What have you learned from Conflict Minerals Reporting this year? Aside from the painstakingly long, arduous journey that it may have been, is there anything that you may want to know for next year? As many compliance professionals close their books after this year’s first obligatory year of reporting, many of you are probably beginning to gear up for next year’s batch as well. How will you better prepare yourself for this grueling process?
The compliance process can be broken down into roughly five steps: regulatory assessment, compliance plan creation, setting up software, communicating with suppliers, and finally the reporting process. This entire process requires the recoupling and integration of multiple divisions of a company, ranging from legal departments to quality assurance and supply chain management professionals; depending on the size of your institution and the particular industry you may be present in, these categories may grow or shrink in size, but the need for them is still eminent.
Despite two years of this regulation occurring, many compliance professionals are left with the same question: what’s next? Although the SEC has not released formal guidance in response to the last two years, other groups have taken to the stage to serve as a facilitating catalyst in this difficult process. One group that has done this is Amnesty International, whose Global Witness’ report, “Digging for Transparency: How U.S. Companies Are Only Scratching the Surface of Conflict Minerals Reporting” urges companies to follow these steps in order to fulfill the OECD’s original five steps for successful implementation:
- “Increase response rates from suppliers by following up with uncooperative suppliers, providing suppliers with conflict minerals training materials and, where necessary, amending contracts;
- Directly engage with identified smelters and refiners in their supply chain to better understand a mineral’s chain of custody;
- Review the due diligence efforts their metal processors undertake in their own supply chains;
- Provide specific examples of identified supply chain risks in their Conflict Minerals Reports;
- Develop a robust risk mitigation and management process to ensure they effectively assess supply chain risks and demonstrate the implementation of those processes in their Conflict Minerals Reports; and
- Carry out independent private sector audits of their due diligence measures, regardless of their products’ conflict status.”
Conflict Minerals reporting is here to stay, spreading widely across the globe. Just recently, the European Union made a “surprise” passing of legislation that stipulates similar guidelines for Conflict Minerals as does in the United States. The aim of such legislation is to support the creation of transparent, socially responsible businesses throughout the entire supply chain. In adhering to such guidelines and safeguards, the process of Conflict Minerals reporting is more easily made transparent, compounding on previous applications. Without the application of such socially responsible, transparent laws, corporate social responsibility will cease to make the strides needed to ensure a sustainable future.