13th CFSI Workshop Presentations - Day 2
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Presentations from Day 1 of the 13th Conflict-Free Sourcing Initiative Workshop in Brussels, March 17-18, 2014. Additional details available on conflictfreesourcing.org.

Presentations from Day 1 of the 13th Conflict-Free Sourcing Initiative Workshop in Brussels, March 17-18, 2014. Additional details available on conflictfreesourcing.org.

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    13th CFSI Workshop Presentations - Day 2 13th CFSI Workshop Presentations - Day 2 Presentation Transcript

    • The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect Welcome!
    • 8:00 - 9:00 a.m. Registration and Check-In 9:00 - 10:30 a.m. Practical Reporting Guidance: What is  expected  from  companies  on  reporting?  What  are  companies’  options?  How  does   participating in the CFSI help downstream companies meet their obligations? 10:30 - 10:45 a.m. Coffee Break 10:45 a.m. - 12:00 p.m. Conflict-Free Smelter Program Overview and Conflict-Free Sourcing Initiative Governance Overview of how interested companies can join the CFSI, how we engage with stakeholders and how the CFSI is managed. We’ll  also  provide  an  update  about  the  CFSP  and  related  smelter  outreach,  protocol  updates  and  training  developments. 12:00 – 1:30 p.m. Lunch 1:30 – 2:30 p.m. Compliance Best Practices Building on CFSI guidance, various paths to Reasonable Country of Origin Inquiry (RCOI) data, and Independent Private Sector Audit (IPSA) and US Securities and Exchange Commission (SEC) frequently asked questions. 2:30 - 3:00 p.m. Closing Remarks 3:00-3:30 Coffee Break 3:30-4:30 p.m. EU Regulation Review (Industry attendees only) The  EC’s  Directorate  General  for  Trade  has  announced  that  it  will  put  forth  regulation  governing  conflict  minerals  in  early   March. After a prompt review of the regulation, experts will discuss their interpretation of the requirements and explain what this all means for your company. 4:30 - 5:30 p.m. Benchmarking  Companies’  Reporting  Progress (Industry attendees only) What is your company doing for this initial reporting period compared against what other companies are doing? What are you including in your report? What are others including? This industry-only session allows companies to compare their reporting plans to their peers and learn further best practices. 2
    • • Chatham House Rule: Participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed. • Respectful participation –Focus on issues, not individuals or organizations –Take a problem-solving orientation –Listen actively (limit side conversations) • Introduce yourself before speaking • Mobile phones off or silent 3
    • • No still photography or audio/video recording. • Want to live Tweet? Great! #CFSI #cfsiconf14 . However: ground rules still apply! • Members of the press are allowed in sessions, but must adhere to all ground rules and wear a name tag to identify themselves. • Please refer press inquiries to EICC Director of Communications Julie Schindall (available at registration). • Be mindful that space outside of sessions is considered public to the press. 4
    • • Meetings and programs should be conducted so as to eliminate questions regarding antitrust compliance. • Under no circumstances shall the meetings of this group be used as a means for competing companies to reach any understanding, expressed or implied, which tends to restrict competition, or in any way to impair the ability of members to exercise independent business judgment regarding matters effecting competition. • These guidelines apply not only to discussions during a formal meeting, but to all informal discussions as well. 5
    • • • • • 6
    • • CFSI will not allow solicitation from non-sponsoring companies. • All CFSI members and other attendees are asked to report solicitation; any companies found not to honor this policy will not be permitted to attend CFSI workshops for one year. 7
    • European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop. Event Sponsors Event Exhibitors
    • The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect
    • 3 major bodies of work address conflict minerals reporting: – The United States Dodd-Frank Act of 2010 – The related Securities and Exchange Commission final rule on compliance with Dodd-Frank (SEC final rule); and – The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance) Future – EU Regulation (2014-2015) 10
    • •  The  CFSI is committed to improving conditions in the supply chain. Mining activities that fuel conflict are unacceptable. •  In  order  to  help  companies  meet reporting obligations and to source conflict-free minerals the following actions are undertaken: – Supporting in-region sourcing schemes to enable future legitimate trade from DRC and surrounding countries – Implementing Conflict-Free Smelter Program (CFSP) that requires OECD guidance to aid in the identification of smelters and refiners that have sourced conflict-free minerals – Developing the Conflict Minerals Reporting Template (CMRT) to help companies gather due diligence information in a common format – Engaging with multiple industries for collaboration and efficiency Conflict Free Sourcing Initiative (CFSI) 11
    • In-Region Schemes Conflict-Free Smelter Program (CFS) Company Assurance Finished Product MINE SMELTER/REFINERY OEMS (pinch point) Conflict Free Sourcing Initiative (CFSI) 12
