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LiveChat 9/12: Getting in Step With Conflict Minerals

93 comments on “LiveChat 9/12: Getting in Step With Conflict Minerals

  1. Daniel
    September 12, 2013

    Hi hope to attend

  2. Daniel
    September 12, 2013

    Good morning everybody

  3. Daniel
    September 12, 2013

    whats this Dodd-Frank act?

  4. Daniel
    September 12, 2013

    How its going to affect the supply chain

  5. Ashu001
    September 12, 2013

    @jacob-dodd frank act is what came about after the 2008 financial crash in america.idea is prevent banks from indulging in risky behavior by making it too expensive to do so.

  6. Ashu001
    September 12, 2013
  7. Hailey Lynne McKeefry
    September 12, 2013

    @Jacob he Dodd Frank Wall Street Reform and Consumer Protection Act requires issuers to examine their supply chain to determine if they manufacture or contract to manufacture products that contain conflict minerals that are necessary to the functionality or production of those products. If so, issuers must then investigate whether those conflict minerals originated in any of the ten countries covered by this law. Conflict minerals are defined as cassiterite, columbite-tantalite (coltan), gold, and wolframite, as well as their “3T” derivatives tin, tantalum and tungsten. Here's more: http://www.environmentalleader.com/2013/04/01/15-tips-for-complying-with-the-conflict-minerals-provision-of-the-dodd-frank-act/

     

  8. Hailey Lynne McKeefry
    September 12, 2013

    so the focus is green, enviromental safety.

     

  9. Hailey Lynne McKeefry
    September 12, 2013

    We will be starting at 11 a.m. PST/2p.m. EST sharp. First, though, there are two housekeeping notes:

    First, please make a copy of your post before hitting the “post” button – just in case.  If the system “eats” one of your carefully crafted thoughts, please hit “Ctrl-Z” to recover it.

     

  10. Hailey Lynne McKeefry
    September 12, 2013

    Second, if you have problems posting, we suggest trying a different browser.  IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.

  11. Hailey Lynne McKeefry
    September 12, 2013

    This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions.  There are no dumb questions and we value everyone's point of view.

  12. Hailey Lynne McKeefry
    September 12, 2013

    And always, please announce your arrival so we can give you a warm EBN welcome and offer you some virtual  guacamole. 🙂

     

  13. Tam Harbert
    September 12, 2013

    Hi, Hailey –

     

    I'm just listening in. Thought I might get some good background for the feature I'm writing for Suzanne.

  14. Jamescon
    September 12, 2013

    Hi Hailey

     

  15. levs
    September 12, 2013

    Let's start

  16. Hailey Lynne McKeefry
    September 12, 2013

    Welcome Jim, Tam, and Lev. Glad you could make it. Pull up a chair and grab some chips. 🙂

  17. Hailey Lynne McKeefry
    September 12, 2013

    And Tam, in addition to our guest, I suspect some other experts may be stopping by. Feel free to throw your questions at them!

     

  18. GRCPundit
    September 12, 2013

    Hello, this is Michael Rasmussen

     

  19. GRCPundit
    September 12, 2013

    I trust everyone is well. I am looking forward to our interactions on Conflict Minerals today.

     

  20. Hailey Lynne McKeefry
    September 12, 2013

    Hi Michael, glad to have you with us! We have a good group already so i'm sure we're going to have some great questions.

     

  21. Jamescon
    September 12, 2013

    Michael, does the Dodd-Frank Act specify how far down the supply chain a company has to look for conflict minerals?

  22. Hailey Lynne McKeefry
    September 12, 2013

    And great handle. 🙂

  23. Hailey Lynne McKeefry
    September 12, 2013

    Can you tell us a little about what you see as the state of most supply chain organizatoins in terms of knowledge of conflict minerals? That May deadline is coming up fast.

  24. Hailey Lynne McKeefry
    September 12, 2013

    By way of introduction, also, let me mention that our guest wrote a recent whitepaper on the topic and will be engaged in a Webinar between Rasmussen and LockPath experts on 9/18 at 3pm CT. perhaps you'll want to tune in.

  25. GRCPundit
    September 12, 2013

    First off, my job is that of a research analyst.  I monitor best pracrices and trends impacting the topics of Governance, Risk Management, and Compliance (GRC) acorss industries.  Conflict Minerals is one of the hottest topics of my research.  My particular speciality is understanding the range of technology, professional services, and knowledge providers to help assist in aspects of GRC.  So my job is to help organizations understand how they can have GRC related processes, like conflict minerals, that is efficient, effective, and agile to the needs of the distributed and dynamic business environment we operate in.

    That being said – I am not a consultant.  I am an analyst.  I research and understand what is going on and point peopel in the right direction – including what consultants they could engage.

  26. Hailey Lynne McKeefry
    September 12, 2013

    That's very helpful, Michael. thanks.

