As we proceed through Q4 and the rest of 2016, with planning, spend, and sourcing all accounted for, it is time to review, renew, and update the Conflict Minerals Reporting Template (CMRT) to the latest version.
Per earlier postings on this site, the latest CMRT is version 4.10 (found here: http://www.conflictfreesourcing.org/conflict-minerals-reporting-template/). Noteworthy on this update is the updated smelter list and re-introduction of “smelter not yet identified” as an option. As part of your own due diligence, be sure to source for CMRT version 4.10. This version will indicate your effort to gather data for 2016 as it was only released in April of this year.
Please note that Green Data Exchange (GDX) automates many of the efforts described below. Identification of “in-scope suppliers” and CMRT response review are readily managed in GDX’s dedicated CMRT workspace and custom conflict minerals reports. While the below identifies the actions and efforts needed for any Conflict Minerals program, GDX automatically handles many of the manual efforts described.
Sourcing – Identifying “In-scope” Suppliers
Review of all suppliers is encouraged. However, not all suppliers will need to submit a CMRT. A few guiding questions for your review and determination on whether you require a CMRT from a supplier are listed below.
- Does the supplier manufacturer a component for your product?
- Does the supplier potentially use tin, tantalum, tungsten, or gold in their product?
- Did you source for a CMRT from this supplier last year?
- Are you buying the same or new products from the supplier?
- Is the supplier still valid? If not, was there a replacement vendor?
Answers to the above will help you to determine the list of suppliers for which you will require a version 4.10 CMRT. Development of this list of suppliers will be an important feature to include in your Form SD filing to the SEC for Conflict Minerals, if you are a publically traded company.
There are key elements to review as a completed CMRT is returned to you from your suppliers. Does the CMRT cover all parts you receive from the supplier? Like its predecessors, the version 4.10 CMRT allows the supplier to select the scope of their declaration. Corporate level declarations will automatically cover you. However, family series, specific parts, and custom declaration scopes may leave some of the parts outside of the CMRT.
Fundamental to the accuracy of your CMRT and Form SD is the validation of smelters. Over the past few years, smelting operations for tin, tantalum, tungsten, and gold have moved, closed, opened, and changed. As such, you will want to identify whether the smelters listed by your suppliers are valid. The validity of a smelter can be determined be its inclusion on the CMRT, itself. Entries added by the supplier that were not included on the smelter dropdown list require further scrutiny. Furthermore, you may want to determine if the smelters on your list are conflict-free, depending on your corporate policy or for internal risk assessment. The list of conflict-free smelters, and smelters participating in conflict-free auditing programs are found here: http://www.conflictfreesourcing.org/conflict-free-smelter-refiner-lists/.
Addressing Gaps & Discrepancies
There are mainly two types of issues that may arise from the review of the CMRT data submitted by your suppliers. There are data gaps and data discrepancies.. Gaps can be due to an out of date CMRT, a version older that 4.10, or dues to a complete or partial lack of response. Complete lack of response is no CMRT, whereas partial would be a CMRT(s) that do not cover all parts from the supplier by the scope of the CMRT. Discrepancies would be a contradiction within the actual declaration. For example, a supplier of tantalum caps indicates that there is no use of tantalum, or an indication of 100% of a mineral coming from a scrap or recycled source, but active smelting locations sourcing from mining are listed for the same mineral.
In either case, the supplier should be notified as to the nature of the error. In many cases, there may be an updated CMRT that was created after the discrepancy or gap was discovered. Note that the review and approval process of your Conflict Minerals data is also an important feature to include in your Form SD filing.
As 2016 sourcing for CMRT data progresses, please be sure to visit this blog. We will be continually posting articles that are aimed at helping customers and suppliers alike, including lessons learned and any new update to regulations. Please remember that Green Data Exchange can help you meet your compliance obligations. Learn more by visiting our website at www.qpointtech.com.