    • High-level Compliance Steps 1. Company Conflict Minerals Program Framework 2. Identify and Assess Risk in the Supply Chain 3. Risk Management 4. Smelters or Refiners 5. Report 6. Implement Program Improvements and Repeat
    • Company Conflict Minerals Program Framework – Build a company management system: • Identify functional areas to support CM program • Adopt a policy and expectations for your suppliers • Implement internal controls – Training – IT Systems – Contracts – Customer Response – Communications • Collect data on products and suppliers which contribute those necessary conflict minerals to the products
    • Identify and Assess Risk in the Supply Chain –Collect supplier data • Conduct a supply-chain survey (CMRT) –Review and respond to unreasonable responses • Assess CFS information for RCOI determination • Potential validation information resources –Other recognized industry approach –Participation in in-region sourcing program(s) –Information attained from industry initiative program(s) –Information attained directly from a smelter –Other indirect information (smelter location)
    • • Make Covered Country sourcing conclusions from ‘all’  applicable information sources • Aggregate smelter/refiner data • Determine  smelter/refiner’s  information – Country of origin information (CC or non-CC) – Utilize CFSP or other recognized industry approach – Solely recycle/scrap
    • Risk Management – If the smelter or refiner (SoRs) sources from covered country or unknown implement OECD Due Diligence • Compare smelters to CF independent audit program reference lists (e.g. CFS, LBMA, RJC) – DRC CF: Listed smelters – DRC conflict undeterminable: smelters  not  yet  ‘listed’ – Identify additional/future activities to improve DD Goal: identify smelters and rely on industry program
    • • Identify program improvement to support better data gathering –Strategize how to improve supplier survey response rate and accuracy –Identify and execute strategies to increase smelter/refiner participation in independent 3rd party validation audits –Modify database to meet changing compliance requirements
    • Smelters or Refiners –Utilize CFSP to determine • Country of origin information for successfully audited SoRs • Conflict-Free status information –For example: • If  a  product’s  supply  chain  SoRs  are  all CFS validated, then may be reported as conflict-free in CMR
    • Reporting • If  you’ve  already  determined  that  the  SEC  Rule  applies,   conducted your RCOI and DD: – Report via Form SD (and CMR as required) Goal: Transparency of sourcing information • Form SD template provided within the SEC Final Rule. –pg. 344 • Report(s)  to  be  filed  “.  .  .no later than May 31 after the end of the  issuer’s  most  recent  calendar  year.”  – pg. 345 • “Report  must  be  signed by the registrant on behalf of the registrant by an executive officer.”  – pg. 346
    • Form SD Under a separate “Conflict Minerals Disclosure”  heading • If you have established that a large majority of CM in your supply base did not originate in the covered countries or were from scrap or recycled materials – Briefly describe the RCOI • Otherwise, all substantive content may be contained in the CMR • In either case, the information must be posted in a public website and a link to the posting must be included on Form SD
    • CMR Company’s  CM Policies conform in all material respects to a nationally or internationally recognized due diligence framework For products “not  found  to be DRC conflict  free”, 1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs 3. Country of origin of the CMs in those products 4. Efforts to determine mine or location of origin Likewise  for  products  which  are  “DRC  conflict  undeterminable”,   1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs, if known 3. Country of origin of the CMs in those products, if known 4. Efforts to determine mine or location of origin 5. Steps to mitigate the risk that its CMs benefit armed groups (including steps to improve due diligence)
    • Independent Private Sector Audit • 2 separate and independent objectives: 1. The design of  the  registrant’s  due  diligence  measures  as  set  forth  in,  and   with respect to the period covered by, [the CMR] is in conformity with, in all material respects, the criteria set forth in the nationally or internationally recognized due diligence framework used by the registrant; and 2. The  registrant’s  description  of  the  due  diligence  measures  it  performed   as set forth in the [CMR], with respect to the period covered by the report, is consistent with the due diligence process that the registrant undertook. The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 23
    • Determination by Registrant Scenario Result File Necessary CMs are from outside the covered countries and/or solely from recycle/scrap 1 DRC conflict free Form SD Know (or have reason to believe) necessary CMs originated from a conflict free sources including from within the covered countries 2 DRC conflict free Form SD & Audited CMR Know (or has reason to believe) necessary CMs originated from within the covered countries and are not (or may not be) from recycle/scrap sources 3 DRC conflict undeterminable Form SD & CMR 4 DRC conflict free & DRC conflict undeterminable Form SD & Audited CMR Know (or have reason to believe) necessary CMs originated from a conflict source within the covered countries 5 Not found to be DRC conflict free Form SD & Audited CMR
    • Do it all again next year And do it better!
