Tag Archives: risk management

New Economic Analysis of Conflict Minerals Rule Implementation from Tulane University Law School’s Payson Center for International Development

A new study on the economic impact of SEC proposed conflict minerals rule was released earlier this week by Tulane University.  The study evaluated cost estimates from SEC , National Association of Manufacturers (NAM) and IPC and provides what they refer to as a “Third Economic Impact Model”.

The study is available free of charge here.

EHS Journal Article on Sustainability, Financial Valuation

Recently, Elm posted a piece discussing comments from Kevin Parker, the CEO of Deutsche Asset Management, an investment firm with three-fourths of US$1 trillion under management.

We expanded that original post for EHS Journal, who just published it.  The expanded version dives deeper into trends in the past decade supporting Parker’s assessment of why capital markets are bullish on carbon-intensive investment opportunities even in light of this era of sustainability.

View the article in its entirety here.

Elm to Present in Conflict Minerals Webinar

Elm will be a featured presenter in a free webinar on Wednesday, October 12, 2011 10:00 AM – 11:00 AM CDT sponsored by MetalMiner and Aravo.

Lisa Reisman, Editor of MetalMiner, will provide opening remarks and then pass the program to Lawrence M. Heim, who leads the conflict minerals practice and is director with The Elm Consulting Group International LLC. Lawrence will provide background around the legislation and the current status of regulations and related initiatives, as well as key definitions and concepts. He will then move into discussing current challenges that leading organizations face and considerations they can take to successfully integrate the legislation into their sourcing practices.

Robert Shecterle of Aravo will make closing remarks before a 15-minute Q&A concludes the session.

Register for this free and informative session here.

New Conflict Minerals FAQ Available

We field many phone calls asking us about the US conflict mineral law and associated requirements.  As a result, we developed a Frequently Asked Questions (FAQ) document that provides concise information on the most common questions we receive.

We hope you find this document useful.  We welcome any comments or suggestions you may have on the document or its content.

Elm Conflict Minerals FAQ

Revision to SICMAP℠ Tool for Conflict Minerals, OECD Incorporates California Supply Chain Law

The Elm Consulting Group International LLC has released a new revision to the Self Implemented Conflict Minerals Audit Preparation Tool.  The update, Revision 1.33, incorporates

  • Minor changes in response to feedback obtained from the late June EICC Extractives Supply Chain Workshop VI in Washington DC;
  • Further clarifications on the OECD framework, its relationship to SICMAP℠  and SEC auditor standards; and
  • Related elements of California Transparency in Supply Chains Act of 2010.

Lawrence M. Heim, CPEA, is leading the firm’s conflict minerals services and SICMAP℠ development:

In our discussions with various companies and workshop attendees, we obtained feedback on a few minor changes and clarifications to improve the tool.  In addition, we decided to incorporate the new California law as there are many similarities between those mandates and the conflict minerals requirements.

The video introduction and overview of SICMAP℠ can be viewed here.

Voluntary Environmental Management Standard Turns Into Third Party Whistleblower

It is not uncommon for EHS auditors to be asked (or ask themselves) “If you find a noncompliance during your audit, do you report it to the regulators?”

The answer depends on the company and audit program, but a recent news item caught our attention due to a variation on the theme.

We have no information other than what is publicly available here, but it appears that an organization managing a voluntary electronic waste management certification program found alleged significant non-conformities at a specific company seeking certification.  As a result, the organization declined to issue its certification to that company.

So far, so good, but the story doesn’t end there…

In its declination letter to the company, the organization states:

Further, there is substantial reason to believe that such exports may violate Public Act 095-0959 (Electronic Products Recycling and Reuse Act, recycler requirements) of the State of Illinois, the Federal CRT Rule, (40 CFR Parts 9, 260, 261, 271; Cathode Ray Tubes; Final Rule) as well as the waste importation laws of Hong Kong/China. Further, while it is not our policy to disclose the results of certifying body audits, we can state that the audit only further substantiated all of our concerns.

In an apparent contradiction to the “policy” referred to in the above statement, the organization’s cc’d “Selected news media”, the Illinois State Environmental Protection Agency and the US Environmental Protection Agency Enforcement on its letter, which can be seen below the signature block.

