ASSENTCOMPLIANCE 3 MAJOR UPDATES CMRT 3.01, FORM SD TRENDS AND SMELTER INFO

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1 3 MAJOR UPDATES CMRT 3.01, FORM SD TRENDS AND SMELTER INFO MATT WHITTEKER MANAGER BUSINESS DEVELOPMENT 1 (866) MATT.WHITTEKER@.COM

2 ABOUT ASSENT Assent Compliance delivers SaaS Environmental Compliance Services to companies who must comply with local, national and global environmental regulations. Assent also supports its software division with a team of highly experienced industry consultants to provide our clients with turnkey compliance solutions. Industry experts at Tier 1 companies rank Assent Compliance amongst the top environmental compliance solutions in the world and one of the only global solution providers to offer a full service solution from end to end. OUR MISSION Is to help our clients comply with environmental regulations in the most efficient and cost effective manner possible. This is achieved through SaaS automation of processes and working with clients to build efficient internal compliance programs that meet global compliance requirements.

3 ASSENT & CONFLICT MINERALS ONLY SOFTWARE COMPANY ON PUBLIC RECORD FOR REGULATION CONFLICT MINERALS A NATURAL FIT TO RSL S 20% OF S&P 500 COMPANIES IN SCOPE USE ASSENT OVER 125,000 COMPANIES PROFILED IN ROHS REACH CONFLICT MINERALS

4 HOW THE ASSENT COMPLIANCE MANAGEMENT SYSTEM WORKS PULLS BILL OF MATERIAL (BOM) INTO A CENTRALIZED COMPLIANCE DATA BASE OR OPERATES AS A STAND-ALONE SYSTEM. INTEGRATES WITH MAJOR ERP/PLM SYSTEMS MODULES TO COMPLY WITH ALL MAJOR ENVIRONMENTAL REGULATIONS BUILT-IN CRM FOR COMPLIANCE TASKS, DUE DILIGENCE REPORTING AND AUDIT TRAILS ALLOWS INTERNAL STAFF TO MAKE ENGINEERING OVERRIDE ASSESSMENTS COMMUNICATES WITH SUPPLY CHAIN IN BI-DIRECTIONAL FASHION TO PROCURE ENVIRONMENTAL INFORMATION FROM SUPPLIERS BUILD IPC 1752-A FORMS. IMPORT/EXPORT VIA XML HOMOGENIZE PROPRIETARY SUPPLIER DOC FORMATS IN XML ACTS AS A REPOSITORY FOR ANY COMPLIANCE RELATED MATERIAL

5 CONSULTING SERVICES Compliance Assessment Services For Environmental Regulations Internal Standard Operating Procedure Consulting Compliance Plan Development Compliance Strategy Consulting Conflict Mineral Compliance IT System Integration

6 OUR CLIENTS Assent serves clients ranging from Small Business to Fortune 500. In global supply chains companies of all sizes must comply with environmental regulations. Regardless of size Assent has products and services to help any sized company meet their environmental compliance obligations.

7 OUR OFFICES LONDON, UK MUNICH, GERMANY OTTAWA, ONTARIO CANADA (HQ) TAIPEI, TAIWAN BANGALORE, INDIA NEW YORK, NEW YORK KENYA (CONFLICT MINERALS)

8 FORM SD TRENDS Vast majority (over 95%) declared either Undeterminable or made no declaration (as per the SEC Guidance on April 29th, companies are not compelled to disclose product declarations) Supplier completion rates varied but the data can be somewhat unreliable It would stand to reason that companies with lower completion rates would not disclose this Overwhelming use of CMRT Woefully inadequate country of origin information Even companies with Smelter info, only knew who their smelters were NOT the mines of origin This is the #1 cited area for improvement in companies Conflict Minerals reports This focus on the smelters is clearly a trend and already being felt in the supply chain You will notice this in declaration request and eventually Due Diligence efforts»» Bad Smelters (AKA Traders, Exchanges and other non-smelters)»» Smelters with no Due Dilgence info (audits or at least intent to audit)»» Mine of origin info (not listed on CFSI site must be gathered from Smelters directly)

9 CMRT 2.0X - CMRT 3.0X CHANGES REVISED QUESTIONS There are now 7 mineral related questions instead of s Question 1 is now split into 2 parts: Are any 3TGs intentionally added (CMRT 3.0x Question 1) Are they necessary to the functionality (CMRT 3.0x Question 2) This is very important for scoping and the responses to these questions should be monitored and verified closely Scrapped or Recycled sources question (2.03 Question 3/3.01 Question 4) clarifies that it must be 100% scrapped/recycled Very important piece of clarification. Suppliers who claim yes, should be able to back it up with evidence Data Gathering question (2.03 Question 4/3.01 Question 5) now allows for any method or template to be used to gather information as opposed to only the CMRT. This should help illicit more positive responses from smaller suppliers.

