Conflict-Free Sourcing Initiative

Transcription

1 Conflict-Free Sourcing Initiative Overview & update The Conflict-Free Sourcing

2 Roadmap CFSI Overview Conflict-Free Smelter Program (CFSP) Company Assurance Due Diligence Practices Summary The Conflict-Free Sourcing 2

3 What Are Conflict Minerals? Illegal mining and trading of certain ores in the DRC has been exploited to fund armed conflict and serious human rights abuses. Columbite-tantalite refined into tantalum (Ta) Cassiterite refined into tin (Sn) Wolframite refined into tungsten (W) Gold (Au) As defined in 1502 of Dodd-Frank Act Regardless of origin Regardless of whether connected to armed groups Conflict Free Sourcing Initiative (CFSI) 3

4 Obligations 3 major bodies of work address conflict minerals reporting: The United States Dodd-Frank Act of 2010 The related Securities and Exchange Commission final rule on compliance with Dodd-Frank (SEC final rule); and The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance) Future EU Regulation (2015) 4

5 CFSI s Response The CFSI is committed to improving conditions in the supply chain. Mining activities that fuel conflict are unacceptable. In order to help companies meet reporting obligations and to source conflict-free minerals the following actions are undertaken: Supporting in-region sourcing schemes to enable future legitimate trade from DRC and surrounding countries Implementing Conflict-Free Smelter Program (CFSP) that requires OECD guidance to aid in the identification of smelters and refiners that have sourced conflict-free minerals Developing the Conflict Minerals Reporting Template (CMRT) to help companies gather due diligence information in a common format; and Work across industries for collaboration, efficiency, and best practice sharing Conflict Free Sourcing Initiative (CFSI) 5

6 Conflict-Free Sourcing Initiative (CFSI) Overview Finished Product MINE SMELTER/REFINERY OEMS In-Region Programs Conflict-Free Smelter Program (CFSP) Company Assurance 6

7 Conflict-Free Smelter Program (CFSP) Supply Chain Pinch-Point Raw Materials Upstream Why Here? Conversion of distinguishable starting material into an indistinguishable product Small Numbers tantalum, tin, tungsten and gold smelter/refiners total less than 500 companies globally Smelters / Refiners Conflict-Free Smelter (CFS) Program Finished Products Downstream 7

8 CFSP: Audit Focus Company Mass Balance - Includes all inventory - Includes all facilities Ore / Concentrate Intermediates Recycled / Scrap Company Program Validation - Conflict Free Policy - Conflict Free Sourcing Systems Sourcing Processes Validation Unfinished Products Finished Products Toll Customer Toll Supplier Conflict Free Policy 8

9 CFSP Improvements 3Ts protocol improvements Tungsten protocol published Coordinated with TI-CMC Addresses unique conditions in tungsten industry Addressing tin industry concerns (definition, ASM, secondary materials, slags) Improving standardization, readability and clarity Explicit alignment with U.S. SEC Rule 9

10 Supply Chain Survey Development, integration and maintenance of tools and processes which support a down-stream company s management system and risk assessment activities: Conflict Minerals Reporting Template Tool to collect information about a supplier s due diligence processes and sources Establishing resources and processes to support data collection and analysis

11 Conflict Minerals Reporting Template Flow 1. Sends request to direct suppliers 2. Sends request to sub-suppliers Template User Direct Direct Suppliers Direct Suppliers Suppliers Sub- Sub- Suppliers Sub- Suppliers Suppliers Smelter Smelter Smelters Original User 5. User returns final aggregated roll up template 4. Direct suppliers return aggregated roll up template Direct Direct Suppliers Direct Suppliers Suppliers 3. Cascades through supply chain until smelters identified. Subsuppliers return template to suppliers. Customer 11

12 Company Assurance Program Updates Conflict Minerals Reporting Template (CMRT) v3.0 aligned to IPC 1755 data exchange standard Next major release contingent on IPC Standard Supporting FAQs released related to use of the CMRT and smelter data collection Smelter Information Exchange Identification of alleged, legitimate, and not-a-smelters Coordinating research for alleged and outreach for legitimate CMRT and supporting materials available at 12

13 Compliant Smelters Ta Sn W Au Totals The Conflict-Free Sourcing 13

14 Active and Compliant The number of legitimate smelters listed as CFSP active or compliant over the total number of legitimate smelters Metal December 2014 Tantalum 96% (44/46) Tin 57% (50/87) Tungsten 40% (17/42) * Gold 57% (68/119) TOTAL: 61% (178/294) * 90% (38/42) including TI-CMC members progressing towards CFSP Validation The Conflict-Free Sourcing 14

15 CFSI Due Diligence Practices White Paper that provides practical steps for downstream companies to: Interpret the OECD DDG Link to SEC reporting obligations (how to..) Incorporate use of CFSI tools and programs Release of Trigger Document regarding Independent Private Sector Audits (IPSA) Release of Frequently Asked Questions (FAQ) Document on company assurance and conflict minerals disclosure 15

16 Summary The CFSI continues to drive improvements in its programs to enable companies in their ability to source conflict-free minerals Improving governance of the initiative, both in structure and revenue generation are key to sustainability and health Company assurance activities of the CFSI are focused on improving company capabilities to validate responsible sourcing of materials by creating common standards, tools and processes 16

17 Membership! CFSI Partner Members 2013 CFSI Partner Members 2014 Total Membership Partner Members EICC-GeSI Members The Conflict-Free Sourcing 17

18 Join us! EICC or GeSI Membership Full Membership provides access to CFSI and all EICC/GeSI WG s ( ) ( ) CFSI Partner Company Participation ( ) $5K fee annually Voting rights, access to all Work Groups, access to RCOI information CFSI Partner Association Participation ( ) $20K fee annually Voting rights (one vote for organization) Up to two participants to CFSI Meeting or CFSI Work Groups, responsible for disseminating all information (staff or constituent members welcome) White Paper on the Extractives WG (now the CFSI) available ( 18