union system for supply chain due diligence self - certification ......union system for supply chain...
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Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas
Jennifer GuestProject EngineerTetra TechP: (734) 213-5057E: [email protected]
1. What has happened to date2. EU legislative process3. Comparison of EU to US conflict
minerals requirements
Outline
2014/03/05 Legislative proposal published2014/03/13 Committee referral announced in Parliament, 1st
reading/single reading2014/10/20 Committee referral announced in Parliament, 1st
reading/single reading2015/04/14 Vote in committee, 1st reading/single reading2015/04/24 Committee report tabled for plenary, 1st
reading/single reading2015/05/19 Debate in Parliament2015/05/20 Decision by Parliament, 1st reading/single reading2015/07/14 interinstitutional negotiations with amendments from plenary
What has happened to date:
First Reading– Committee Stage– Plenary Stage– Follow-up Procedure
Second Reading– Committee Stage– Plenary Stage
Third Reading– Conciliation– Plenary Stage
EU Legislative Process
EU vs US: Scope
US• Tin, Tantalum, Tungsten and
Gold (3TG)• DRC and surrounding
countries (covered countries)• United States SEC filing
companies• Manufacturers (and
manufacturers that contract to manufacture) of products
• Products that contain 3TG• 3TG is necessary to the
production and functionality of the product
EU• Tin, Tantalum, Tungsten and
Gold (3TG)• Conflict-affected and high-
risk areas• Union importers of 3TG• Union smelters of 3TG
EU vs US: Labels
US• No labelling requirement
EU• Responsible importers who
self-declare can be certified by means of a label
• Responsible importers shall be granted a ‘European responsible importer’ label by Member States’ competent authorities
EU vs US: Exemptions
US• Recycled or scrap sources
EU• Recycled or scrap sources
EU vs US: Requirements
US• Conduct a reasonable country
of origin inquiry (RCOI) in good faith
• If results from the RCOI show that the 3TG is or may be coming from the covered countries then due diligence must be conducted on your supply chain in accordance to a nationally or internationally recognized frame work e.g. OECD Due Diligence Guidance
EU• Conduct supply chain due
diligence in accordance to Annex II of the OECD Due Diligence Guidance
• The regulation continues to cite requirements for due diligence that aligns with the OECD Due Diligence Guidance e.g. management system, risk assessment, grievance mechanism, supply chain policy etc.
EUAdditionally ….• Traceability system for minerals to include:
– Description of mineral including its trade name and type– Name and address of supplier to importer– Country of origin– Quantities and dates of extraction, expressed in volume or
weight– If from conflict region provide mine of origin, location
where minerals are consolidated, traded and processed, and taxes, fees, royalties paid
EU vs US: Requirements
EUAdditionally ….• Traceability system for metals to include:
– Description of metal including trade name and type– Name and address of the supplier to the importer– Name and address of the smelter or refiner– Record of smelter or refiner third-party audit– Country of origin of the mineral – If from conflict region additional info according to the
OECD required
EU vs US: Requirements
EUAdditionally ….• The Commission will make a list of responsible importers of minerals
and metals available on the internet.• Any smelter in the Union must meet all the requirements of this Reg. If
they do not then they will subject to fines• The Commission will make a list of responsible smelters or refiners and
make it available on the internet.• Member States shall carry out ex-post checks to ensure responsible
importers comply with Article 4, 5, 6 and 7. They will be conducted by taking a risk-based approach. The ex-posts will include: – Examination of the supply chain due diligence obligations including
management system, risk management, third-party audit and disclosure– Examination of documentation and records that demonstrate compliance
with due diligence obligations – Examination of audit obligations
EU vs US: Requirements
EU vs US: Smelters
US• Must trace, identify and
report all smelters
EU• Must trace, identify and
report all smelters• The EU plans to maintain a
list of responsible smelters and refiners
EU vs US: Audits
US• Currently, after the court of
appeals decision, an independent private sector audit is required if a filing company claims they are conflict free or are not conflict free
EU• Certified responsible importers
shall be exempted from third-party audit provided they submit substantive evidence that all smelters or refiners in their supply chain conform to the provision of this Reg.
• Importers in scope of this Reg. shall carry out a third-party audit
• Audit scope to include:– Importer’s activities, processes and
systems for supply chain due diligence
– Importer’s compliance with Articles 4, 5 and 7 of this Reg.
