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Electronics Manufacturing

Conflict Mineral Reporting

Aug 27, 2024
Accuris,
In Part 2 of our 3-part Conflict Minerals Blog Series, we explore global supply chain complexities in tracing conflict minerals, as highlighted by a 2023 study from the U.S. Government Accountability Office (GAO). Despite efforts and tools like audit programs, many companies struggle due to limited access to suppliers & complex supply chains, with 43% companies citing this as a main hurdle. Non-compliance and incomplete filings remain prevalent, indicating a perception of lax enforcement. With the 2023 SEC deadline nearing on 5/30/24, firms are reassessing their conflict mineral programs, considering automation tools like the Conflict Mineral Platform from Accuris, and outsourcing to service providers.

Evidence from a 2023 study by the U.S. Government Accountability Office (GAO) from the SEC filings they reviewed shows that the companies’ Reasonable Country of Origin Inquiry (RCOI) determinations are not significantly different since 2015. The GAO analysis has determined that in 2022, an estimated 51% of the companies reviewed made preliminary determinations, and that 53% of the companies that performed additional due diligence could not determine whether the minerals in their products did originate from conflict mineral regulation covered countries.

Though GAO discovered that many companies were using standardized tools and programs, such as audit programs, traceability schemes, supplier surveys, etc., to determine the source of their minerals, many companies ran into roadblocks in the process. Some companies reported that they had challenges from a lack of access to suppliers’ complex supply chains. GAO found that an estimated 43% of 2022 filings referred to a lack of access to suppliers and complex supply chains as the main challenge, which is the same as GAO’s findings for 2021. In 2022 GAO found that 78% of companies reported using the Conflict Minerals Reporting Template as a survey tool.

In that same study, GAO uncovered that some companies were filing incomplete reports and some companies were not filing at all as these companies may have perceived that they were unlikely to face enforcement action by the SEC if they did not comply. Similar to prior years, GAO found that in 2022, 56% of the filings indicated that companies suffered from inaccurate or incomplete survey information from their suppliers. As part of this, 48% of 2022 submitted filings indicated that not all suppliers had responded to company survey requests.

From GAO industry stakeholder resources, GAO reports that there are many companies that are performing more extensive due diligence in response to international regulations and heightened consumer/industry pressures. The EU Conflict Minerals Regulation that went into effect in 2021 is one of these and differs in significant ways from the US SEC Final rules.

The current landscape of conflict minerals regulation, required reporting, and individual manufacturer policies are complex. While the 2023 SEC filing deadline is around the corner (May 30, 2024), many organizations are reconsidering their conflict mineral programs and how to make them less burdensome.

Companies are reviewing their conflict mineral programs and policies to ensure they align with current conflict mineral regulations, the goals of their customers, and their corporate identities. They are considering automation tools such as the Conflict Mineral Platform from Accuris for automating the sourcing and assessing conflict mineral information, tracking metrics needed for reporting and including in their Conflict Mineral Reports (for US SEC-reporting companies), and generating their CMRT to share with their clients. Many companies are outsourcing their conflict mineral projects to service providers like Accuris to benefit from their expertise and cost savings.

Future blogs will dive further into RCOI and due diligence involving conflict minerals in electronic industry supply chains.

Written By
Accuris

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