine applicability If subject to the SEC Final Rule, then
• Step 2: Conduct RCOI Goal: Seek to determine whether CMs are
– sourced from within the covered countries
– derived solely from recycle/scrap
If required, conduct DD on CMs sourced from within the covered countries which were not derived from recycle/scrap. Goal: Seek to determine whether sourcing of CMs directly or indirect support conflict in the DRC.
• Step 3: Report via Form SD (and CMR as required) Goal: Transparency of sourcing information
Reporting Basics
• Form SD template provided within the SEC Final Rule. – see pg. 344
• Report(s) to be filed “. . .no later than May 31 after the end of the issuer’s most recent calendar year.” – pg. 345
• “Report must be signed by the registrant on behalf of the registrant by an executive officer.” – pg. 346
Reporting Requirements: Form SD
Form SD: under a separate heading entitled “Conflict Minerals Disclosure”,
• Briefly describe the RCOI in form SD if you have established that a large majority of CM in your supply base did not originate in the covered countries or were from scrap or recycled materials
• Otherwise, all substantive content should be contained in the CMR
• In either case, the information must be posted in a public website and a link to the posting must be included on Form SD
Reporting Requirements: CMR
Company’s CM Policies conform in all material respects to a nationally or internationally recognized due diligence framework For products not been found to be “DRC conflict free”,
1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs 3. Country of origin of the CMs in those products 4. Efforts to determine mine or location of origin
Likewise for products which are “DRC conflict undeterminable”, 1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs, if known 3. Country of origin of the CMs in those products, if known 4. Efforts to determine mine or location of origin 5. Steps to mitigate the risk that its CMs benefit armed groups (including steps to
improve due diligence)
Likely Filing Scenarios for CY2013 Determination by Registrant Scenario Result File
Necessary CMs are from outside the covered countries and/or solely from recycle/scrap
1 DRC conflict free
Form SD
Know (or have reason to believe) necessary CMs originated from a conflict free source within the covered countries
2 DRC conflict free
Form SD & CMR
Know (or has reason to believe) necessary CMs originated from within the covered countries and are not (or may not be) from recycle/scrap sources
3 DRC conflict undeterminable
Form SD & CMR
4 DRC conflict free & DRC conflict undeterminable
Form SD & CMR
Know (or have reason to believe) necessary CMs originated from a conflict source within the covered countries
5 Not found to be DRC conflict free
Form SD & CMR
• Many registrants will report within Scenarios 1 & 3 • Some registrants may report within Scenario 4 • Limited registrants will likely report within Scenario 2 & 5
Examples
SRI and NGO Expectations
for 1502 Reporting
Patricia Jurewicz
Director, Responsible Sourcing Network
CFSI 12th Extractives Workshop
September 11th, 2013
Structure
• Category
• Key Elements
• Best Practices
• Indicators
Policy and Program
• Publicly disclosed, easy to find
• Key elements included
– Commitment and steps to exercising due diligence,
requirements of suppliers, etc.
• % staff aware and educated
• % suppliers received copy & educated
Reasonable Country of Origin Inquiry
• % of products/product categories containing 3TG
• % of surveyed 3TG products and % of responded
suppliers
• % of products with indeterminate 3TG
• % of 3TG products with smelters/refiners identified
• % of suppliers using material from CFS smelters
• Publicly available list of identified smelters or refiners
Due Diligence
• % of suppliers adopted policy & program consistent w/
OECD
• % of suppliers undergoing remediation
• % of smelters not participating in an independent
verification system
• Number or % of validated smelters in supply chain sourcing
certified conflict-free minerals from covered countries
In-region Clean Minerals Trade
• List of conflict-free initiatives participating in
• Quantity or % of products producing with certified
conflict-free minerals from region
• Support of responsible supply chain or alternative-
livelihood initiatives
• Participation in the MSG Policy or Diplomacy
Working Groups
Thank you for being part of the solution
Patricia Jurewicz Director
Responsible Sourcing Network
patricia@sourcingnetwork.org
510.735.8145
Sasha Lezhnev Sr. Policy Analyst
Enough Project
sasha@enoughproject.org
703.485.6949
DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example
• Brenda Baney, Delphi • Jay Celorie, HP
Tues. 9/10 3:30-5:15pm
Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE
Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network
Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer
Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example
• Brenda Baney, Delphi • Jay Celorie, HP
Tues. 9/10 3:30-5:15pm
Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE
Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network
Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer
Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
CMR Transition Period IPSA Triggers and Objectives
When is IPSA Required for CMR?