EU vs US: Reporting
US• Reports are due by May 31st
of each calendar year for the previous year
• Submit to the SEC via EDGAR
EU• Reports are due by March
31st of each calendar year for the previous year
• Submit to the Member State competent authority
EU vs US: ReportingUS
• Form SD:– Commission File Number– IRS Employer Identification Number– Address and Contact Person– Brief description of the RCOI– Form to be filed on EDGAR
• CMR:– Detailed description of the due
diligence process implemented and the results of the assessment
– Provide a description of the products and the facilities used to process these products
– Disclose the location of the mine and the step took to determine this with the greatest possible specificity
– When applicable a copy of the independent third party audit and who conducted the audit and certification of independence
EU• Company contact details and description of
its commercial activities• Declaration of conformity to Article 4, 5, 6
and 7• Third-party audit• Total amount of minerals purchased as
confirmed by a third-party audit• Name and address of each responsible
smelter or refiner in its supply chain• Third-party audit of smelter or refiner• Proportion of minerals originating from
conflict-affected and high-risk areas to the total amount of the minerals purchased by each of those smelter or refiner, as confirmed by a third-party audit
• Report publicly on an annual basis on due diligence policies and practices and risk management and summary of third-party audit
Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains
1. Status2. Comparison of China to US conflict
minerals requirements
Outline
• In an unprecedented move the Chinese government opened up their Due Diligence Guidelines for Responsible Mineral Supply Chains for public comment.
• The commenting period closed on November 7, 2015• CFSI submitted and included anonymous comments
from member companies• Currently awaiting feedback on the comments from
China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC)
What has happened to date:
China vs US: Scope
US• Tin, Tantalum, Tungsten and
Gold (3TG)• DRC and surrounding
countries (covered countries)• United States SEC filing
companies• Manufacturers (and
manufacturers that contract to manufacture) of products
• Products that contain 3TG• 3TG is necessary to the
production and functionality of the product
China• Covers all minerals but the
CCCMC is prioritizing: Tin, Tantalum, Tungsten and Gold (3TG)
• Conflict-affected and high-risk areas
• Voluntary for “all Chinese companies which are extracting and/or using mineral resources and their related products and are engaged at any point in the supply chain of minerals”
China vs US: Requirements
US• Conduct a reasonable country
of origin inquiry (RCOI) in good faith
• If results from the RCOI show that the 3TG is or may be coming from the covered countries then due diligence must be conducted on your supply chain in accordance to a nationally or internationally recognized frame work e.g. OECD Due Diligence Guidance
China• Must determine origin• Risk based assessment• Apply OECD Due Diligence
Guidance
ChinaAdditionally ….• Risk is broken down into two categories.
– Type 1 are the risks contributing to conflict and serious human rights abuses, as they are defined in the OECD Due Diligence Guidance
– Type 2 go beyond the risks outlined in the OECD Due Diligence Guidance. They include those risks relating to serious misconduct, as defined in the Chinese Responsible Mining Guidelines.
China vs US: Requirements
ChinaAdditionally ….• Warning Signs have been defined to help determine when
enhanced due diligence is required:
China vs US: Requirements
China vs US: Audits
US• Currently, after the court of
appeals decision, an independent private sector audit is required if a filing company claims they are conflict free or are not conflict free
EU• Audit will assess whether
the company has fulfilled core requirements
• the auditor will check a) whether the company took
appropriate steps to actively collect information on risks and to evaluate the information received by third parties
b) whether the company has taken effective and adequate action to mitigate the risks identified
ChinaAdditionally ….• Companies can apply for certification
– Basic responsible sourcing certification– Basic responsible sourcing certification (making progress)– Extended responsible-sourcing certification
• Certified companies and those seeking certification will be made available via list on a website
China vs US: Audits
China vs US: Reporting
US• Reports are due by May 31st
of each calendar year for the previous year
• Submit to the SEC via EDGAR
China• Reporting publicly for the
step 5 report (OECD Due Diligence)
• A template and website will be made available
• Watch for feed back from the commenting period• CCCMC has promised further guidance on how to
implement due diligence requirements and audit protocols
What’s Next
Requirement U.S. E.U. ChinaMinerals in scope 3TG 3TG All (3TG priority)
Regions/Areas in scope
Democratic Republic of the Congo (DRC), Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia
All conflict-affected and high-risk areas
All conflict-affected and high-risk areas
Companies in scope All SEC filing companiesAll importers and smelters
All Chinese companies which are extracting and/or using mineral resources and their related products and are engaged at any point in the supply chain of minerals
OECD Due Diligence Guidance Yes Yes YesAudit Pending Court Decision Yes YesPublic Reporting Yes Yes Yes
Overall Comparison
Jennifer GuestProject EngineerTetra TechP: (734) 213-5057E: [email protected]