  27. Jamescon
    September 12, 2013

    Do you have any sense of how extensive the use of conflict minerals has been, and what types of progress companies have made in moving away from them?

  28. Hailey Lynne McKeefry
    September 12, 2013

    As you go through your research, what are some of teh best practices that you've identified?

  29. GRCPundit
    September 12, 2013

    JimC, there is ambiguity on approach and depth to the supply chain.  Of course, I cannot give legal advice and you need to understand my comments are generalizations and not on specific situations.

    The end game is that organizations need some type of reasonable assurance that 3TG is not from or is from the Democratic Republic of the Congo (DRC) or nine surrounding countries.  If it is sourced from the DRC area then there are further steps that need to be taken.

    Organizations that have to report to the SEC can trace the depths of their supply chain themselves by sending assessments to the suppliers of their suppliers of their suppliers to the source smelter or mine. Or they can send the assessments to just their first ring of suppliers and rely on their suppliers to do the same and have them attest to it.  I see most organizations going with the later over the former.  

     

  30. Hailey Lynne McKeefry
    September 12, 2013

    @Michael, is that mainly, do you think because of the time consuming and expensive nature of the first approach?

  31. GRCPundit
    September 12, 2013

    Conflict minerals has been pretty prevalent which is what prompted Congress to take action in Dodd Frank section 1502.  Some companies were addressing conflict minerals as part of their Social Accountability or Corporate Social Responsibility programs. Most were not.

    This regulation does not forbid use of conflict minerals.  It is to make reporting their use a requirement.  

  32. Hailey Lynne McKeefry
    September 12, 2013

    The need to disclose, though, especially for the public companies we are discussing here, does at least make the conversation happen, I would think.

  33. GRCPundit
    September 12, 2013

    Best practices:

    1 – Know who is on the team. The issues I have seen is when organizations pass this obligation around like a hot potato.  Someone needs to step up and own it.  This could be legal, corporate compliance, supply chain management, procurement, risk management, etc.  However, despite who owns it – it needs a cross functional team across these departments.

     

  34. Hailey Lynne McKeefry
    September 12, 2013

    Is there a best case scenario in terms of who owns it? Or is it more of making sure someone is responsible.

  35. GRCPundit
    September 12, 2013

    2 – Figure out your approach.  Are we going to just assess our first tier of suppliers?  Or are we going to go down to 2nd or 3rd tiers?  All the way to mine/smelter?  Or do we rely, at one of these levels, on the attestations that they have done this work and we can rely on it.

  36. Tom Murphy
    September 12, 2013

    Hi Guys…sorry I'm late.  I have a question. As I understand it, this only applies to publicly traded companies in the US, correct?  So what about all the private and foreign-based companies — do they gain some sort of unfair advantage?   Are we likely to see a change in supply chain as a result of a shift in demand from public companies to private?

  37. Tom Murphy
    September 12, 2013

    (And Hailey: I have another question — where's the guacamole?)

  38. Hailey Lynne McKeefry
    September 12, 2013

    Hi Tom, Pull up a chair! Glad you could make it.

  39. Hailey Lynne McKeefry
    September 12, 2013

    the Guac was being passed around earlier along with teh organic corn chips. Take a look on the back table.

  40. Ashu001
    September 12, 2013

    @Tom-You brought the guacamole?

  41. Jamescon
    September 12, 2013

    What happens to a company that fails to eliminate conflict minerals from its supply chain?

  42. Tam Harbert
    September 12, 2013

    Have you heard any concerns about the use of conflict minerals from other parts of the world? I know the Dodd-Frank provision covers on the Congo conflict, but the Wash Post recently ran a story on tantalum mined in Colombia. It's a similar situation – the guerillas are using proceeds from the mines to fund their warfare.

  43. GRCPundit
    September 12, 2013

    3 – Understand how technology helps.  We have been through this before.  In the days of ealry Sarbanes Oxley compliance many organizations approached it with spreadsheets, documents and emails to find out this does not work.  It is not scalable.  Compliance teams were spending 80% or more of their time as document reconcilers and not managing compliance proactively.  Things got missed, slipped through the cracks.  It was a mess.  Worse, documents and spreadsheets have no audit trail.  You could not prove to regulators that a speciifc individual answered the assessment questions (no authentication) nor could you prove that those assessment answers were orginal and not manipulated to paint a rosier picture to get the organization out of trouble.  Documents and spreadsheets fail to hold up as evidene of compliance.  

    Organizations need to look to technology that can stay on top of tasks, workflows, can do assessments, track changes, requires authentication, and can easily reconcile and report.

  44. Tom Murphy
    September 12, 2013

    Tech4People. No, I brought the Margaritas and my solar-powered blender. I counted on the guac being here.

