Risk

Japan Tragedy Tests Ethical/Environmental Procurement Standards

As the world grapples with the immense impact of the disaster in Japan, attention is turning to the global economic impact of the country’s lost production.  Japan has long been a critical link in the supply chain of many industries – perhaps most notably in the automotive and electronics sectors. The Financial Times ran a piece today on this which touches on contingency plans to help replace lost production stemming from unforeseen major disruptive events. In this context, a question arises:  Will companies enforce their procurement requirements for vendor EHS performance during this period? Elm has long discussed EHS risks in the context of supply chain disruption contingency planning.  In past years, the risks have been more focused on matters related to how production redistribution could cause violations of various environmental permit limits tied to production levels.  However, the rise of ethical purchasing standards – as voluntary and highly publicized corporate commitments – has altered the definition of EHS risks in supply chains. It may be months or years before some of the Japanese plants are in production mode again.  In the interim, companies impacted by the disruption face a conundrum: Do they attempt a rapid production recovery by quickly

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Elm Hosts Webinar on Using the iPad in HSE Auditing

Join us for an upcoming webinar Friday, February 25 about using the iPad in HSE audits.  We will present an overview of our experiences in using the device on actual audits over the past 6 months. Included in the presentation will be a discussion of evaluating its potential use and fit within organizations/existing audit processes; benefits and limitations; and a detailed step-by-step simulation of an audit using Elm’s selected application (smartNotes), including actual screen shots. The hour-long presentation will be followed by an open question and answer period. Click here for a full description.  There will be a morning session and an afternoon session.  Click here for the afternoon session. We hope you can participate.

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Elm Prepared for US Securities and Exchange Commission (SEC) Auditor Standards for Conflict Minerals Audits

The Elm Consulting Group International LLC (“Elm”) will deliver independent third-party Conflict Minerals Supply Chain Traceability Audit services aligned with the SEC mandates for auditor independence to companies across the range of industries impacted by the US Conflict Minerals Law, enacted as part of the Dodd-Frank Wall Street Reform Act. In 2010, Elm was engaged by a leading US-based electronics manufacturer industry association to conduct the first independent third-party Conflict Minerals supply chain traceability audits supporting the association’s “Conflict Free Smelter” designation for tantalum. Those audits were the first of their kind, resulted in the first “Conflict Free Smelter” designations issued, and generated significant improvements to the initial audit tools/scope  created by other stakeholders. Patrick Doyle, Managing Director in Elm’s New Haven, CT office: “Elm is a world leader in conducting Conflict Minerals supply chain traceability audits to support the new Conflict Minerals Law in the U.S.  We saw significant value in bringing our experience to assist a broad range of industries and companies.  However, we were concerned about potential conflicts of interest with being engaged by a trade association consisting of multiple corporate members that also may have relationships with other Elm clients.  In our 2011 strategic planning, we decided

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Elm Concludes Conflict Minerals Auditing Presentation in San Diego

This week we concluded our presentation giving an overview of Conflict Minerals Traceability auditing under US Securities and Exchange Commission (SEC) regulations on “Conflict Minerals” originating from the Democratic Republic of Congo (DRC).  Lawrence Heim, Director at ELM, presented on Elm’s experiences as part of a panel on sustainability at The Auditing Roundtable Winter Meeting January 25. The key points made were: Planning is critical.  Because the legal requirements apply to the supply chain rather than a single site, a successful auditing program needs to start as close to the mine as practical then move forward toward the consumer.  Working backwards creates complexities, confusion and increases costs. SEC sees different audit types, but the market doesn’t. SEC’s proposed regulations establish two traceability activities: “reviews” (a less formal, internally-driven screening process) and “Conflict Minerals Reports” (requiring formal third party audits).  However, buyers of affected products/materials are already demanding third party credibility and independence for any material origin statements.  These buyers are increasingly unwilling to rely on statements or declarations of “DRC free” based on the “reviews”. Audits are SEC-based, not EHS. As stated in SEC’s proposal, AICPA-based attestations are a critical component of viable traceability programs.  Requirements for auditor independence, attestation

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Elm to Present on Conflict Minerals Supply Chain Auditing at San Diego Meeting of The Auditing Roundtable

Lawrence Heim, CPEA of The Elm Consulting Group International LLC will be speaking as part of a panel on sustainability at The Auditing Roundtable national meeting.  The meeting will be held from January 24 – 26, 2011 at the W Hotel in San Diego. Mr. Heim will be discussing Elm’s experience with the first third-party audits of Conflict Minerals Supply Chain Traceability conducted under the US Conflict Minerals Act/Dodd-Frank Wall Street Reform Act. The meeting agenda can be viewed here:     http://bit.ly/etp3sj

