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Conflict Minerals Reporting: More Valuable than We Originally Thought?

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In mid-February, the press reported a leaked draft Presidential memorandum proposing to suspend the Conflict Minerals Rule. On April 3, the Court of Appeals rendered final judgement upholding the First Amendment verdict on the Conflict Minerals Rule. On April 7, SEC Acting Chairman Michael Piwowar issued a statement regarding the enforcement of specific sections of the rule. The Conflict Minerals Rule has been in the news more in past weeks than at any time since its enactment.

Those who oppose the rule note that it had negative impacts at first, and has failed to achieve all the desired effects within the Africa Great Lakes region. Those in support of Dodd-Frank Section 1502 observe there have been benefits from the rule, that litigation does not determine public perception, and that rule absence may result in negative consequences including multiple, differing state regulations rather than a single federal rule.

Whatever your position on Conflict Minerals reporting, most would agree the rule has compelled industry to investigate aspects of the supply chain which were previously unexplored. The pursuit of Conflict free sourcing has established communication channels previously unavailable and created avenues of data collection which formerly did not exist.  In establishing these channels, corporations have realized the possibility to ask questions we’ve never thought to ask, of previously unrecognized parties involved in the production of our products.

For us in the automotive industry, such multi-tier supply chain reporting is somewhat familiar, as it mirrors the processes used for ELV compliance via IMDS. In most other industries, this mechanism is a new revelation. Early estimates of the time and effort necessary to collect Conflict Minerals information were typically overstated, as those estimates failed to perceive that methods, processes and procedures to streamline the data collection process would be created. In essence, we have become engaged in a very large business analytics activity. We gather data from diverse sources, perform further processing, and use the results to permit us to answer questions which previously could not be answered or even formulated. This is almost a dictionary definition of Big Data; an activity companies are exploring for an ever increasing range of topics, and in response to a wide range of business pressures and opportunities. While in its infancy, the techniques used for Conflict Minerals reporting, combined with proper analytics, offer a new way of viewing our business.

While Conflict Minerals has a very specific scope, it has opened our eyes to the potential to utilize similar analyses to obtain information about our products unavailable before. Increasingly, companies plan to utilize the tier-by-tier data gathering process used for Conflict Minerals reporting and in IMDS. The new IMDS Chemistry Manager adds broader support for REACH and Biocidal Product Directive compliance and improves upon the multi-tier data gathering activity methodologies available previously, and solutions similar to IMDS support a range of additional topics. The Organization for Economic Co-operation and Development (OECD) recently issued new guidance urging companies to utilize the Conflict Minerals tools and related techniques as a basis for addressing broader compliance topics, such as U.K. Modern Slavery Act, Fair Labor Practices and more. This is valuable guidance, yet must we confine this exploration to compliance?

Any time we identify questions we haven’t thought to ask previously, and ways to answer those questions, we expose new opportunities for business improvement. While few were eager to participate in Conflict Minerals reporting, most would agree that this endeavor has brought benefits to those reporting companies which analyze the results to enable better informed business decisions. Conflict Minerals reporting may not yet have had a positive return on investment, but one day we may find that these methodologies, employed initially for compliance, have become sustainability tools which change the way we develop product offerings and operational efficiencies.

Intrigued? The theme for the 2017 AIAG Corporate Responsibility Summit is Building Blocks of Sustainability. I invite attendees to participate in the session, Realizing Sustainability Benefits through Compliance. This and other Summit topics will encourage attendees to explore how to view compliance as a legally required sustainability activity, and offer an approach to view sustainability as a way to improve product design, optimize manufacturing operations, gain competitive advantages and increase product sales.

Chuck LePard is the Americas Representative for IMDS and CDX, and a product engineering, manufacturing and compliance senior consultant at DXC Technology He is an active member of AIAG's Conflict Minerals and Chemical Management & Reporting Workgroups, the Chemical Management & IMDS Summit Planning Committee, and co-chair of the Chemical Management Recommendations and Documentation Subgroup. DXC Technology was created April 3, 2017 through the merge of HPE Enterprise Services and CSC, and is a Platinum Sponsor of the 2017 Corporate Responsibility Summit.