  45. Hailey Lynne McKeefry
    September 12, 2013

    @Jim, no one is required to eliminate them, is my understanding.Only required to disclose it if they are using it. SO perhaps the questions is what happens if they don't disclose?

     

  46. GRCPundit
    September 12, 2013

    4 – Integrated into broader supplier risk/compliance strategies.  Conflict minerals should be part of a broader social accounatibility and CSR program.  Do not reinvent the wheel.  Leverage conflict minerals to get in place a broader supplier risk and compliance management program.

     

  47. Hailey Lynne McKeefry
    September 12, 2013

    I brought the guacamole, made from California's finest offering, it's on the back table…Please help yourself!

  48. GRCPundit
    September 12, 2013

    Who owns it questions . . .

    Started answering this before – most important thing is to find an owner but ensure a cross-department collaborative team.

  49. Hailey Lynne McKeefry
    September 12, 2013

    @Michael, the technology piece is really intersting… i remember SoX and HIPAA and other requirements creating similar chaos and confusion and the software vendors really helped on that.

  50. Tom Murphy
    September 12, 2013

    JimC: The question for corporations that relay on conflict minerals is going to be: What's the fallout from disclosing? or Not disclosing?   The former may create a PR problem, the latter could result in a fine.

  51. GRCPundit
    September 12, 2013

    Tom,

    Your question on who it applies to . . .

    Yes, it applies to about 6,000 companies that report to the SEC.  However, the downstream effect applies to a whole range of hundreds of thousands of companies.  Very huge impact.

    There is also growing requirements internationally like Canada's

     

  52. GRCPundit
    September 12, 2013

    Jim,

    You question on failure to eliminate . . .

    Organizations can use conflict minerals.  The requirement is reporting.  Nothing, at this point, forbids there use.  Congress wants to use reporting pressure on brands to reduce their use.  Make it a brand and reputation issue.

    As for penalities for not reporting – we will wait and see. Too early to tell.

  53. Tom Murphy
    September 12, 2013

    GRC: So, if you're a publicly traded company down the chain, you are responsible for knowing whether any of the companies up the chain disclosed?   That could prove rather difficult, eh?

    What about private companies up or down the chain? Are they immune?

  54. GRCPundit
    September 12, 2013

    Tam,

    I understand that there are bills in Congress, and even at the State level (California) that takes a broader approach to Conflict Minerals beyond the DRC area.

  55. GRCPundit
    September 12, 2013

    Tom,

    If you are down the chain – someone should be sending you an assessment as well for disclosure.  The whole idea is to force assessments down the chaing.  Even to private companies.  If they want to do business they have to answer the assessments and disclose and then on to their suppliers.

  56. Hailey Lynne McKeefry
    September 12, 2013

    It makes sense as at least a starting point.  How will this be enforced?

  57. GRCPundit
    September 12, 2013

    There certainly is a lot of work involved in all of this.  And there is the possibility of dishonesty and concealment at different levels of the supply chain.  The organization has to show it has done a reasonable assessment and reasonably believes if 3TG is used or not used in its products.

  58. Ashu001
    September 12, 2013

    @GRC-Regarding your comment here-

    If you are down the chain – someone should be sending you an assessment as well for disclosure.  The whole idea is to force assessments down the chaing.  Even to private companies.  If they want to do business they have to answer the assessments and disclose and then on to their suppliers.

    Don't u feel this will just add too much paperwork today and slow down decision making considerably?

  59. Ashu001
    September 12, 2013

    @GRC-Don't u feel(as you pointed out) The potential for Fraud is much-much higher the more complex this GRC system gets?

  60. Hailey Lynne McKeefry
    September 12, 2013

    It makes sense in that this plan seems to strive for hte most impact without insurmountable costs. In talking with organizations and those who work with those organizations, it seems that most agree that this is an important topic and one that they want to address. I  know there will always be some bad apples, but i hope the good outweighs that.

  61. GRCPundit
    September 12, 2013

    Hailey,

    Right now we are unsure about enforcement.  Everyone will be waiting for the first round of enforcement actions.  

    Consider HIPAA – it was passed in 1996.  For a decade consultants and vendors were throwing around the HIPAA word but hospitals were reacting slowly.  Until enforcement started happening in 2006/2007 – they they got the message.

    Organizations are reacting now to conflict minerals, much better than HIPAA, but some are slow.  The slow ones sit more on the sidelines wanting to see the first enforcement actions while hoping they are not the case study for enforcement.

  62. Ashu001
    September 12, 2013

    @Hailey-The costs will most definitely be insurmountable here!

  63. Ashu001
    September 12, 2013

    @GRC-In a lot of ways does'nt it give the usual impression of America-Super-meddlesome behavior?

  64. GRCPundit
    September 12, 2013

    tech4people,

    I am not sure what you mean by GRC system?  Are you talking technology? Process?

