One of the more common questions we hear from companies on the topic of conflict minerals is “Are we behind the curve?” Every company faces their own challenges in understanding the requirments, assessing their needs and implementing programmatic changes. But there are a number of common guideposts that provide reasonable indications on general progress – and shed light on whether your company is falling behind. So, in an unabashed take-off of Jeff Foxworthy’s “You Might be a Redneck If…”, we offer the following. If any of these sound familiar, then it is probably time to pick up the pace. Second quarter is fast approaching and one consistent trend has emerged for companies who are immersed in this right now - this process takes more time, and is more complex, than it seems. It is valuable to ensure you have as much time as possible in 2013 to make key decisions, gather data and develop processes to support SEC reporting or customer information requests. You might be falling behind on conflict minerals if… You had not heard the term “conflict minerals” before the first of this year. Customer information requests on conflict minerals are piling up unanswered. Your company has not establishedRead more →
Elm announces CM CheckPointSM, a new rapid and highly cost-effective conflict minerals program assessment method/deliverable to be available late January 2013. CM CheckPointSM is intended for companies who have already begun program development or implementation and are looking for high-level “navigation checks” – rather than deep dives – from a third party to confirm strategic direction, alignment with SEC regulations and/or project status. Features of CM CheckPointSM include: Assesses from a high-level perspective practices/status/available documentation against the three-step process for SEC regulatory compliance (plus reporting/auditing) and the 5-step process of OECD Due Diligence framework and related supplements Reviews from a high-level perspective the framework, strategy, procedures, and generalized level of implementation at the company’s corporate level Topic/element/task general completion status indicators of Complete, Partially Complete, Not Started, Not Applicable Severity rankings for identified gaps/deficiencies reflecting potential importance to program implementation or potential audit outcome Can be used to confirm site-level program implementation/consistency with corporate expectations Automated summary report generation on-site with intuitive visual indicators Comment fields for each topic and sub-element allow highlighting of relevant data, findings or limitations encountered Minimal disruption – requires a single Elm assessor and only a few days on site, including on-site summary reporting Evolutionary steps inRead more →
A new study released last week from Paul Griffin, a professor in the UC Davis Graduate School of Management, claims that shareholder value has suffered in response to past (voluntary) public disclosures on conflict minerals. The release summary from Phys.org stated: Griffin and his research team examined 206 companies from December 2010 through March 2012 and found those companies — half who had voluntarily disclosed before the law became mandatory — lost $6.5 billion in shareholder value due to declining equity values. Both disclosing and nondisclosing companies were affected because of the ripple effect in capital markets when uncertainties arise about a particular business practice — using conflict minerals, in this case. The study methodology claims to correct for other factors possibly influencing stock pricing before and after such disclosures. Elm’s analysis of the impact of the 2010 Enough company rankings on corporate revenues was cited within the study, although Professor Griffin acknowledged the differing parameters and goals of the respective studies. We have only begun our review of Griffin’s study (given its timing, our plate has been full with the final SEC rule) and hope to have more detailed commentary soon.Read more →
Anticipating a final rulemaking by SEC on conflict minerals, the American Law Institute and American Bar Association (ALI-ABA) has announced a webinar sponsored by ABA’s Business Law Section on the matter to be held September 12 ,2012. The participants include: Planning Chair and Moderator Jeffrey W. Rubin, Hogan Lovells LLP, New York City. Mr. Rubin will be giving a substantive presentation as well. John C. Bullock, Esq., Cheshire, CT Lawrence M. Heim, CPEA, The Elm Consulting Group International LLC, Atlanta, GA Bob E. Leet, M. Sc., Intel Corporation/EICC, Portland, OR Irma Villarreal, Kraft Foods Company, Northfield, IL Virtually all ALI CLE programs are accredited in all US jurisdictions. Specific MCLE information for this course is not yet available.Read more →
Two recent news items from the UK’s International Business Times illustrate interesting developments in the area of conflict minerals. The group known as Anonymous (referred to as “hacktivists” for their use of hacking as a tactic to promote their activist causes) targeted semiconductor manufacturer Intel and European metals trader Traxys in attacks yesterday and today. The first article highlights Anonymous’ attacks of Intel that claim “mining companies that provide coltan to Intel are working in DR Congo”. The article did not indicate what evidence Anonymous relied on in making the accusation. According the article, Anonymous dumped personal information such as usernames, password, emails as well as a heap of emails and payments database on [an activist website] as part of Operation Green Rights, which Anonymous launched last year against major oil companies… The second article offers more details on the Traxys attack, including text from emails that Anonymous claims support their position that the company is engaged in trading illegally-sourced materials. The article only includes excerpts from emails received by Traxys, and does not mention responses to those by Traxys. We note this because we ourselves occasionally receive unsolicited emails from traders offering to sell a variety of ores, metals and recyclables.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 →
Top law firm Akin Gump recently published an Alert containing their in-depth analysis of the letter from Senator Leahy and others to SEC expressing views on the final SEC conflict minerals regulation yet to be promulgated. Akin Gump noted Leahy’s comments on the SEC’s apparent position that the conflict minerals report (CMR) be “furnished” rather than “filed”. The practical impact of the “furnished” vs. “filed” distinction is that “furnished” information is not automatically incorporated by reference into a reporting issuer’s filings with the Commission and is not subject to liability under Section 18 of the Exchange Act. Section 18 of the Exchange Act makes reporting issuers liable for “false or misleading statements” if investors rely on such statements when purchasing or selling securities at a price which was affected by such statements. Reporting issuers who are required to “furnish” information to the SEC as an exhibit to an annual filing may still be subject to liability for violations of Sections 13(a) or 15(d) of the Exchange Act if they fail to furnish a required exhibit or if the required exhibit is “unreliable”. Penalties for such violations may be injunctive, civil or criminal and may also extend to individual executives ofRead more →
After the devastating tsunami in Japan early in 2011, we began exploring the interrelationship of green/ethical procurement (such as conflict minerals) with business continuity/disaster recovery planning. Now, an article from leading electronics supplier Digi-Key states that lead times are delayed up to almost 6 months for a significant amount of the world’s production of tantalum capacitors as a result of the flooding in Thailand, combined with raw material supply impacts of conflict minerals laws/policies. Of course, higher prices are also expected. ”Combine those two things together and that put a big strain on the supply of raw materials in the market as well as pricing,” said Joe Porter, vice president tantalum product marketing at Kemet Corp. based in Greenville, S.C. We continue to believe that significant opportunities exist for business continuity/disaster recovery planning efforts to incorporate growing green/ethical procurement initiatives. Robust sustainability risk assessment exercises are essential in identifying relevant gaps and areas for improvement. Feel free to contact us for more information about how we can help.Read more →
SEC has released the full transcript and archived video of the October 18 Conflict Minerals Roundtable.
View the transcript here and the video (Parts 1 and 2) here.
The following is a transcript of Elm’s opening comments and answers to questions posed by SEC staff at this week’s Conflict Minerals Roundtable in Washington DC. These comments were presented by Lawrence M. Heim, CPEA of Elm’s Atlanta office. Opening … Continue reading →Read more →