The global marketing and analytics company IHS Corp. recently issued a press release titled “Vast Majority of Electronic Companies Not Yet Ready for U.S. Conflict Minerals Law.” IHS surveyed large electronic original equipment manufacturers (OEMs) and found 90 percent haven't yet produced the necessary data, declarations, or documentation needed to fulfill regulatory requirements. Only 11.3 percent had required information available, and that information only covered 17.1 percent of the electronic components on the market.
Although these are eye-popping numbers, should the industry really be worried? Let's review the history.
The Securities and Exchange Commission issued a proposed rule in December 2010 and requested public comments. The response was overwhelming. Affected parties said the draft rule was overly broad and impractical to implement, and the timetable was unrealistic, given the lack of any currently available tools to do what was being requested. To the SEC's credit, it studied the comments and made major changes before issuing the final rule on August 22. Electronics companies knew major changes were coming. Most waited for SEC clarification before making requests of their supply chain.
So are companies dangerously behind and unprepared to comply? I don't think so. Companies now know with certainty what is required. They now have the tools they need to gather the necessary data and declarations. The EICC-GeSI template is a good example. An updated version was released in August after the SEC rule was issued. Most companies have begun sending it to their suppliers and asking them to complete and return it.
The trade group IPC is also working on a comprehensive industry due-diligence guidance document and a data exchange standard. It plans to work with ANSI and to issue both (called IPC 1081 and IPC 1755) in the spring of 2013.
IPC recently teamed up with Hewlett-Packard and the law firm Allen & Overy in presenting a “how to comply” Webinar you can view. They will also present “how to comply” seminars in San Francisco and Chicago in November.
Publicly traded companies will have to submit their first SEC conflict minerals report on May 31, 2014. The report must cover conflict minerals usage in 2013. As long as companies start requesting information from their suppliers before the end of this year, they should have the time needed to comply. The SEC is allowing companies a two-year phase-in period to deal with any suppliers unable to provide needed information.
Now that the electronics industry has the clarification it needed, as companies begin seeking supplier declarations, they should be able to comply.
Has your business started its compliance efforts? Are you comfortable, or do you feel behind and unprepared? Let me know. For more information on conflict minerals and other legislation affecting the electronics industry, click here.