Question: A customer has flagged certain smelters or facilities on our Conflict Minerals Reporting Template (CMRT) as potentially high risk based on the "OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas". They asked us to perform additional due diligence to confirm that these smelters or refiners (SORs) are not part of our supply chain for any products we provide to them. How should we do this, and what exactly is required?
Answer: Your customer is asking you to request a user-defined CMRT from your suppliers who claimed these SORs on their CMRTs. Specifically, you would need a user-defined CMRT for the most recent year-end declaration, limited to materials or parts sold to your company. If this user-defined CMRT shows that the flagged SORs are not part of the supply chain for materials that your company purchased, you can conclude that these SORs are also not part of the supply chain for anything you sold to this customer.
This degree of due diligence is not required by the U.S. Securities and Exchange Commission (SEC) and is not considered a necessary part of an effective due diligence program. However, a growing number of companies interpret Step 3 of the OECD Due Diligence Guidance to mean that this degree of follow-up is necessary.
Your company has two response options:
- Reply to your customer, stating that your company follows the OECD framework and provides immediate feedback to suppliers claiming smelters of interest to be forward-looking about their future reliance on problematic sources. In many cases, this response will be enough to satisfy your customer's concerns.
- This presumes that your company follows the OECD framework as described. If not, that is a broader issue and should be addressed urgently.
This article is current as of 2021-07-09.