Result of RCOI/DD
During Transition Product Status IPSA Required
After Transition Product Status IPSA Required
All CM Unknown Undeterminable No Not found to be Conflict Free
Yes
Some CM known – Conflict Free
Undeterminable Pending SEC FAQ
Not found to be Conflict Free
Yes
Some CM known – Conflict Supporting
Not Conflict Free Yes Not Conflict Free Yes
All CM known – Conflict Free
Conflict Free Yes Conflict Free Yes
Audit Objectives
Express an opinion or conclusion as to whether
1. The design of the registrant’s due diligence measures as set forth in, and with respect to the period covered by, [the CMR] is in conformity with, in all material respects, the criteria set forth in the nationally or internationally recognized due diligence framework used by the registrant; and
2. The registrant’s description of the due diligence measures it performed as set forth in the [CMR], with respect to the period covered by the report, is consistent with the due diligence process that the registrant undertook.
AICPA Conflict Minerals Task Force
• Task force includes representatives from seven CPA firms
• Q & A’s posted to AICPA website • Independence • Differences/similarities between attestation engagements and
performance audits
• Q & A’s under development • Objectives of IPSA • Opining on design of due diligence framework • Completeness of description in CMR • Evaluations outside scope of IPSA • Sample audit procedures • Example reports
Conflict Minerals Report Audits: The Auditing Roundtable
Performance Audit Updates
Lawrence Heim, CPEA
The Auditing Roundtable
• Founded 1982 as The Environmental Auditing Roundtable – Now includes health, safety, management systems,
Responsible Care and Process Safety Management
• Joint venture in 1997 with Institute of Internal Auditors for third party EHS auditor certification – Board of Environmental Auditor Certification (BEAC)
– EHS compliance and associated management systems
– Requires experience, exam, continuing education, peer/supervisor commendations, code of ethics commitment
• Audit program standards and auditor training
The Auditing Roundtable Conflict Minerals Interest Group (CMIG)
• Initiated in December 2012 to develop CMR auditor guidance under GAO Performance Audit standard
• Began as narrative field manual, now Q&A format to mirror SEC and AICPA
• Coordinating closely with AICPA, SEC and GAO
• External stakeholder reviewers:
– CFSI, IPC, ITRI
The Auditing Roundtable Performance Audit Guidance
• Q&A still in CMIG draft stage
– Internal peer reviews required before stakeholder reviews, then final Board approval needed
• Well aligned with Attestation/AICPA guidance
• To be issued before end of 2013 and maintained as a living document
– Will be available free of charge on AR website
• May develop narrative field guide in future
The Auditing Roundtable Contacts
• Kathy Reith, Managing Director
– kathy@auditing-roundtable.org
– 480-659-3738
• Lawrence Heim, CMIG Chair
– lheim@elmgroup.com
– 678-200-5220
Executive Analytic Exchange on the Democratic Republic of the Congo and Great
Lakes Co-sponsored by the Bureau of Intelligence and Research of the U.S. Department of State
and the National Intelligence Council
September 6, 2013
Dr. Richard Robinson,
Extractive Industries Technical Adviser, USAID DRC
Mineral Country Value ($ export Per year)
Amt/Percent legal & conflict-free
Gold DRC $600m-$2.0 b $350m-17% or more (vs $2.0 b)
Tin, tantalum, tungsten (3T) DRC $135 m-$350 m 40% DRC-27% from Kivu’s, 90-100% from Katanga
3T Rwanda $154 m 55% or more based on historical productivity
Copper DRC $4.8 b 100%
Cobalt DRC $500 m 90%
Diamonds DRC $300 m 90%
Total estimated $6.5-8 billion
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Estimated mineral exports DRC & Rwanda—legal & illegal--2012
Move from desperate economic choices
To LSM/Banro South Kivu—15% of DRC gold conflict-free
What does long-term improvement for the CFSP look like?
Bob Leet, Intel
Jean-Paul Meutcheho, GAM
How should the CFSP change/improve over the next 2-5 years?
• Think of both existing and new issues
• Some topical areas: – Audit Execution
– Audit Protocols
– Scope
– Costs / Funding / Membership
– Program Management
– Information Management
– Communications
top related