eu conflict minerals update -- amnesty international report review

EU Conflict Minerals Update

& Amnesty Intl Report

Assent Compliance Webinar

Jonathan Hughes 5/26/2015 Ottawa

Agenda

•Intro

•Amnesty Intl

Report

•EU Conflict

Minerals

•What’s next

•Q&A

[email protected] | www.assentcompliance.com | TEL: 1(866)964-6931 Slide 4

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Introduction to Assent

Assent Compliance specializes in IT solutions and Support programs that help organizations with their Global Compliance strategies. Assent's Industry leading platform is used by over 30% of S&P 500 companies for a

wide range of regulations from Conflict Minerals to Restricted Substance Control, Social Compliance, Inspections, Audits and more.

Assent is your Compliance Partner for Global Compliance Requirements

• Full Turnkey Support services that allow Assent to handle all facets of your Compliance Program

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• Automated Data Validation, Risk Analysis and Completeness checks

• Supplier Engagement including Education. Follow-up, Corrective Actions and Supplier Audits

•Workflow Management allowing our clients to encompass all tasks within their Compliance Program in 1 place

• 1 stop shop for all your Compliance needs with Assent’s scalable Platform and Support Program


Amnesty International Report

Amnesty International Report released last month with the claim that 80% of companies are not complying their Conflict Minerals Requirements

• http://www.amnestyusa.org/sites/default/files/digging_for_transparency_hi_res.pdf

• Scoring Criteria can be found on Page 6 (and is the source of the main arguments by both sides

Industry push back stating that the scoring system used by Amnesty International was not inline with Dodd-Frank

Amnesty’s position is that their scoring system uses the spirit of the law and the OECD Due Diligence criteria

Both sides have some merit

http://www.amnestyusa.org/sites/default/files/digging_for_transparency_hi_res.pdf


Amnesty International Report

Key Amnesty Criteria that are above and beyond Dodd-Frank

• All comes down to language of “Must describe xyz…”

• Ex: #5 states “carry out and describe due diligence measures taken on the source and chain of custody of the four minerals, including metal processors as well as direct suppliers;”

Key criteria that although not in Dodd-Frank, are in the OECD and should be part of your program

• Most of the items are in the OECD Guidance but issuers don’t necessarily need to describe them

• Ex #10 “develop a risk identification and assessment process and describe its efforts to identify risk in its supply chain in its report;”

NOTE: This was the 3rd study done of Conflict Mineral Reports

• Lawrence Heim Study

• IPC Study (which Assent was a part)


EU Conflict Minerals – Quick Takeaways

The previous proposal for a mostly voluntary Conflict Minerals scheme has been overturned

The EU has adopted an amended draft law by a margin of 402 for, 118 against and 171 abstentions

All EU Refiner and Smelters to undergo mandatory 3rd party audits (this affects a limited number of companies)

All downstream users, 880,000 potentially affected EU firms, must provide “information on the steps they take to identify and address risks in their supply chains for the minerals and metals concerned.”

The reading has not closed and EU Parliament has now entered into informal talks with the EU Council to discuss implementation of the law

Important to note, that this law could still change but it is highly unlikely to go back to a Voluntary scheme. The genie is out of the bottle.


EU Conflict Minerals – Differences from

Dodd-Frank

2 main differences:

Not limited to issuers.

• Initial proposal calls for all affected EU Manufacturers to provide information

• No de minimus, Issuer requirements or company size thresholds (yet)

GLOBAL SCOPE…

• “conflict-affected and high-risk areas' as those in a state of armed conflict, with widespread violence, the collapse of civil infrastructure, fragile post-conflict areas and areas of weak or non-existent governance and security, characterised by "widespread and systematic violations of human rights"

Next Steps (And by Steps, I mean bureaucratic fist-fight)

Informal talks to begin with EU Member states in order to seek final version of the law

Need to indentify what information is to be provided and who the enforcement body would be


EU Conflict Minerals – What’s next

Need for clarification on the following items:

What “information” is to be provided?

Who the enforcement body will be?

• EU agency?

• Country level?

Confirmation of Scope

• Companies

• Regions


EU Conflict Minerals – What’s next

Assent has been asked to provide feedback in various stakeholder forums and will be providing continued updates as more information is made available

Likely next moves

EU Industry to push back very hard on these new requirements but a roll back to a completely voluntary scheme for all downstream users is not realistic – a compromise is much more likely.

Look for the Scope to be clarified with respect to companies in scope (specifically small and medium businesses)

The final law will be in line with the OECD standards

The major fight could be over regions in scope

• Strong feelings fro EU parliament supporters over making this is a global issue but not currently practical

• 2 year phase-in makes the most sense as EU companies would be able to mirror US issuer initiatives


The Conflict Minerals Benchmark Report

Last year there were 3 different “scores” done on CMRs, all using different scoring criteria

• Amnesty International

• IPC

• Lawrence Heim

These were all done on a sampling of responses (Approx 100 each)

Assent Compliance has commissioned a Study from Tulane University to analyze ALL 2015 CMR submission (yes – ALL) against all 3 different scoring criteria to create a weighted average.

These findings along with scores and ranking will all be made publically available


The Conflict Minerals Benchmark Scorecard

This is going to involve a lot of resources (over 20 people are conducting the study).

The Advisory board includes:

• Lawrence Heim

• IPC

• The Responsible Sourcing Network

• KPMG

• EY

• Assent Compliance

This will be the biggest and most comprehensive Conflict Minerals Report ever undertaken

Perfect to use to Benchmark your program against any other affected issuer


The Conflict Minerals Benchmark Scorecard

Timelines

Initial Data Webinar – 2nd week of July

First Analysis Webinar – August

Issuer Commentary and Feedback Webinar – September


General Updates

Marcus Evans Conference – Chicago June 23-25. Please join us.

Assent Currently Providing Free 0 Commitment Required, Guided Trials of Software and Services For The 2016 Reporting Year. Let show you why 30% of S&P 500 Firms in Scope Partner with Assent


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