Contract Manufacturing and Conflict Minerals: Creating a Workable Compliance System
Authors: John Sheehan and Allen Abell Company: SigmaTron International Date Published: 9/28/2014
Abstract: HR4173, the Dodd-Frank Financial Reform Bill Section 1502(b) requires all US stock listed companies and their suppliers to disclose the chain of custody usage of Conflict Minerals on company web sites and in filings with the U.S. Securities and Exchange Commission (SEC). While the requirement is designed to enhance corporate social responsibility by eliminating funding for guerilla groups gained through the sale of Conflict Minerals in the Democratic Republic of the Congo (DRC) and adjoining countries, it places significant due diligence and data collection requirements on publicly-traded companies and their suppliers. Contract manufacturers often manage the supply chain for their customers and, as a result, also need a robust system for managing compliance activities. Longer term, they may also support their customer’s redesign efforts or identification of alternate suppliers needed to transition to DRC Conflict Free materials over time. This paper looks at the challenges the new regulations present and best practices in developing a compliance management system and a level of supply chain transparency capable of supporting reporting requirements and design-related engineering activities.