The SEC conflict minerals rule is the regulatory requirement for conflict minerals disclosure by US public companies, and what a company can reasonably do to comply depends on its position in the supply chain.  As downstream companies who need to report for calendar year 2013 enter the final stretch toward the May 2014 reporting deadline, it’s advisable to take a step back and assess whether conflict minerals compliance efforts are on track to cost effectively meet SEC requirements.

A growing consensus on best practices emerging from the Conflict Free Sourcing Initiative (CFSI) and other key organizations provides a useful lens for downstream companies to organize and plan for cost effective compliance.  Key considerations for downstream companies include:

• Having a documented due diligence strategy and following through on it
• Adopting a management system approach, consistent with the OECD guidance
• Collecting a sufficient amount of supply chain data to support reasonable conclusions
• Assessing risks posed by smelters and refiners (SORs) and leveraging independent verification programs to mitigate risks
• Structuring due diligence records and SEC reporting to address those issues specifically required under the SEC rule.  The SEC recently published the official Form SD template, which can be accessed at http://www.sec.gov/about/forms/formsd.pdf
• Continuous improvement of supplier data collection and due diligence in future reporting years

Looking forward, many ambiguities exist around the requirements for independent private sector audit (IPSA) of conflict minerals reports (CMRs).  We anticipate that the SEC will publish another round of FAQs that may clarify IPSA applicability and requirements.

Anthesis consultants have delivered product compliance services to Fortune 500 clients since 2003.  We’re available to assist you with managing conflict minerals compliance and meeting customer expectations for conflict free supply chains.