Reviewing SEC Conflict Minerals Due Diligence Reporting

As SEC reporting companies finalize their conflict minerals disclosures each year, they typically review the Form SD requirement that calls for a description of any steps taken or to be taken to improve their conflict minerals due diligence. This required disclosure is typically provided in sections called “Actions Taken and to be Taken to Improve Due Diligence” and “Continuous Improvement” and the like. Since there is time for reporting companies to consider and implement improvement actions for calendar year 2022, now is a perfect time to review the most recent filings to survey improvement actions included in the reports for calendar year 2021. This is especially true because, in this current regulatory climate, the conflict minerals disclosure requirements and their enforcement are not likely to be reduced.

We undertook a review of the filings by the 207 companies that were included in the Responsible Sourcing Network’s Mining the Disclosures report for 2019 (“2019 Report”), which is the most recent investor guide of SEC conflict minerals due diligence reporting. The preparers of the 2019 Report viewed them as “leading companies” in the various industries covered. The industries listed below were covered by the 2019 Report and they were included in our survey of actions being taken to improve conflict minerals due diligence.  They are listed here in the order presented in the 2019 Report.  The number indicated beside each industry is the number of the companies in such industry covered in the 2019 Report.

• Communications Equipment (8)

• Semiconductors (8)

• Auto Manufacturers (6)

• Medical Devices (7)

• Application Software (11)

• Computer Hardware (19)

• Industrial Products (20)

• Auto Parts (6)

• Farm & Construction Equipment (6)

• Manufacturing – Apparel & Furniture (9)

• Solar (4)

• Communication Services (7)

• Chemicals (6)

• Retail – Apparel & Specialty (11)

• Other Auto (5)

• Aerospace & Defense (9)

• Building Materials (6)

• Travel & Leisure (8)

• Packaging & Containers (7)

• Oil & Gas – Services (6)

• Other Large Caps (9)

• Consumer Packaged Goods (6)

• Drug Manufacturers (5)

• Business Services (6)

• Steel (6)

• Oil & Gas – Integrated (6)

Some of the surveyed companies did not file Form SDs for calendar year 2021, some did not file conflict minerals reports, and some did not include responses to this specific improvement actions requirement. But, those that did provided an array of actions. Some are actions that certain reporting companies have been taking since 2014. Some actions show ongoing development of systems and processes over time. Some actions are very far-reaching and indicate a significant investment relating to upstream suppliers and smelters and refiners.

Below is a summary of the types of actions and steps that the companies that were included in the 2019 Report listed in their filings for reporting year 2021. In some cases, we combined or revised certain of the actions. In some cases, we anonymized certain specifics in the actions to be more generally applicable.

• New Minerals

  • Expand programs to undertake due diligence on additional minerals (cobalt, mica and others)

  • Support development of RMI’s Minerals Agnostic Standard and Pilot Reporting Template (PRT) to collect data on all minerals