As we have done for Cycle 1 and Cycle 2, Elm has published - in conjunction with MetalMiner – a detailed review and analysis of the final (Cycle 3) report of the pilot program of OECD’s conflict minerals Due Diligence framework implementation for downstream companies. MetalMiner also recently published a very successful A-Z Guide on conflict minerals compliance for U.S. manufacturing companies. One of the unique aspects of this guide is that it presents conflict minerals content information on a range of finished and semi-finished metal/alloy commodity products to help users identify products of concern in relation to conflict minerals.
Read more →Anyone who has been involved with SEC’s conflict minerals regulations for any amount of time is well aware of its confusing nature, overly complex and labyrinthine sentences and significant substantive ambiguities. Among these, two matters seem to be rising to the top in popularity – due to the sweeping nature of the applicability: Is packaging within the scope of the regulation as something that is “necessary to the functionality or production” of a product? In some cases, packaging may serve little more than a product container to convey the product to the market or consumer in a convenient manner. In other cases, packaging could be seen as preventing the degradation of the product, and therefore arguably contributing to its functionality. Is organotin – as well as other non-metallic forms of 3TG – considered a different/specific “derivative” of cassiterite that is not intended to be regulated in the same manner as the specifically-named derivative “tin”? In the preamble of the final rule (77 Fed. Reg. 56284 – 56285), SEC addressed the matter of organotin without bringing full clarity to their views on the matter. There may – or may not – a glimmer of insight into the Commission’s potential interpretation on these two topics. Take
Read more →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 established
Read 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 in
Read more →With 2013 looming, the past 2 months have been a whirl of meetings, conference calls, proposals, RFP development support and project work. Through all that, a few questions companies are asking in this regard are becoming almost universal. A handful of these questions and thoughts specific to SEC regulatory compliance are below. We hope you will find these informative and helpful. How far back in the supply chain do I need to go? The preamble to the final rule makes it clear that issuers may satisfy the Reasonable Country of Origin Inquiry obtaining and relying on representations from the company’s direct (Tier 1) suppliers. However, you must have reason to believe the representations are true and additional efforts may be required to either (a) identify/monitor “applicable warning signs or other circumstances” indicating that materials may originate from Covered Countries or are not scrap, or (b) confirm the accuracy/credibility of information from those suppliers. How can I be comfortable relying on information provided to me by my suppliers? This is a difficult question but one that should be approached with an attitude of what auditors call “professional skepticism”. For example, one company recently released a letter to its customers clearly stating that
Read more →Respected law firm Cooley LLP has published an overview of the latest documents (filed November 21) in the legal challenge to SEC’s final conflict minerals regulations. These filings provide more detail about the technical and legal arguments to be brought against the US government in the case. The filings can be accessed here and here and Cooley’s article is here. The filings state that SEC has agreed to an expedited “briefing schedule” for their purposes, with final briefs to be filed by March 29, 2013 in an attempt to “ensure that outstanding uncertainty about the validity of the Rule and the statute will be resolved as soon as feasible.” We expect that SEC’s plans for issuing interpretive guidance on the rule may be delayed until after the March briefing is concluded. And in a closely-related development, Amnesty International announced that they filed a petition to “intervene to defend new regulations that require corporations to investigate and disclose whether their sourcing practices finance armed groups in the Democratic Republic of the Congo (DRC)… the organization, which is represented by Public Citizen Litigation Group, has filed a motion to intervene in the lawsuit so that it can help defend the regulations.”
Read more →Since the US Securities and Exchange Commission adopted their final conflict minerals rule on August 22, Elm and our Conflict Minerals Consortium partners have seen an explosion in proposals, RFPs and related meetings, which we expected. Also expected was the concurrent growth of firms marketing themselves as conflict minerals experts or having off-the-shelf technological solutions. We offer the following points to consider when evaluating possible business partners for a long, unprecedented, complex – and likely costly – journey. A little due diligence on your consultants may provide you a smoother due diligence process for conflict minerals. You may find it worth asking your potential conflict minerals advisors, consultants and solutions providers questions like those below. Even a 60 second review of Google search results on the expert can be revealing. When did the expert start working on conflict minerals matters? The issue began to come forward in the electronics industry back in 2008, but gained real momentum in 2010 with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. A very small number of external advisors/consultants have direct experience going back to 2010, or even 2011 for that matter. Did the expert participate in public
Read more →UPDATE: To help keep clients and others informed, we have added new insights and commentary based on further discussions with a variety of stakeholders. Our review of the final SEC regulation on conflict minerals is now available. While we strive to be first in presenting you important information, this time we chose a different path. In the days since the rule was adopted, we have had many discussions with clients, other companies, legal authorities, the SEC directly and others who raised a variety of points, preliminary interpretations and questions. Along with the technical substance of this complex ruling, our review also incorporates a number of unique insights from these discussions that are not reflected in other analyses. We have also included guidance on what companies should be doing in the next 12 months to prepare for the first reporting deadline and customer demands. We are using a stunning new presentation format (prezi) that is more effective than standard formats at communicating information/context and emphasizing key points. Prezi requires no new software or downloads and is easy to use: Full screen mode provides the optimum viewing experience. Click on the full screen icon near the lower right hand corner of the viewer. Navigate manually through
Read 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 →The final SEC regulation on conflict minerals, passed earlier today by a 3-2 vote, is now available for download. Most of the attendees in the auditorium, including Elm, had a difficult time hearing the substantive commentary made on the final regulation by John Fieldsend of the SEC’s staff (we understand the audio on the webcast was far superior to what those of us in the audience experienced). Therefore, we will be publishing a summary of key points before the end of the week. In the meantime, SEC’s official meeting summary is here and click here to download from the SEC website.
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