Source 44, a leading provider of supply chain sustainability solutions, and The Elm Consulting Group International LLC (“Elm”) today announced they have formed a cooperative relationship that will provide a range of conflict minerals traceability and due diligence offerings. The firms are both leaders in developing groundbreaking technology and solutions that can help companies meet conflict minerals regulations outlined in Section 1502 of the Dodd-Frank Act. This announcement comes ahead of the imminent ruling expected by the U.S. Securities and Exchange Commission (SEC) on the scope of Section 1502 and the nature of the relevant reporting requirements. “Some time ago, we realized that information management tools will be a critical component of conflict minerals traceability programs,” said Lawrence Heim, Director in Elm’s Atlanta office. “We were struck by Source 44’s functionality, user interface and dashboard, as well as the auditability of the source information within the system.” Source 44 is a leader in accessing, managing and leveraging information technology to drive sustainable supply chain management. Elm has extensive experience and expertize in environmental/sustainability management systems development and auditing, including conflict minerals. Together, the firms will be able to provide a seamless solution offering for conflict minerals due diligence traceability program development,
Read more →The WSJ reported yesterday that SEC is considering toughening certain aspects of their 2010 conflict minerals proposal. The statements made in the article corroborate information provided to Elm last week by reliable sources. If the final rule passes as the article indicates and as we have been told, the official Conflict Minerals Report (CMR) audits will be conducted as Attestation Engagements and only by CPAs. The proposed rule stated that SEC and GAO felt that the audits could be done as Performance Audits, allowing EHS auditors to do those. That sentiment was also clear during the SEC’s Roundtable in October. However, we understand that SEC stands ready to finalize their determination that CMR audits must be filed rather than furnished, making the audits part of the Form 10-K and other SEC forms. If the CMR audits were to be “furnished” as the proposed rule indicated, there would be more flexibility in who could be considered appropriate auditors. One implication of this decision is that the credibility of information relied upon in due diligence processes – including any of the nice supporting audits listed in the recent GAO report – will be heavily scrutinized before CPAs and company senior management sign off on the CMR audits.
Read more →The Government Accountability Office (GAO) has published its report to Congress (mandated as part of Section 1502 of The Dodd-Frank Act) that assesses the effectiveness of Section 1502(b), describes issues encountered by the SEC in carrying out the provisions of the Act, reviews non-covered companies that have conflict minerals necessary to the functionality or production of a product manufactured by such companies; and reviews the rate of sexual-and gender-based violence in war-tom areas of the Democratic Republic of the Congo and adjoining countries. Because the final rule has not yet been promulgated, the GAO report – as stated by SEC in their June 22, 2012 written comments to the report - “examines the steps the SEC has taken toward issuing a conflict minerals disclosure rule; stakeholder-developed initiatives that may help covered companies comply with the anticipated rule; and any additional information available on the rate of sexual violence in the eastern Democratic Republic of Congo.” Key Points from the Report The following are excerpts from the report on what we think are key points. Some stakeholders’ efforts to improve their initiatives through expansion and harmonization have been hindered by the uncertainty regarding potential due diligence and disclosure requirements stemming from SEC’s delay
Read more →The SEC will meet at 10:00am August 22 to vote on the final conflict minerals regulation in addition to conducting other business. Read the announcement here.
Read more →As has become habit with SEC, the highly publicized June timeframe for publication of the Commission’s final rule on conflict minerals (Section 1502 of the Dodd-Frank Act) will pass by without action. SEC Chair Mary Shapiro stated in a budgetary hearing last March that she anticipated the final rule in June, establishing yet another informal deadline and setting some expectations in the regulated community. The Commission did not meet this week, nor is a meeting scheduled for today, Monday or anytime in the next 7 days. Rules are voted on in Commission meetings for adoption, then publication. Federal law requires public notice of Commission meetings at least 7 days in advance (except for emergency meetings, which typically involve enforcement actions, not rule making). There is talk in some circles of an August publication timeframe. Of equal interest is how – or perhaps whether – Shapiro responds to this week’s letter from 58 members of Congress demanding July 1 action on the rule or a June 29 written response explaining the Commission’s reason for the inaction/delays. We have heard that the letter could possibly go completely unanswered. With the government’s attention on yesterday’s Supreme Court decision on health care, and politicians
Read more →On June 21, 2012, The UN Security Council released the interim report on DRC (document number S/2012/348). As stated in the report, “the Group’s primary role is to investigate and document evidence regarding the procurement of military equipment, including weapons and ammunition, by armed groups active in the Democratic Republic of the Congo, as well as their related financial networks and involvement in the exploitation and trade of natural resources” [Paragraph 5]. Therefore, the majority of the report details the existence and activities of armed groups in DRC and adjoining countries, including April’s defection from FARDC lead by General Bosco Ntaganda. But the report also “evaluat[es] the impact of its due diligence guidelines for importers, processing industries and consumers of Congolese mineral products…” [Paragraph 7]. Regarding those findings, The Group has established that market uncertainty resulting from the lengthy delay in the publication of the [US Securities and Exchange] Commission rules, together with the fear of potential 100 per cent “conflict free” demands in [the companies’] reporting obligations, has led most industry actors to pull out of the market in the eastern Democratic Republic of Congo rather than conduct due diligence on their supply chains. [Paragraph 151]. Last August, we
Read more →OECD recently released its second interim progress reports (called “Cycle 2″) on its pilot program for implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas, and the Supplement on Tin, Tantalum and Tungsten. Our Client Alert reviewing the Cycle 2 Report can be downloaded free of charge below. NOTE – We have had some reports of errors encountered in downloading this document. We believe the problem has now been fixed, but please email lheim@elmgroup.com with any problems and we will send you the document directly. Download the Client Alert Please enter your contact information to download the document. Thank you.