    Complexity always grows opportunity for fraud and misdeeds.  Things can be hidden and fly under the radar with complexity.  That is why spreadsheets, documents, and emails do not work for GRC nor specifically for conflict minerals.  They make things more complex with extra time and steps for consolidating and reporting and no audit trail.

  65. Hailey Lynne McKeefry
    September 12, 2013

    @Michael, thanks, very helpful… the enforcement question will be interesting to see how it unfolds. i suspect that you are right that there 's probably a long leash for organizations who want to wait and see.

  66. Hailey Lynne McKeefry
    September 12, 2013

    Do you have a sense of where the most confusion or concern lies in terms of processes?

  67. GRCPundit
    September 12, 2013

    tech4people,

    My libertarian side of me does not like the idea of conflict mineral regulation.  But it is here.  And yes, it could lead to negative views on the USA and our meddlesome regulations.

    However, it is also a big concern of the OECD.  And as I pointed out other countries are jumping on this as well.

    http://www.mapi.net/research/publications/conflict-minerals-how-courts-congress-canada-and-eu-are-responding

  68. GRCPundit
    September 12, 2013

    Hailey,

    The most confusion is in scope. What products/materials apply that we have to trace?  And how far down the supply chain do our efforts go before we rely on the attestation of those further down they have done the work?

  69. Ashu001
    September 12, 2013

    @GRC-Correct I meant the entire system is haven for Fraud.

  70. Ashu001
    September 12, 2013

    @GRC-If that's the case then when Manufacturing in Electronics is set to become a much-much more Expensive Proposition at exactly the wrong time(when Global Demand is falling and Pricing Pressures are rising).

    Not good news.

  71. Hailey Lynne McKeefry
    September 12, 2013

    OK everyone we've hit 11:45… any last questions for our guest?

  72. GRCPundit
    September 12, 2013

    tech4people, not arguing against you

  73. Hailey Lynne McKeefry
    September 12, 2013

    Thank you for being with us, Michael. I appreciate your willingness to come and field our questions. You gave us a lot to think about!

  74. Hailey Lynne McKeefry
    September 12, 2013

    Again, check out Michael's white paper and webinar for more indepth information. This is a complex subject–more than we can cover in a chat–although we gave it a good try!

  75. GRCPundit
    September 12, 2013

    One more thing – horizon.  Acutally starting to happen.  The integration of content, services, and technology.  Where there is known sources of either conflict free or not suppliers and these can be used in transactions systems to monitor if we are paying firms on good lists or bad lists.  There is the use of organizations that have a wide network and experience with suppliers, particularly in Africa to gain their expertise and knowledge.  There is a lot fo interesting things we weill see mature over the next few years.

  76. Ashu001
    September 12, 2013

    @GRC-Just like HIPAA at what stage do you feel Dodd-Frank will actually be implemented and enforced in Manufacturing?[Ten years later? 15 years later???]

  77. Hailey Lynne McKeefry
    September 12, 2013

    Sounds like there's going to be a lot of peer pressure going on, and perhaps that's a good thing.

  78. Ashu001
    September 12, 2013

    @GRC-So you mean to say they actually trace each and every Mineral from each country? I find it hard to believe.

  79. GRCPundit
    September 12, 2013

    tech4people, I think section 1502 of Dodd Frank will be enforced in 2014/2015.  HIPAA was just an example of enforcement waking people up.  Other regulations did not have a decade.

  80. GRCPundit
    September 12, 2013

    Tech4people, no, I am not saying they actually trace every mineral from each country.  But they do deploy extensive knowledge and gather information on which suppliers are red flags to be concerned about.

  81. Hailey Lynne McKeefry
    September 12, 2013

    Thank you again for being our guest! I hope you'll join us again.

  82. GRCPundit
    September 12, 2013

    Thank you. It is my pleasure.  Another supply chain area I have a lot of experience with is social accountability in the context of supply chain code of conduct, international labor standards, and workplace safety.  That could be an interesting topic.

  83. Hailey Lynne McKeefry
    September 12, 2013

    That's a great topic! I”ll be sure to give you a call.

  84. Ashu001
    September 12, 2013

    @GRC-Thanks for the great posts! Appreciate it!

  85. Daniel
    September 13, 2013

    Sorry, I missed the chat section

  86. Daniel
    September 13, 2013

    Hailey, thanks for the clarification and link

  87. Daniel
    September 13, 2013

    It shows that its a great chat show

  88. Daniel
    September 13, 2013

    Thanks everybody

  89. Daniel
    September 13, 2013

    thanks onceagain

  90. Daniel
    September 29, 2013

    It seems that the linkl is wrong

  91. Daniel
    September 29, 2013

    Its the previous one and not the one mentioned for 30/09

  92. Daniel
    September 29, 2013

    Hailey, please update the chat mail with a new link

  93. Daniel
    September 29, 2013

    Hope to attend

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