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EU Regulation on Conflict Minerals
The need for supply chain transparency and intelligent risk management
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Background
EU Regulation on Conflict Minerals
Competing visions for conflict minerals due diligence in the EU.
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Who needs to be concerned?
EU Regulation on Conflict Minerals
Compliance implications cut across industries and function...
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Proposed Regulation goes beyond the US Dodd-Frank Act
EU Regulation on Conflict Minerals
…in terms of application, theme...
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Likely challenges
EU Regulation on Conflict Minerals
Difficulties encountered in Dodd-Frank reporting are likely to be e...
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Traceability: A precursor for responsible management
EU Regulation on Conflict Minerals
Viable solutions ultimately depe...
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Definitions and monitoring: A moving target?
EU Regulation on Conflict Minerals
‘High risk’ countries not currently defi...
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What can companies do?
EU Regulation on Conflict Minerals
The OECD Guidelines as a key due diligence starting point.
Pot...
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Products and services
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1. Insight 3TG Commodity Briefings
EU Regulation on Conflict Minerals
Commodity value-chain overviews
in the context of...
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2. Risk prioritisation 3TG Source Country Reports
EU Regulation on Conflict Minerals
In-depth, sub-national reports foc...
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3. Analysis Online risk management platforms
EU Regulation on Conflict Minerals
► Interactive online tools to centralis...
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4. Management In-depth advisory services
EU Regulation on Conflict Minerals
OECD Due Diligence Guidance
Best practice p...
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EU Regulation on Conflict Minerals
5. Supply chain traceability Data driven solutions
Mine global trade data to identif...
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Notice:
EU Regulation on Conflict Minerals
Strictly Private and Confidential
This discussion document has been prepared...
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EU Regulation on Conflict Minerals

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The need for supply chain transparency and intelligent risk management

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EU Regulation on Conflict Minerals

