Most public companies are falling behind in their compliance with the Securities and Exchange Commission's conflict minerals disclosure rule, according to a survey released May 29 by risk management consultant Aravo Solutions Inc.
The firm, in a survey of its customers, other companies, and industry participants, found that most issuers have yet to begin their reasonable country-of-origin inquiries.
The survey further found that the main challenge confronting issuers' compliance readiness is the “lack of progress being made to-date” on their reasonable country-of-origin inquiries and the due diligence processes they must undertake pursuant to the Organisation for Economic Co-operation and Development's due diligence framework. “Only 15 percent of those surveyed have begun either of those steps,” Aravo said in a release.
Very generally, the rule requires a three-step process in which companies must:
In other survey findings, Aravo said another challenge facing most companies is the “lack of central ownership” for their conflict minerals compliance programs. “While the procurement organization owns conflict minerals reporting compliance in 25 percent of the companies, the rest have fragmented responsibility across legal, finance, sustainability, and production organizations,” it said. The fragmentation will contribute to “compliance gridlock and the potential to miss reporting due dates.”
Robert Shecterle, Aravo's vice president for marketing, told BNA that there were 218 respondents to the survey. Forty percent of the respondents were from compliance departments, 22 percent from finance, and 15 percent from legal, he said. The rest were from information technology or other departments.
By industry, 43 percent of those surveyed were from the manufacturing sector, while 28 percent was from business services, Shecterle said. The rest of the respondents were from the IT, retail, energy, telecommunications, and metals/mining industries.
Aravo's release and survey results are available at http://www.aravo.com/newsroom/pr_conflictminerals_survey_05292013.php.
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