April 4, 2014 - April 11, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.
SEC Issues Second Set of Conflict Minerals FAQs
On April 7, 2014, the SEC issued a second set of FAQs on the conflict minerals rule which is presented as Frequently Asked Questions 13-21. Most of the new FAQs focus on the independent private sector audit requirement in the conflict minerals rule. None of the FAQs address any of the questions of interpretation that are part of the pending legal challenge – obviously, the SEC did not want to address those in advance of the Court of Appeals decision, which is expected soon.
For a brief summary of the new FAQs, see Dynda’s post from last week titled New Conflict Minerals FAQs – But Little New Guidance.
Also, you can see a description of the first set of FAQs in our blog post from last June 2013.
PwC Survey: Companies Unprepared for Conflict Minerals Filing
PriceWaterhouseCoopers recently conducted a conflict minerals survey titled Where Companies Stand on Their Compliance Efforts – This Year and Beyond and the results confirm our expectations about the progress companies have made towards their initial conflict minerals filings.
Accompanying the survey is a release which lists key findings:
- A quarter of the respondents were still in the early stages of compliance;
- Only 45% had sent a Reasonable Country of Origin Inquiry to more than three-quarters of their in-scope suppliers; and
- Only 47% had received fully-completed responses from more than half of the suppliers queried.
In addition, a Reuters article titled Companies Unprepared for Conflict Minerals Rule, U.S. Court Ruling Looms summarizes PwC’s survey and its methodology. According to the Reuters article, only four percent (4%) of survey respondents have completed a draft of their conflict minerals filing.
Bobby Kipp, a partner at PwC, commented, “Time is running out and companies need to move fast.”
Source Intelligence: Suppliers Take Up to Six Months to Respond to Conflict Minerals Inquiry
According to a Source Intelligence white paper titled Overcoming Supplier Resistance: How Educating Suppliers Impacted Responses to Conflict Minerals Regulation in 2013, suppliers can take up to six months to respond to a conflict minerals inquiry.
The press release accompanying the white paper says, “Publicly-held companies (issuers) must take into account this significant lead time in the preparation for compliance with Section 1502 of the Dodd-Frank Rule.”
Kevin McArthur, Source Intelligence Manager of Risk and Compliance Solutions, states, “Some suppliers simply don’t understand the rule or are pushing back after receiving multiple requests for the same EICC survey.”
2014 AIAG Global Automotive Corporate Responsibility Survey
The Automotive Industry Action Group (AIAG) released the results of its 2014 AIAG Global Automotive Corporate Responsibility Survey, which was “designed to measure opinions, action and opportunities on key corporate responsibility issues facing the automotive industry and related sectors.” Approximately 550 professionals, both AIAG and non-AIAG members, completed the survey.
One of the issues highlighted in the survey was the conflict minerals rule. The survey results provide that only forty-six percent (46%) of respondents have a conflict minerals policy or process in place to comply with reporting requirements or customer requests. In addition, in a surprising survey response, of those companies that are required to file a Conflict Minerals Report, only fifty percent (50%) expect to meet the deadline to file a conflict minerals report. Nine percent (9%) do not expect to meet the deadline and twenty-two percent (22%) do not know. The remaining nineteen percent (19%) indicate that the Conflict Minerals Report is not applicable to them.