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  2. 2. 2 EU Regulation on Conflict Minerals The need for supply chain transparency and intelligent risk management
  3. 3. 3 Background EU Regulation on Conflict Minerals Competing visions for conflict minerals due diligence in the EU.
  4. 4. 4 Who needs to be concerned? EU Regulation on Conflict Minerals Compliance implications cut across industries and functions. In addition to smelters/refiners and importers, key sectors using 3TG include: 1. Sourcing/procurement 2. Legal 3. Risk management 4. Reporting
  5. 5. 5 Proposed Regulation goes beyond the US Dodd-Frank Act EU Regulation on Conflict Minerals …in terms of application, themes and scope…
  6. 6. 6 Likely challenges EU Regulation on Conflict Minerals Difficulties encountered in Dodd-Frank reporting are likely to be exacerbated. Traceability • Opaque supply chains • Blending of minerals • Illegal trading and document falsification Definitions • ‘High-risk country’? • ‘Conflict’? • ‘Human rights abuses’? Monitoring • Which countries to monitor? • How to address shifting geographic goal posts?
  7. 7. 7 Traceability: A precursor for responsible management EU Regulation on Conflict Minerals Viable solutions ultimately dependent on the traceability of 3TG minerals. 67% of companies reporting under the US Dodd-Frank Act don’t know the origin of their 3TG. This is likely to be a ‘journey’ for affected EU companies, using risk-based prioritisation Cooperation, coordination and sophisticated data / assurance management required Mine Traders Smelters / refiners Traders Component manufacturers Product manufacturers DownstreamUpstream Primary focus on smelters / refiners carrying out due diligence Due diligence required by all actors
  8. 8. 8 Definitions and monitoring: A moving target? EU Regulation on Conflict Minerals ‘High risk’ countries not currently defined OR prioritised. Tantalum from DR Congo? Tungsten from China? Gold from Zimbabwe? Tin from Myanmar?
  9. 9. 9 What can companies do? EU Regulation on Conflict Minerals The OECD Guidelines as a key due diligence starting point. Potential challenges ! Policy scope (e.g. ‘conflict’/ ‘human rights’ definitions) ! Mapping of internal 3TG use – and external sources ! Degree of ‘tainting’ of 3TG supplies through the amalgamation of ores/metals/components at any stage ! Opaque, multi-layered ore/metal trading ! Lack of existing supplier information ! Defining – and providing – an acceptable level of assurance to business partners and consumers
  10. 10. 10 Products and services
  11. 11. 11 1. Insight 3TG Commodity Briefings EU Regulation on Conflict Minerals Commodity value-chain overviews in the context of conflict minerals compliance ► Country / 3TG risk scoring (to allow benchmarking and monitoring across locations and commodity) ► 3TG in national context, including: • Mining locations / forms / actors • Trading routes / dynamics / actors • Export locations / patterns / actors ► Commodity conflict issues, including: • Political violence and civil unrest • Criminality • Security forces and human rights ► Commodity human rights issues, including both ‘serious’ and ‘other’ abuses relating to: • Civil / political rights • Economic / social / cultural rights • Labour rights ► Sub-national GIS risk-mapping Research, analysis and scorecards 79 AuGold 73 TaTantalum 50 WTungsten 74 SnTin
  12. 12. 12 2. Risk prioritisation 3TG Source Country Reports EU Regulation on Conflict Minerals In-depth, sub-national reports focused on key source country risks ► Country / 3TG risk scoring (to allow benchmarking and monitoring across locations and commodity) ► 3TG in national context, including: • Mining locations / forms / actors • Trading routes / dynamics / actors • Export locations / patterns / actors ► Commodity conflict issues, including: • Political violence and civil unrest • Criminality • Security forces and human rights ► Commodity human rights issues, including both ‘serious’ and ‘other’ abuses relating to: • Civil / political rights • Economic / social / cultural rights • Labour rights ► Sub-national GIS risk-mapping Research, analysis and scorecards
  13. 13. 13 3. Analysis Online risk management platforms EU Regulation on Conflict Minerals ► Interactive online tools to centralise, analyse and report on risks in the 3TG supply chain ► Pre-packaged risk indices from Verisk Maplecroft’s well-established, proprietary portfolio ► Supplier screening based on location, management systems, activity and other relevant variables ► Integration of SAQ and first/third-party audit results ► Flexible data analytics to support solutions across different sectors and functions ► Auto-generation of compliance scorecards for supply chain actors and/or supply chain ‘phases’ ► Action Plan generation based on risk, issue severity, reputation and other relevant variables ► Base platform tailorable to client-specific needs Innovative, online platforms that generate insight and support OECD-aligned compliance by analysing client, Verisk Maplecroft and supply-chain partner information
  14. 14. 14 4. Management In-depth advisory services EU Regulation on Conflict Minerals OECD Due Diligence Guidance Best practice policy, guidance and tool development (best practice) Supply chain risk and impact assessment (remote and on-the-ground) Supplier engagement (SAQs, auditing) Strategy development and Action Plan formulation Screening and assurance methodologies Auditing of supply chain partners (remote and on-site) Public reporting (media, sustainability reporting, integrated reporting) Client solutions
  15. 15. 15 EU Regulation on Conflict Minerals 5. Supply chain traceability Data driven solutions Mine global trade data to identify the provenance of 3TG, and assess the likelihood that it originates from ‘conflict-affected and high-risk areas’ ► Data-driven supply chain traceability systems to help companies assess a commodity/product’s ethical performance ► Track 3TG minerals through the value chain (mine -> trader -> smelter/refiner -> trader -> component manufacturers -> manufacturers) using global trade data ► Overlay Verisk Maplecroft ESG + Political indices to help identify ‘red flags’ in the supply chain, which require further due diligence ► Analysis enables businesses to better understand potential sources of reputational/regulatory risk Top exporters of trade Tin ores 2014
  16. 16. 16 Notice: EU Regulation on Conflict Minerals Strictly Private and Confidential This discussion document has been prepared by Verisk Maplecroft and its contents and conclusions are confidential and may not be disclosed to any other persons or companies without Verisk Maplecroft’s prior written permission. The information upon which this discussion document is based comes from our own experience, knowledge and databases. The opinions expressed in this discussion document are those of Verisk Maplecroft. They have been arrived at following careful consideration and enquiry but we do not guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability for your reliance upon them.
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