10 Smelter Validation question has changed (2.03 Question 6/3.01 Question 7) Suppliers no longer must confirm that their smelters are compliant with CFS Program Must confirm they have list all the smelters reported to them in the CMRT This question should confirm full disclosure of Smelter information from all Suppliers (or an explanation as to why not) SCOPE SELECTION CHANGE Division and Category removed as Scope option from the drop-down Company and Product remain There is a user-defined option which allows the user to create their own scope Division and Category were the least used statistically but this does mean that you will need some mechanism in place to flag user-defined scopes so that they can be reviewed and approved SMELTER IDS HAVE CHANGED Old IDs consisted of 3 parts A number (indicating the metal), 3 letters (indicating country and a numeric identifier Ex: 1JPN072, would be a Gold Smelter (1 = Gold) in Japan (JPN = Japan) with 072 as the identifier New IDs are simply CID followed by a 6 digit numeric identified

11 SEC GUIDANCE FROM APRIL 29TH On April 29th, the SEC released the following Guidance: PublicStmt/ #.U2EU4fldXrx This was in response to the NAM legal challenge in the DC Circuit Court The key passage is the second last paragraph (specifically the last sentence): No company is required to describe its products as DRC conflict free, having not been found to be DRC conflict free, or DRC conflict undeterminable. If a company voluntarily elects to describe any of its products as DRC conflict free in its Conflict Minerals Report, it would be permitted to do so provided it had obtained an independent private sector audit (IPSA) as required by the rule. [5] Pending further action, an IPSA will not be required unless a company voluntarily elects to describe a product as DRC conflict free in its Conflict Minerals Report. This effectively removes the requirement for a Conflict Minerals Audit Work still needs to be executed in good faith according to the requirements of the law, but a final determination of Conflict Free, Not Conflict Free or Undeterminable is longer necessary

12 LESSONS LEARNED COMMON SUPPLIER MISTAKES Suppliers can often confuse what constitutes a Conflict Mineral All 3TGs are Conflict Minerals even if they don t come from Conflict afflicted areas Sometimes (especially with PDF declarations), you will see a supplier indicate that their products don t contain any Conflict Minerals even though they do contain 3TGs. Clarify these types of responses with the supplier Lack of Smelter Due Diligence Comes in 2 forms»» Smelters listed on the form who are not verified smelters (Usually they are traders)»» Smelters who source from the DRC but are not flagged accordingly in the source section (Ex: Malaysia Smelter Corp)»» In both these cases, the Smelter may have a Smelter ID and even have passed a CFSI Audit but the data is not being reviewed properly by the supplier and therefore not reported on correctly You must track Smelter information internally to cross-reference it with Supplier submissions

13 BEST PRACTICES SUPPLIER CORRECTIVE ACTIONS: Main items for consideration: Acceptable answers and/or minimum goals, (Ex: You must have a Company Policy in place ) Acceptable format, (Ex: CMRT 3.0x) Date and Timelines (depending on short-term and long-term goals) If more clarification is needed for specific types of answers (Ex: Clarification of Company Policies), create a company template the Suppliers can fill out and have them attach supporting documents as needed It is important to maintain a uniform process for all suppliers Track date and times of correspondence as well as the actual correspondence DUE DILIGENCE All Corrective Actions should be reviewed and approved according to your compliance program s minimum criteria Make sure all the piece fit together Review the policy to see if it is actually being followed based on other sections of the CMRT Ask for evidence of claimed activities Review information in internal/external Smelter Database to ensure that only valid Smelters are being reported on and that the correct sourcing info is being used.

14 BEST PRACTICES REVIEWING SUPPLIER RESPONSES Company level responses provide a good indication of the accuracy of Mineral related questions and smelter info Companies without robust programs & policies in place, often have inaccurate data present in the form Monitor these suppliers closely Mineral related questions must be confirmed by the information provided on the Smelter page make sure it is checked thoroughly as well A company cannot claim they have no 3TG sources from the DRC if they listed smelters who are known to procure 3TGs from the region (Ex: Malaysia Smelter Corp) this is true even if the Smelter has and ID and is Conflict Free NOTE: Having a Smelter ID and being Conflict Free are not one and the same Have access to a Smelter database or keep your own in order to verify Supplier submissions Review any User-Defined scope submissions carefully to ensure it covers all the necessary materials you procure from the Supplier It usually best to ask the supplier for either a Company level or Product level declaration

15 STANDARD INDUSTRY PROCESS SMELTERS TIER 2, 3, 4 SUPPLIERS TIER 1 SUPPLIERS DATABASE SUPPLIER LIST

16 ASSENT S PROCESS SMELTERS TIER 2, 3, 4 SUPPLIERS TIER 1 SUPPLIERS DATABASE SUPPLIER LIST & PRODUCT INFORMATION ASSENT SMELTER DATABASE

17 CMRT 3.01 PRODUCT UPDATE DEMO

18 QUESTIONS? Please submit your questions in writing using the Q&A tool along the top menu tool bar. Any questions not addressed during the Q&A portion of this webinar will be addressed in private correspondence after the webinar and in an FAQ document posted to the Assent Compliance Webinars page. Thanks for attending! WANT A DEMO? Matt.Whitteker@AssentCompliance.com info@assentcompliance.com