Best Practices to Optimize Your Year-Two Conflict Minerals Filing

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May 8, 2015Kirsten WallerstedtBlog

The June 1, 2015* due date is quickly approaching for year-two Form SD and Conflict Minerals Reports (CMRs) filings with the U.S. Securities and Exchange Commission (SEC). Here are some best practices and suggestions to keep in mind as you draft and finalize your public disclosure.


  • Start early – Multiple rounds of review for your report will produce a better filing. Various departments such as compliance, legal, marketing, etc. may have valuable advice to contribute. Remember, SEC filings are always available to the public, so publishing a well-reviewed report is wise. Executive-level approval and sign off is needed, so get your executive up to speed early on as well.
  • Supporting evidence of your actions – Can you back up your CMR assertions with documented evidence? Most companies will not get audits this year, but once the audit requirement is reinstated most companies will have to be able to show that they actually undertook the due diligence actions that they describe in their CMR. It may be helpful for your team to evaluate the statements you make for the 2015 filing with this audit standard in mind.
  • Benchmark – Consider reviewing CMRs that have already been filed with the SEC during 2015. Seeing what others have written can be helpful to guide your own report. However, be aware that an early filing is no indicator of quality.
  • DRC Conflict Free – While drafting your disclosure, keep in mind the goal of the law: to eliminate funding of conflict in the covered countries, and to maintain economic ties to conflict-free smelters and refiners in the DRC region. It can be advantageous to demonstrate an understanding of the fundamental goal of the law when describing your company’s policies and actions. Also, be careful not to imply that your materials are “Conflict Free” – according to the SEC’s Corporation Finance director, a company that suggests their products are conflict free, even without using those exact words, should likely be subject to the CMR audit requirement.
  • Demonstrate improvement – A core tenet of the conflict minerals law is to establish a process to continually identify and mitigate risks in your supply chain. The law is not designed to demand perfection – it is designed for the real world where suppliers, sources, and available information are constantly changing. It’s a good thing to acknowledge actual problems or risks that you have found, and to describe how your company addressed (or will address) the specific issues.
  • Integrate expert guidance – Companies may benefit from integrating auditing guidance into their CMR practices this year. The Auditing Roundtable guidance document provides clarity on the objective of the CMR audit and helpful questions and answers (Q&As) including what level of evidence and verification of claims may be needed. The American Institute of CPAs (AICPA) conflict minerals resources also include valuable Q&As, for example on the use of section headings and subheadings in your CMR (Question 13) as well as the types of words to use and to avoid using (Question 5). AICPA also provides a sample CMR format that would help facilitate a successful audit. Not a bad idea to start good habits early!


Perception and reception of your filing by various audiences should influence how and what you disclose.

  • Write with various audiences in mind – Consider audiences such as: Your investors (remember Section 18 liability for false or misleading statements applies to all SEC filings); your customers; auditors who may look at past reports to understand the history of your program; U.S. sanctions against the trade of illicit natural resources from the DRC; non-governmental organizations (NGOs) rankings and reports; and any audiences specific to your company or industry.
  • Your filing will fall on a spectrum: You should decide where – There is a spectrum of CMRs, from minimum reporting to full and descriptive disclosure. A good practice is to consciously decide as a company where you want your report fall on the spectrum, from bare minimum to ideal. There are pros and cons to each!
  • Consider public pressure – Amnesty International and Global Witness recently released a controversial joint review of 2014 filings in a report called "Digging for Transparency".  The Responsible Sourcing Network also released documents intended to influence 2015 filings, entitled "Expectations Shortlist" and "Indicators Shortlist". These groups are effectively trying to increase pressure for issuers to do more with their conflict minerals work and filings, and to be a lot more transparent about their work.
  • Check out the leaders – Notably in endnote 4 of the "Digging for Transparency" report, the NGOs list companies they deemed to have met all their standards in their 2014 filing. These could be good reports to review and use as a model, depending on your company’s goals and priorities.

*June 1, 2015 is the deadline this year since the formal May 31 deadline falls on a weekend.

3E Supply Chain (3ESC) offers a comprehensive solution to help our customers meet the obligations of conflict minerals compliance. Learn more here: