The Automotive Industry Action Group (AIAG) recently issued a call-for-action to all companies within the automotive supply chain to become fully engaged in Conflict Minerals reporting. “Your participation is critical if the industry is to achieve a transparent, conflict-free mineral supply chain, and this means supporting not only your direct customers’ requirements, but also ensuring your company’s compliance with the U.S Securities and Exchange Commission (“SEC”) conflict mineral’s rule, as applicable,” says the invitation.
There are a number of ways for your company to become involved, of course, but your personal participation is valuable, as well — to you and to your company. Just ask Ryan Jenner, SCM Compliance/ Business Continuity Planning/ Risk Management regional lead for Yazaki North America, Inc., who is a member of AIAG and the Conflict Free Sourcing Initiative (CFSI) conflict minerals work groups.
Jenner was selected to participate in AIAG’s first pre-audit smelter visits. Here, he shares his experiences.
AIAG: Why has AIAG sponsored multiple conflict mineral briefings?
Jenner: AIAG briefings help to educate the auto industry and company associates affected by the Dodd-Frank legislation. AIAG collaborates with CFSI echoing a consistent message to promote industry best practices and share lessons learned amongst its members to comply with customer and governmental filing requirements. This unified approach has led to cost savings within the auto industry while serving the human interest factor.
AIAG: The fourth briefing included speakers from the Enough Project and the US Department of State. What new perspective did they bring?
Jenner: The Enough Project aims to counter human right abuses fueled by gangs and armed groups in the Democratic Republic of Congo (DRC) regions. The project provides AIAG and CFSI members with good insight into how well our efforts are working towards stemming conflict in the affected regions.
Feedback from the project representative provides our group with a snapshot of our work progress to-date. It is a good way to help gauge the success of our efforts and ways to better serve the initiative moving forward. What we have seen is that change is slow. However, with continuous effort and the use of a single voice by the industries as a whole, we are making good strides towards eliminating the wrongs being committed in these areas of the world.
Eileen Kane, economic officer at the U.S. Department of State’s Bureau of Economic Affairs, provided her insight into the Dodd-Frank Act legislation, the impact the legislation has on the industry as a whole, and the influence it has on other countries and regions that support this movement. Her feedback is important, because it demonstrates the footprint the U.S. legislation has made on other countries who are considering implementation of their own laws to promote the conflict mineral initiative outside U.S. jurisdiction.
AIAG: Several of the sessions included speakers from both OEMs and suppliers. Why is this helpful?
Jenner: It is important to understand the reporting difficulties at both ends of the supply chain spectrum in order to create an end to end process that demonstrates year-over-year improvements as required by the SEC and/or your customer base. An overall review of the industry and obstacles encountered at both ends of the supply chain spectrum must be reviewed and discussed to formulate one reporting process shaped by best practices and agreed upon by the entire industry. An outline of reporting requirements and a consistent reporting process will avoid confusion on what is expected for that year’s conflict mineral reporting season.
AIAG: You were recently chosen to participate in AIAG’s first smelter pre-audit visit with CFSI. Tell us about that experience.
Jenner: This spring, AIAG participated in an on-site pre-audit smelter visit with the CFSI Smelter Engagement Team (SET) by electing to send one of their own AIAG SET representatives to smelter facilities located in China. I was honored and privileged to be selected from my AIAG peers to participate in this event.
Smelters can seek participation in a pre-audit visit for various reasons. The SET team pre-audit visit provides a smelter with assistance needed to pass their official audit towards becoming a certified smelter. The team provides the smelter with an overview of the CFSI audit process and helps the smelter identify deficiencies in their internal processes; this allows the smelter time to implement recommended corrective actions in advance of the official CFSI audit.
Assisting smelters is of vital importance to AIAG and CFSI team initiatives. Companies must identify and report 3TG minerals in their supply chain along with a minerals country of origin as part of their conflict minerals reporting requirements. Raw materials sourced from mines filter through a smelter facility in order to be processed and used in production of company products. Smelter facilities are the most eligible candidates in the supply chain to be able to identify which minerals come from which mines and where the finished product they produce is shipped. A smelter that receives CFSI certification, indicating their facility does not receive minerals from conflict mines, allows the smelter a competitive advantage against their peers in the industry who are not CFSI-compliant while also providing a dual benefit of lessening obligations to companies who must report out to the SEC and their customer base.
The CFSI SET team is very nurturing to its team members. Members new to pre-audit visits — that would include myself — are paired with veterans who have conducted pre-audit smelter visits in the past and generally speak the language of the country being visited. During my visit, I was fortunate to be teamed with Ford and Best Buy representatives. Both were located in China and very well versed with the regions and smelter locations we were visiting. I couldn’t have asked for a better group of people to show me the ropes of my initial pre-audit smelter visit, nor could I be more appreciative of the accommodations they provided during my travels. Personally, I’m truly honored to be a part of such an intelligent group of people sharing a common interest. Their knowledge and expertise were very rewarding in helping to make this a productive trip.
AIAG: How does AIAG communicate the results of such a visit so that it helps other companies?
Jenner: AIAG created a SET team that is a sub-committee of the AIAG Conflict Minerals Work Group. AIAG SET works in collaboration with the CFSI SET and reports out any smelter updates and smelter outreach activities that are being conducted to AIAG member companies. The work groups from AIAG and CFSI consolidate their field notes and report out to member companies on a bi-weekly basis. This is of great benefit to multiple, inter-related industries in need of this information.
AIAG: Did you learn anything that was unexpected?
Jenner: The degree to which the momentum behind the CFSI/AIAG initiative has progressed over the past year as compared to previous years is remarkable. The numbers show that as more smelters are becoming familiar with the work being done by CFSI/AIAG, the more willing non-compliant smelters are in joining the program. This momentum has also flourished beyond companies wishing to take part in this effort, to governmental entities who also want to participate in this effort by proposing their own legislation to stem the atrocities that take place in the DRC regions.
“It’s impressive” Jenner concludes, “to see from where we began to where we are now in helping to stem conflict and better the lives of individuals in the DRC regions, and to see companies across multiple industries and governments from around the world come together united in purpose. I’m humbled to be a part of such a wonderful group of people.”
(Left to Right): Jerry Huang, Best Buy; Ruby Liu, Best Buy; Yang Fang, Hunan Chuangda Vandium Tungsten Co., ltd.; Ryan Jenner, Yazaki North America, Inc.