    • Questions? Thank you
    • European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop. Event Sponsors Event Exhibitors
    • The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect
    • The Conflict-Free Sourcing Initiative www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect • Commitment • New Partner! • 2014 Goals • New look • CFSI Governance Update • Conflict-Free Smelter Program • Company Assurance • Due Diligence Practices • Summary
    • • The CFSI is committed to improving conditions in its supply chain and mining activities that fuel conflict are unacceptable. • In order to enable participating companies to source conflict-free minerals, we are taking action by: – Implementing Conflict-Free Smelter and Due Diligence Programs – Supporting in-region sourcing schemes to enable future legitimate trade from DRC and surrounding countries – Supporting OECD due diligence guidance and pilot – Engaging with stakeholders for collaboration and efficiency 30
    • • Newest CFSI Association Member The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 31
    • 1. Continually evolve the Conflict-Free Smelter Program (CFSP) 2. Continue development and implementation of the Conflict-Free Sourcing Initiative (CFSI) 3. Continually evolve common cross-industry approaches to support the disclosure and due diligence expectations of the U.S. SEC, OECD, ICGLR and UN; consider and support other models as they are developed 4. Support the implementation of verifiable traceability programs for the Democratic Republic of Congo (DRC) and covered countries for conflict-free minerals 5. Build and maintain strong relationships and increase transparency, communications and efficiency to enhance credibility in the CFSI activities The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 32
    • 33 • New logo • New website • Improved functionality • Improved navigation • Improved SEO • Improved aesthetic
    • The initiative is undergoing continued improvement: • Name change completed, CFSI is the umbrella • Continue work on future structure • Interim Steering Committee to more permanent body • Cross-industry composition • Revenue generation options being implemented (membership and royalties) • CFSP improvements Overall development and implementation will continue in into 2014 and beyond 34
    • The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 35 CFSI Steering Committee EICC Bob Leet GeSI TBD At Large Jay Celorie At Large Carrie George At Large Jean-Paul Meutcheho At Large John Plyler CFSI Partner Sandy Merber CFSI Partner Ben Cohen Chairperson Mike Loch Program Director Michael Rohwer Staff Katherine Sullivan Ex-Officio (nonvoting) Committee Members Association Partners -AIAG : Michael Wolf -JEITA -RILA NGOs
    • The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 36 Audit Review Committee •Ensures auditor appropriate execute audit to protocol •Identifies potential corrective actions CFSI Stakeholder •Provides updates and news from OECD and NGOs CFSI Workshop Planning •Program development and planning Extractives Due Diligence •CMRT revision and user-group Due Diligence Practices •Compliance best practice sharing •Initiative position creation on compliance issues Smelter ID Team •Smelter validation •Smelter master list •Smelter outreach
    • • PPA activity support • OECD upstream implementation good practices document • Supporting and integrating with in-region due diligence mechanisms • ICGLR support • Integrating with closed-pipe systems • Dialogue with covered countries The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 37
    • In-Region Programs Conflict-Free Smelter Program (CFSP) Company Assurance Finished Product MINE SMELTER/REFINERY OEMS 38
    • Upstream Smelters / Refiners Downstream Conflict-Free Smelter (CFS) Program Raw Materials Finished Products 39 Why Here? Conversion of distinguishable starting material into an indistinguishable product Small Numbers – tantalum, tin, tungsten and gold smelter/refiners total less than 500 companies globally
    • 40 Company Mass Balance - Includes all inventory - Includes all facilities Ore / Concentrate Recycled / Scrap Toll Customer Finished Products Toll Supplier Conflict Free Policy Intermediates Unfinished Products Company Program Validation - Conflict Free Policy - Conflict Free Sourcing Systems Sourcing Processes Validation
