Conflict Minerals Reporting: Best Practices to Meet Your Deadline

Conflict Minerals Reporting: Best Practices to Meet Your Deadline

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act obligates U.S. publicly-traded companies to demonstrate due diligence in their supply chains and report on their use of conflict minerals, which are defined as tin, tungsten, tantalum and gold (3TGs). In-scope companies must submit a report annually to the U.S. Securities and Exchange Commission (SEC) detailing these efforts. With the May 31, 2020, filing deadline fast approaching, in-scope companies should leverage the following best practices to ensure their forms are submitted on time.

Conflict Minerals Reporting Deadline

The annual report, called a Form SD (Specialized Disclosure), identifies the use of 3TGs in products that were manufactured or contracted for manufacture in the calendar year prior to the submission deadline. As such, companies must prepare a report on products manufactured in 2019 before the May 31, 2020, deadline. The Form SD must be submitted on the Electronic Data Gathering Analysis and Retrieval System (EDGAR).


For a comprehensive breakdown of your conflict minerals requirements, download our eBook, The Conflict Minerals Handbook: Your Guide to Compliance in 2020.


Coronavirus Confusion

On March 25, 2020, the SEC issued a notice to in-scope companies that it is extending the filing deadlines for certain obligations. Conflict minerals filings were not part of those extensions. May 31 remains the official deadline; however, as this date falls on a Sunday, the in-practice deadline for Form SD filing is Monday, June 1, 2020.

Meeting SEC Conflict Minerals Disclosure Requirements

If a company determines that 3TGs are present, it must make an effort to determine whether the minerals originated in the Democratic Republic of the Congo (DRC) or its adjoining countries. This can be accomplished through a Reasonable Country of Origin Inquiry (RCOI). The company must also determine whether the minerals were derived from recycled or scrap sources, and document these efforts in the Form SD.

If the process determines the 3TGs originated in the DRC, companies must exercise due diligence on the source and chain of custody, and describe the process in a Conflict Minerals Report (CMR) listed as Exhibit 1.01.

Responsible Minerals Supply Chains in Practice

Strong responsible minerals supply chains contain provisions to address each process a mineral may undergo along the supply chain, from extraction to refinement. Certain tools can help companies prepare, such as the Organisation for Economic Co-operation and Development (OECD)’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Companies submitting a CMR use this five-step framework, which has become the de facto international standard for responsible mineral reporting.

The steps are as follows:

  1. Establish strong company management systems.
  2. Identify and assess risk in the supply chain.
  3. Design and implement a strategy to respond to identified risks.
  4. Carry out independent third-party audit of supply chain due diligence.
  5. Report annually on supply chain due diligence.

A CMR should detail how each step of this framework is being met. However, the most attention will be placed on steps two and three. These steps involve a self-evaluation of risks identified in upstream sources and across the supply chain, as well as how a company communicates the details of this risk and the expectations they set for suppliers.

Leverage a Third-Party Solution

A third-party supply chain data management solution can provide companies with the tools and resources required to meet their conflict mineral requirements. Assent’s Corporate Social Responsibility Suite allows users to survey suppliers, conduct smelter risk assessments, prepare a CMR and more. For more information, contact us at info@assentcompliance.com.

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