As the filing deadline for compliance with Security and Exchange Commission (SEC)’s Conflict Minerals Rule is almost here – Monday, June 2 is the big date – MetalMiner felt the need to give manufacturers some last things to keep in mind about the fun and games that is conflict minerals compliance.
We’ve covered the issue and how it pertains to small- and medium-sized manufacturers extensively, even throwing a conference about it. Last summer, we covered findings of a report released by Thrive on Risk (TOR), ComplianceOnline, and MetricStream on companies’ readiness to comply with SEC’s Conflict Minerals Rule. (It didn’t look great.)
But here we are, nearly a year later, and the landscape doesn’t look as dire as it did. MetalMiner chatted with Sonal Sinha, associate vice president of industry solutions for MetricStream, to try and shed some more light on filing by Monday – and on how 2015 will be different. (More on Sinha’s background at the end of the article.)
MetalMiner: What, in your opinion, has been the single-most difficult element of compliance for manufacturing companies?
Sonal Sinha: Data sourcing has been the most challenging; for example, there are people misspelling names of smelters or suppliers. Getting and validating the right data has been the hardest. There are such big volumes of data for each product, and managing this has been the most challenging.
MM: Have certain industries had it easier or tougher as far as their compliance processes go? (e.g. retailers, hi-tech, manufacturing, etc.)
SS: A handful of companies have already filed their Form SD (Intel is a recent big one). But it has been more challenging for smaller-sized manufacturing companies simply because of their control – or lack thereof – over their supply chain. Their control over their supply chain is potentially not as strong as that of bigger firms. Therefore it has been more difficult to get responses from their suppliers.
MM: What are the Top 3 things that manufacturing companies shouldn’t overlook as they’re prepping their filings?
SS: 1) File on time! 2) Make a good faith effort. 3) Show that you’ve made a good faith effort. Learn everything you can from Year One, and streamline the process for Year Two – make sure you’re thinking about your supplier base, altering the scope, and streamlining your communication program (e.g. code of conduct). Leverage your existing policies and processes to manage conflict minerals as part of them. This will help in getting better responses from your suppliers.
MM: So showing that you’ve made a good faith effort is like ‘showing your work’ on a problem in eighth-grade math class, and not only submitting the answer?
SS: In a way. We have a grace period here; SEC does not expect you to have your act [entirely] together in Year One. Lots of companies can come out and say, “We don’t know,” but the whole idea behind Year One is that companies are looking to make a good faith effort. Reaching out to their suppliers, getting any data they can, and performing some level of due diligence. Are they receiving all responses? No. But as we hopefully get more guidance from SEC in the next year, and organizations such as EICC continue taking a lead in getting manufacturers smelter information, as this converges, data will be more available.
MM: Last summer, a healthy percentage of firms had yet to begin their compliance process. What type of progress have you seen from these organizations over the last year? Has anything surprised you?
SS: No surprises, really. There have been lots of reports and surveys [published in the past several months], and as of a month ago, a good amount of organizations are ready to report. People are fairly well prepared.
MM: In the year ahead, do you see any changes happening to the CM compliance process by the time filings are due in 2015?
SS: We’re hoping SEC comes out with more guidance, but what I think is going to happen is that the industry is going to converge on this much faster. EICC is taking the lead in making this process more efficient, getting the industry to use GeSI templates. I do believe a lot of these lawsuits and rulings would shape how industries are reacting. [Although] it’ll get clear over time, it probably won’t become crystal clear immediately. I compare this to the Sarbanes-Oxley days – the first year was chaotic, but the following years became about how auditors would be looking at it, how new processes are created, etc. In other words, the first year is primarily a learning experience.
Still have unanswered questions before the deadline? Get ’em answered here.
As Associate Vice President of Industry Solutions, Ms. Sinha is responsible for driving solutions and strategy for MetricStream in industries such as Consumer Packaged Goods, Retail, and Technology. Ms. Sinha has over a decade of experience as a Risk Management, Audit, Advisory, and Compliance Leader at consulting and technology companies including Google, Visa and KPMG.