It is certainly possible that the company themselves had made prior disclosure to the regulators on this issue.  But this event may cause companies pursuing voluntary programs/certifications to carefully consider how the company and auditor will manage regulatory non-compliances that are found or alleged in the course of related audit activities.

UPDATE:  Reports today indicate that the company is taking legal action against the certifying organization stating that the allegations on which the organization based its decision – as well as its disclosure to the press and regulators – are false.

Guest Perspective: Is the Dodd-Frank Act Conflict Minerals requirement the next Proposition 65?

Ed. note:  We are fortunate to count Mark Schaffer as an Elm Affiliate.  Mark is located in Austin, Texas and runs Schaffer Environmental, providing a range of supply chain, sustainability and product content consulting support to the computer, technology and electronics industries.  Mark submitted the following piece on conflict minerals from his perspective on other product content matters.

The Dodd-Frank Act requires companies regulated by the Securities and Exchange Commission (SEC) to report whether their products contain conflict minerals from the Democratic Republic of the Congo (DRC) and other nearby countries.  These conflict minerals are defined as cassiterite, columbite-tantalite, gold, wolframite and their derivatives (tin, tantalum and tungsten) – though, in the future, more minerals may be added to this list.

These materials are found in a variety of consumer products that we love to use everyday, from computers to cell phones, golf clubs to fishing weights.  So, to the purchaser of these consumer products, what is the real impact of whether the product contains one of these minerals sourced from the Congo?

Currently, the exact reporting requirements are still not established.  The law requires manufacturers sourcing “conflict minerals” to include information on their sourcing in their websites.  The SEC regulations, scheduled to be finalized in third or fourth quarter 2011, will clarify what disclosures will be required within the financial reports to SEC.  Further sourcing disclosure may even end up on the product or the product packaging.

Granted, business-to-business contracts, relationships and purchasing requirements are already being impacted by the supply chain traceability mandates – but what might this all mean to the consumer and the choices they make?

At best, the disclosures will be an awareness point for consumers, but will it truly affect their purchase of the product?  Unless there is a price differential between products, only the most conscientious consumers will be deterred from buying and using products containing DRC-sourced materials.

In addition, consumer confusion is likely to result where companies use/disclose “Non-conflict DRC materials”.  This is material that originates from the conflict areas (DRC and adjoining countries) but is obtained from a legitimate source verified as not funding or contributing to the region’s armed conflict and human right violations.

In a similar fashion, California Proposition 65 requires a notification of the presence of substances that have been determined to be cancer causing and/or damaging to the reproductive system by the State of California.  A warning is often seen printed on the packaging of products or on tags and labels of products indicating the presence of materials in the product that could cause cancer, birth defects or other reproductive harm.

Even this type of warning does not deter the consumer from purchasing the product.  It is likely that a conflict-warning label, if that became a requirement, would have similar negligible effect in product sales.  There will be even less of a measurable impact on sales/revenue if the warning is limited to disclosures within a corporate Form 10-K report.  Placement in a 10-K will raise visibility to investors in the company producing those products but unless there is a clear impact on the bottom-line profits or revenue, will that be enough incentive to change sourcing practices?

The strength of a “notification” regulation lies in a company’s desire to avoid “label shame.”  Manufacturers of products covered by Prop 65 have made changes to the materials they use such that their products no longer need the warning label.   So, even though not all consumers changed their purchasing habits due to the presence of those warnings, manufacturers worked (and still work) to replace those materials with safer alternatives.  The Dodd-Frank Act may ultimately have similar effect in transforming the material choices and sourcing.

At the same time, however, there is growing evidence of consumer “label fatigue,” indicating that consumers are paying less attention to these labels or feel they are not credible, especially where the labels – and their form/content – are not mandated by law.  This is perhaps most prevalent in “green” product labels and certifications.

Recent history tells us that the Dodd-Frank conflict minerals requirements may indeed promote change, though that change is slower than would occur from an outright restriction or ban on the use of those materials.  For example, the most recent impactful “banning” restriction, the EU Restriction on Hazardous Substances (RoHS) went into effect July 1, 2006 after many years of development.  Due to the demand by the electronics industry for parts that could meet the RoHS requirements by that date, the supply chain transformed rapidly using alternative materials and techniques.