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Leading Edge Information Technology to Support Elm’s Conflict Minerals Traceability Services

The Elm Consulting Group International LLC (Elm) earlier this week launched our Conflict Minerals Traceability Service in response to recent US legal and international economic policy developments concerning “Conflict Minerals”.  Conflict Minerals are defined by the United States’ Securities and Exchange Commission (SEC) and the international Organization for Economic Cooperation and Development (OECD) as tin, tantalum, tungsten, gold and the ores from which these materials originate. Today, Elm announces an enhancement to the Conflict Minerals Traceability Service.  We will be leveraging cutting-edge information technology through our relationship with Sentiment360, a leading Internet data monitoring and analytics company.  Using Sentiment360, Elm’s unparalleled depth of information review – far beyond standard data reviews – may yield critical insight into conflict mineral provenance. Lawrence Heim, Director at Elm: “As audit activities get closer to the mining and exportation of the ore, concern increases over the veracity of the information.  These concerns have been expressed by the SEC, OECD and by trade associations developing conflict minerals traceability programs.  The public and nongovernmental organizations (NGOs) also have similar apprehensions.” “In discussions with Sentiment360 soon after Elm broadcast information about our Conflict Minerals Traceability Service, we concluded there is an excellent fit for Sentiment360 in these

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Now Available – Summary Review/Comparison of Conflict Mineral Supply Chain Traceability Audit Programs

Elm has developed a short summary review of conflict minerals audit programs based on our industry-leading first-hand experience conducting these audits, and leveraging our extensive international senior-level health, safety and environmental (HSE) auditing expertise. If you are interested in receiving our summary document, please send us an email (lheim@elmgroup.com) or feel free to call us.  We look forward to hearing from you soon.  

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In Tampa, a Mining Company Shutdown Highlights Business Interruption Risk from Environmental Issues

In Tampa Bay, an all-to-real demonstration is playing out of the trickle-down economic impact of a company operation being shut down for environmental reasons.  The Tampa Bay Business Journal reported this story. The Mosaic Co. is a publicly-traded company with over $6billion in annual revenue reported last fiscal year.  Mosaic mines phosphate ore.  The company has been mining in Polk County since 1995 and recently filed for an expansion of operations to access reserves in Hardee County.  These ore reserves represent about 10 years of active mining operations. The Sierra Club, along with other NGOs challenged the issuance of a federal permit that would allow Mosaic to expand, alleging that the expanded operations would cause environmental damage to the headwaters of the Peace River and other streams that drain into the Charlotte Harbor estuary. On July 30, in response to the challenge U.S. District Judge Henry Lee Adams Jr. in Jacksonville issued a preliminary injunction against the expansion, saying the Army Corps had failed to adequately explore alternative plans that would cause less environmental damage to the area. The article reports that, if the Mosaic expansion does not move forward, the economic impact would be dramatic. At least 18 companies

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Seriously, Consumers Don’t Want Sustainable Products

For some time now, we have written about the potential business risk associated with developing sustainability programs for some companies.  Just recently, an article was published in the Journal of Marketing that provides empirical evidence of negative consumer perceptions (and therefore reduced sales) of certain products labeled as “sustainable” or “environmentally friendly”. The article is titled The Sustainability Liability: Potential Negative Effects of Ethicality on Product Preference, written by Michael G. Luchs, Rebecca Walker Naylor, Julie R. Irwin, and Rajagopal Raghunathan.  The authors are all professors of marketing at William & Mary, Ohio State and The University of Texas at Austin. The article reviews various hypotheses and empirical studies conducted by the authors around the concept about how buyers perceive the attribute of sustainability or environmentally friendly (they use the term “ethicality” to encompass those attributes) in certain product categories. INTERESTING NOTE HERE – there is a fair amount of overlap between the product categories within the scope of the study and those that are included in the Walmart Supplier GHG Innovation Program Guidance Document.  If you are a supplier who is involved in WalMart’s GHG Innovation Program, you may want to read The Sustainability Liability. The first several pages

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Elm Survey on EHS Risk Launched

Even before the BP oil spill, there was a substantial chatter about “EHS risk”, what it means and options for managing it. In many cases, external resources such as consultants are brought in to assist with the effort. These resources possess skills that cut across various competencies, which can create ambiguity within the client’s organization about which department(s) may be responsible for identifying, vetting and hiring these resources. Elm has created a survey that is intended to explore these issues. To ensure your privacy, we have disabled the user tracking option on the SurveyMonkey settings.  Therefore we have no way of identifying respondents in any way. Launch the survey here.

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