Lessons from the Road: Insights from Chemical Watch’s Global Supply Chain Workshop

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March 25, 2014 - Kirsten Wallerstedt

Last week, I had the pleasure of presenting a session on Conflict Minerals: the U.S. Conflict Minerals Law & EU’s Responsible Sourcing Initiative at Chemical Watch’s Global Supply Chain Workshop. My portion of the presentation focused on the implementation of the US Conflict Minerals Law, while my co-presenter, Mrs. Signe Ratso, Director, Trade Strategy and Analysis, Market Access Directorate-General for Trade, European Commission, addressed the EU’s responsible sourcing regulations.

Ms. Ratso’s presentation was full of valuable information on the EU’s regulation; key insights included:

An update on implementation. The proposal will likely take a couple of years to become law. It has to go through the appropriate channels to be approved by the Parliament and Council, and then will have to be ratified by the Member States.

It will be voluntary. The EU expects the voluntary nature of the proposal to be effective for several reasons:

  • Companies are concerned about their reputation
  • Collective pressure on importers, e.g. within an industry
  • 80% of companies that responded to the public consultation said they have an interest in responsible sourcing
  • The review that must happen three years after (as in the proposal language) enactment is another “stick” – if a critical mass of companies are not opting-in, the EU would likely make the requirement mandatory.

A better understanding the 3TG scope. This only applies to the 3TG and their ores, with a few other items listed e.g. “tin bars, rods, profiles and wires”. See Annex I of the regulation for the list. According to Ms. Ratso, the EU opted not to include products that contain these minerals in order to make the regulation more manageable.

Goal. The EU proposal is “process-based” – different from the U.S. law, which is focused on due diligence but also whether you are “conflict free” or “not conflict free.”

Attendees very much appreciated Ms. Ratso’s expertise and counsel, as there have many questions and debate surrounding the EU’s initiative. In fact, her analysis – as well as mine – is based on the proposed language, which may or may not change during the political process. As always, companies that have an interest in the content of the final proposal should engage during the rulemaking process.

There were also several questions related to the industry’s obligations under the Dodd-Frank Act as well. Understanding these emerging regulatory obligations can certainly be a complex and time-consuming undertaking.  It should be noted, however, that since the EU proposal is based on the same OECD due diligence guidance as the US law, there will likely be synergies between many of the obligations and processes.

Should you choose to partner with a service provider to help you understand or meet your obligations, we recommend choosing a partner or solution that supports due diligence under the OECD guidance in order to fully capitalize on these efficiencies. If you don’t know whether and how this proposal may affect your company, a reputable service provider such as 3E can help explain how this proposal can support enhanced Dodd-Frank compliance.

Do you have questions about your conflict minerals obligations? Feel free to leave a comment below. You may also be interested in my recent post on Verisk’s blog here. In addition, 3E Company will also be hosting a webinar on preparing your SEC disclosure. Registration information can be found here.

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