    • • Protocol improvements: – Tungsten protocol released! • Collaboration with TI-CMC – Addressing tin industry concerns (definition, ASM, secondary materials, slags) – Gold update scheduled for 2014 – Improving standardization, readability and clarity • CFSP Program-Manual generation in progress – ISO & ISEAL alignment improvements – Competence, impartiality, enforcement, grievance, appeals, and record- keeping, 41
    • 42 • 6 months ago: 70 active / 45 compliant • Today: 112 active / 79 compliant
    • Development, integration and maintenance of tools and processes which support a down-stream  company’s  management                                                           system and risk assessment activities: – Policy language included in the EICC Code of Conduct (http://www.eicc.info/eicc_code.shtml ) – Created; maintaining a tool to collect information about  a  supplier’s  due  diligence  processes  and                                                sourcing:   Conflict Minerals Reporting Template – Establishing resources and processes to support data collection and analysis 43
    • 44 Smelter Smelter Smelters Sub- Suppliers Sub- Suppliers Sub- Suppliers Template User Direct Suppliers Direct Suppliers Direct Suppliers 1. Sends request to direct suppliers 2. Sends request to sub-suppliers 3. Cascades through supply chain until smelters identified. Sub- suppliers return template to suppliers.Direct Suppliers Direct Suppliers Direct Suppliers Original User Customer 4. Direct suppliers return aggregated roll up template 5. User returns final aggregated roll up template
    • • NEW Conflict Minerals Reporting Template (CMRT) – Revision 3.0 scheduled for release at end of March • CMRT 3.0 Noteworthy Improvements – Harmonized with new IPC Standard (CFSI co-developed) • 2 additional due diligence questions • Several new company information fields • Numerous slight modifications to existing (2.03a version) questions – Additions / edits to companies in the “Standard  Smelter  List” – Simplification of the assigned CFSI identification numbers – Enhanced instructions and updated definitions 45
    • • Highly recommend use of 3.0 for data collection for 2014 calendar year • Historical data can be very useful, but exercise due care in comparing 3.0 to 2.xx data – Version (2.xx) has slightly different question set. – CFSI ID numbers have been modified so mapping of historical smelter information from 2.xx to 3.0 will be required 46
    • • EICC and GeSI collaborating with the IPC (www.ipc.org, “Association  Connecting  Electronics  Industries”)  with  the   objective to: – Develop a standard for exchange of data related to conflict minerals used in manufactured products to facilitate efficient data exchange across companies, supply chain levels, and industries • Not an actual data collection tool – but a set of due diligence information requirements  and  “instructions”  to  allow  different  tools  to  communicate • IPC facilitating an open ANSI standard process 47
    • • Work began in November 2012 and continues: – Standard for Ballot passed in late 2013 – Associations  are  finalizing  approvals  as  “co-developers”  (e.g.,   EICC, JEITA) – In  process  of  “typesetting”  for  publishing • Contact: – Stephanie Castorina: scastorina@ipc.org 48
    • • Forum for best practice sharing – CMR and SD templates – Cross-industry collaboration – Surveys and polls • Position papers and FAQs – SEC – AICPA – NGOs • EU Regulatory scheme 49
    • • The CFSI continues to drive improvements in its programs to enable companies in their ability to source conflict-free minerals • Improving governance of the initiative, both in structure and revenue generation are key to sustainability and health • Company assurance activities of the CFSI are focused on improving company capabilities to validate responsible sourcing of materials by creating common standards, tools and processes 50
    • • EICC or GeSI Membership – Full  Membership  provides  access  to  CFSI  and  all  EICC/GeSI  WG’s ( http://www.eicc.info/Membership_Application.shtml ) ( http://www.gesi.org/Membership/tabid/59/Default.aspx ) • CFSI Partner Company Participation ( http://www.eicc.info/documents/ExternalWGMembers-Companies.pdf ) – $5K fee annually – Voting rights, access to all Work Groups, access to RCOI information • CFSI Partner Association Participation ( http://www.eicc.info/documents/ExternalWGMembers-Organizations.pdf ) – $20K fee annually – Voting rights (one vote for organization) – Up to two participants to CFSI Meeting or CFSI Work Groups, responsible for disseminating all information (staff or constituent members welcome) • White Paper on the Extractives WG (now the CFSI) available (www.conflictfreesmelter.org) 51
