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 →Last week, OECD made available the complete final report on downstream company pilot program implementation of its conflict minerals due diligence framework. We have not completed our review and summary, but the report can be downloaded for free here. Of particular initial interest to many may be: the illustrative list of products (page 12) key trends (pages 15-18) learnings and recommendations from pilot participants (pages 60-64). Among the recommendations is one that Elm has voiced for two years: that the audit/auditor standards be upgraded from the generic ISO19011. However, the recommendation references ISO/IEC 17021, which brings its own unique concerns and challenges. list of 3T smelters (pages 70-75). It is important to understand that this list does not include gold refiners, nor is the list exhaustive or limited to ”approved” or “certified” smelters. We hope to have additional analysis and insights available soon.
Read more →Elm has been selected by The Auditing Roundtable to lead their newly formed Working Group to develop a professional auitdor guidance intended for use by non-CPAs in applying the “generally accepted government auditing standards” (also known as “GAGAS” or the Yellow Book) to audits of Conflict Minerals Reports under SEC’s conflict minerals regulations. Lawrence Heim, CPEA, Director of Elm’s Conflict Minerals services: ”The Board of Directors agreed to take on the challenge of developing this guidance, and doing so as rapidly as possible to serve the regulated community. I am honored that the Board asked me to play a role in that process.” Heim continued: “Given the importance, visibility and global impact of of this guidance, the Board recognizes how critical broad-based input and consensus will be. The Working Group’s first order of business is to present to the Board for their approval two lists: one of recommended professional peer reviewers and one of organizations/entities from whom input will be sought as stakeholders.” The Working Group will hold its first meeting in conjunction with the Roundtable’s national meeting in San Diego January 28-30, 2013. Elm has been a vocal proponent of strong auditing and auditor qualification/independence standards in the conflict
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 →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 →A leading industry association in the electronics sector has published a draft of its conflict minerals due diligence best practices guideline. IPC – The Association Connecting Electronics Industries© – has made available IPC-1081 for comment. IPC is accepting comments from non-members and industries/companies beyond their membership, but only those who are “qualified participants” in the standard development process may cast votes. IPC’s standards development procedure is parallel to the ANSI standard development process; therefore IPC standards – once finally approved by ANSI – become ANSI standards as well. To access the document, click here. Click on the “+” next to Drafts, then click on the link that appears. A file will download that includes the draft standard and the official form that is to be used for submitting comments to IPC. Comments submitted in a manner other than this form may not be considered.
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 →In response to yesterday’s passage by the US Securities and Exchange Commission of the final conflict minerals regulation, today marks the official launch of an international consortium formed to provide comprehensive services globally for conflict minerals due diligence, traceability, auditing and disclosure for companies impacted by conflict minerals requirements. The group, called the Conflict Minerals Solutions Consortium, was initiated by The Elm Consulting Group International LLC. Lawrence Heim, Director of Elm, stated “We don’t believe that any single entity is able to provide similar comprehensive services due to the complexity of global supply chains and material flow. Our goal was to assemble a unique and highly qualified group to serve the wide range of companies and potential requirements.“ Heim continued, “We tried to assemble project team members who are not directly working in existing conflict minerals audit/traceability programs such as those under OECD or electronics industry groups. We believe this independence will foster development of new solutions that may be more efficient and/or effective than those currently available.” Members of the Consortium include recognized experts globally representing: HSE/sustainability auditing Management systems program development RoHS/REACH/EPEAT program development Mining industry auditing/traceability program development Traceability software CSR integration/reporting Legal advisory (US and Africa)
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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