Many Companies Ill-Prepared for Compliance with Conflict Minerals Regulation

With just four short months left before publicly traded electronics component manufacturers doing business in the United States must report to the U.S. federal government any use of so-called conflict minerals sourced from Africa, many global companies are still without a concrete plan for compliance, according to new information gathered by IHS Inc.

In a December IHS webinar on the subject, fully 42 percent of participating companies in a survey professed uncertainty on what to do, or appeared unprepared for the May 2014 deadline on conflict minerals.

Of the 42 percent of the respondents, at least 22 percent said they were “unsure” on how to go about meeting the new regulations on conflict minerals. Meanwhile, 20 percent admitted they were just in the process of putting a plan together or “determining that approach now.”

The companies surveyed included 162 firms from five global geographical regions, with the majority of attendees based in the U.S. The webinar was entitled “The Road to Compliance: Managing Restriction of Hazardous Substances (RoHS); Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (REACH); and Conflict Minerals Regulations.”

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The protocols on conflict minerals took effect in August 2012 under the Dodd-Frank Wall Street Reform and Consumer Protection Act set out by the Securities and Exchange Commission (SEC), with initial reporting legally required by May 2014 of publicly traded U.S. companies.

MORE FROM THOMASNET NEWS: Conflict Minerals Reporting Must Be Full, Accurate, and Ongoing

Compared to those feeling adrift on conflict minerals compliance, 23 percent use internal resources to catch up, while 9 percent employed a third-party reference database and 2 percent took advantage of supplier tools. The remaining 24 percent subscribed to a hybrid approach that utilized some combination of determining a workable approach that uses internal resources and also referring to third-party reference content.

For 30 percent of the respondents, the biggest concern with the looming deadline revolved around fears relating to noncompliance with U.S. regulations. “Losing clients” followed closely behind at 28 percent, and “not having responsible supply chains” was third at 20 percent.

And despite the large number of companies that remain ill-equipped on compliance, 50 percent of the sample admitted they could use help in collecting conflict minerals information from their suppliers — a revealing statistic that shows how important some form of assistance could be.