    • European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop. Event Sponsors Event Exhibitors
    • SIGNET RESPONSIBLE SOURCING PROTOCOLS (“SRSP”s)  for  gold  and  “3Ts” Brussels, March 2014
    • Signet is the #1 Specialty Jeweler in the U.S. & U.K. Note: Sales for Fiscal 2013. Estimated store numbers Fiscal 2014-end. H.Samuel #1 in U.K. Sales: ~$0.4 billion Stores: 304 Ernest Jones #2 in U.K. Sales: ~$0.3 billion Stores: 179 Kay Jewelers #1 Jewelry store in U.S. Sales: ~$2.0 billion Stores: 1,057 in 50 states Jared The Galleria Of Jewelry #1 U.S. Off-Mall Specialty Jeweler Sales: ~$1.0 billion Stores: 205 in 39 states 2
    • Context for Supplier Research and Due Diligence • Signet Jewelers Ltd is legally required to comply with US legislation (Wall Street  Reform  and  Consumer  Protection  Act,  “Dodd-Frank”)  relating  to  “conflict   minerals”  - gold,  tin,  tantalum  and  tungsten  (“3Ts”) • “Dodd-Frank”  applies  to  Signet  Jewelers  Ltd’s  global  supply  chain,  for  both   U.S. (Sterling) and U.K. (Signet) Divisions • Signet Jewelers Ltd is also active in the development of harmonized industry guidance  and  standards  (OECD,  RJC,  LBMA,  EICC,  DMCC  etc.).  LBMA’s   “Responsible  Gold  Guidance”  is  a  core  reference   • The  SRSP  for  gold  can  be  aligned  with  the  RJC’s  new  “Provenance  Claim”   provision • Signet has produced global guidance for all suppliers of gold and 3Ts , which is aligned with these guidance and standards • The  Signet  Responsible  Sourcing  Protocol  (“SRSP”)  identifies  compliance   criteria  to  ensure  Signet’s  supply  chain  is  conflict-free • SRSPs supported by government-backed trade bodies (RJC, LBMA, DMCC, OECD) and Reserve Bank of India Confidential & Proprietary Information of Signet Jewelers Ltd
    • Year Key Activities 2011 Research suppliers to understand supply chains Identify focal points in supply chain (esp. smelters/refiners, banks) Map  Signet’s  supply  chain 2012 Build  database  of  Signet’s  gold  &  3Ts  supply  chain Development of SRSPs and supplier testing Harmonization of SRSPs with industry guidance and standards Implementation of SRSPs, eff. 1/1/13 2013 SRSP compliance reporting (quarterly) Identify and support any non-compliant suppliers Establish audit criteria and test SRSP compliance report for full year 2013 2014 Audit of SRSPs, preparation of Form SD, annual report Establish ongoing operational procedures Project  Timeline  of  “SRSP”s   Confidential & Proprietary Information of Signet Jewelers Ltd
    • Supply Sources for Gold (simplified) Confidential & Proprietary Information of Signet Jewelers Ltd
    • SRSP Supplier Requirements • Signet’s suppliers are required to validate, certify and audit supplies of gold from every source used, including subcontractors • The SRSP is intended as a guide for suppliers to enable this certification. • Compliance reporting quarterly throughout 2013 via a simple online report. • Suppliers need to pass on the same Signet Responsible Sourcing Protocol (“SRSP”) requirements to all subcontractors, who will in turn need to assess this SRSP, ensure due diligence is undertaken on their own supply chain, and confirm a capability to certify and audit against the SRSP. • After reporting compliance, include “The seller warrants that any products containing gold, tin, tungsten or tantalum have been supplied in compliance with the Signet Responsible Sourcing Protocol (‘SRSP’)” on all invoices, delivery notes and any other documentation accompanying future supplies to Signet. • Some suppliers must provide an independent audit of compliance in Jan/Feb 2014 to validate their 2013 compliance claims Confidential & Proprietary Information of Signet Jewelers Ltd
    • 1: Policy documentation in accordance with SRSP guidance, e.g. - Refineries:  LBMA  “good  delivery”  status,  RJC  member   certification, other accredited certification, KYC procedures - Metals Traders: terms of business, confirmation of certified refinery gold, KYC procedures - Banks: terms of business, confirmation of certified refinery gold - Subcontractors: as above, RJC Chain of Custody/Provenance Claims certification 2: Transaction documentation to support above policies, e.g. - Delivery certificates showing certified refinery sources - Delivery/transfer documentation which matches certificates - Invoices with matching details Documentation should be available for independent audit Supporting evidence required to validate compliance claims Confidential & Proprietary Information of Signet Jewelers Ltd
    • • Signet have provided a list of accredited auditors and full guidance for auditors and suppliers • Audits done on representative sample basis, completed in January and February 2014 for calendar year 2013. • Auditor list is aligned with RJC, plus some local specialist companies with harmonized standards/audits (e.g. SCS Global Services) • SRSP audit is mutually recognized and harmonized with RJC, SCS, CFSI, LBMA, DMCC etc. audits, to reduce costs and duplication • The  SRSP  audit  can  be  harmonised  in  future  with  the  RJC  “Provenance   Claim” • Suppliers may choose audit company from the accredited list • Suppliers will be responsible for appointing auditors, paying for audits and providing audit reports to Signet. • Audits should be 1-day (possibly desk) audits, depending on quality of documentation and complexity of the supply chain, estimated < $2,000/day. SRSP Audit Procedures Confidential & Proprietary Information of Signet Jewelers Ltd
    • European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop. Event Sponsors Event Exhibitors
    • High-level Compliance Steps 1. Company Conflict Minerals Program Framework 2. Identify and Assess Risk in the Supply Chain 3. Risk Management 4. Smelters or Refiners 5. Report 6. Implement Program Improvements and Repeat
    • –Collect supplier data • Conduct a supply-chain survey (CMRT) –Review and respond to unreasonable responses • Assess CFS information for RCOI determination The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 63
    • The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 64 Smelter Smelter Smelters Sub- Suppliers Sub- Suppliers Sub- Suppliers Template User Direct Suppliers Direct Suppliers Direct Suppliers 1. Sends request to direct suppliers 2. Sends request to sub-suppliers 3. Cascades through supply chain until smelters identified. Sub- suppliers return template to suppliers.Direct Suppliers Direct Suppliers Direct Suppliers Original User Customer 4. Direct suppliers return aggregated roll up template 5. User returns final aggregated roll up template Check for completeness Check for reasonableness Assess  ID’s  smelters’  risk
    • Reasonable Country of Origin Inquiry: • Representations from relevant suppliers could indicate • The  names  of  SORs  in  that  supplier’s   supply chain. • The mine of origin associated with an SOR, which could indicate whether the facility sources from a CC. • Whether or not the SOR solely processes recycled or scrap materials. • On the CFSP compliant list • SOR’s  geographic  location • Public sourcing information • Company’s  direct  information The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 65
    • • SEC does not require certainty but rather a reasonable process designed to yield reasonable results. The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 66 REASONABLE EAGLE
    • • Try to get that list of smelters in your supply chain • Depends on the circumstances – Position in the supply chain – Complexity of products – Supply tiers from smelters • Do you have reason to believe CM in your supply chain are from CC? • Tell the SEC what you did • Maybe keep it easy to audit? The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 67
    • • Design • Performance 2 Separate Aspects • Which is the easier audit? • Is it documented? Qualitative vs. Quantitative The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 68
    • • Depends on your circumstances The Conflict-Free Sourcing Initiative | www.conflictfreesourcinginitiative.org | @EICCoalition | @GeSIConnect 69 REASONABLE EAGLE
    • European Union regulations, in-region traceability initiatives — a lot is going on in the conflict minerals space. Make sure you have the most up-to-date information about best practices on conflict minerals due diligence by attending our 13th Conflict-Free Sourcing Initiative Workshop. Event Sponsors Event Exhibitors