Read more →Based on our ongoing dialogs with clients and other companies, and our attendance at last week’s EICC-GeSI Conflict Minerals Workshop in Philadelphia, we have a few predictions about the upcoming second report on OECD’s downstream pilot program on the implementation of their due diligence guidance. The report was originally scheduled for release last month, but is not yet available and we don’t know when it will be published (although we would expect in advance of the next meeting the first week of May). As our client base consists more of heavy industry, hard metals and non-electronics consumer products, some of our predictions stand in contrast to “conventional wisdom.” Especially for US companies subject to DF1502, there is an increasing recognition that the makeup of the downstream pilot participants is heavily skewed toward the electronics industry, and the results of the pilot are therefore not representative of heavy manufacturing or other non-electronics sectors. At the same time, we expect an increased awareness of conflict minerals (CM) issues in pilot participants which means a related increase in uptake of basic program elements such as company policies on conflict minerals. Many companies (arguably most companies (a) outside the electronics industry and (b) not
Read more →The highly-touted Solutions for Hope (SfH) Project in the DRC has received global publicity as a potential model for future conflict-free mineral sourcing within the DRC. As part of the project, an independent audit of the operations was conducted to evaluate conformance of the operation to the OECD Due Diligence Guidance. This work was conducted by Gregory Mthembu-Salter, a consultant to the United Nations Group of Experts. This audit document, which forms the basis of SfH’s conflict-free mine claims, is available on the SfH website. (NOTE: When we began writing this piece, the link to this audit report functioned properly. At the time of our publication, the link appears to have become corrupted, therefore we include the document in its exact form as originally downloaded from the SfH website on April 5, 2012. SfH OECD audit report) With the world carefully watching the SfH project, one expects the highest attention to detail and scrutiny at each step in the process. However, with all due respect to Mr. Mthembu-Salter (whom Elm will be meeting at the end of this month at the ITRI Conflict Minerals Programme in Cape Town South Africa), it is unlikely that an SEC Conflict Minerals Report (CMR)
Read more →Do you have questions about conflict minerals programs or cultural/business contexts of conflict minerals in Central Africa? In just over a month, Elm’s Lawrence Heim will be presenting at ITRI’s Conflict Minerals Programme in Cape Town South Africa as part of ITRI’s International Tin Conference 2012. He is joining a panel of world renowned experts from Central African countries including DRC, the United Nations (UN), US Agency for International Development (USAID) and more. These recognized experts, covering a range of topics relevant to cultural and business implications of conflict minerals in Africa, include (alphabetically): Patrick Amisi, Minister of Mines, Maniema, DRC Banny Banza, Vice President Stakeholders Committee Katanga, Head of SAESSCAM Katanga Bali Barume – BGR Yves Bawa – Pact Cyprien Birhingingwa, South Kivu civil society Assheton Carter, Senior Vice President, Pact Joseph Ikoli – DRC Eric Kajemba, OGP (civil society) (to be confirmed) John Kanyoni, FEC & Association des Comptoirs, North Kivu and DRC Bob Leet – EICC/Intel Gilbert Leya – Katanga Paul Mabolia, ICGLR Committee on Illegal Exploitation of Natural Resources, DRC Joseph Mbaya – Rwanda Kay Nimmo – ITRI Henry Nkeng – MONUSCO – Centre de Negoce Dr Emmanuel Nkurunziza, President of Stakeholders Committee Rwanda, Director General
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