SOURCE: LockPath, Inc.

LockPath, Inc.

June 02, 2015 12:00 ET

Conflict Minerals Reporting: Ensuring Your Efforts Aren't Futile

OVERLAND PARK, KS--(Marketwired - June 02, 2015) - For those required to report their conflict minerals findings, it's game time. Due diligence should be all but done at this point because the June 1 reporting deadline is here.

Many organizations, however, may have been left wondering if reporting efforts were futile.

The D.C. Court of Appeals determined previous requirements in Section 1502 of the Dodd-Frank Act elicited unconstitutionally compelling speech, violating the First Amendment. In November 2014, the court decided to revisit this decision. As of now no revisions have been made, leaving organizations with no definite answer or guidance for this year's deadline.

Traditionally, the cost for organizations to perform con-min reporting has been steep. These expenses coupled with the fact that there are no stable guidelines or enforceable financial penalties has led to the effectiveness of this regulation being questioned.

However, companies can rest assured their efforts were worthwhile. While legislation and direction may be currently lacking, the issue isn't going away.

One strong indicator of this is the recent decisions made by European parliament. Recently passed legislation introduced conflict mineral reporting regulations that will affect nearly one million European companies. These new regulations run parallel to their American counterparts found in Section 1502 of the Dodd-Frank Act. With global adoption of such regulatory standards, constancy and standardization is inevitable for American organizations.

Traditionally, the activities necessary to fulfill requirements of Section 1502 have been extremely resource-laden. Proper due diligence now requires organizations to take vendor management a step further. If materials utilized in manufacturing fall under Section 1502's designation of conflict minerals (3TG), companies must engage with smelters typically found in the second tier of their supply chains. Communication and findings must be documented to provide required data when reporting. Typically this has been done manually through issuing vendor and smelter assessments via email. This method leaves organizations unaware of assessment receipt, completion status, and communications. All this being said, it is very obvious as to why reporting is a major expense and point of frustration for companies.

Companies will benefit from continuously improving their reporting processes. Organizations who develop their methods will reward themselves with more efficient means for future reporting, the benefits from which will be extremely advantageous.

One such way for refining and streamlining these processes involves implementing a Governance, Risk Management, and Compliance software solution (or GRC for short). GRC solutions remove the manual tasks and additional, unnecessary resources. Now organizations can automate things such as conflict mineral questionnaires, security assessments, and scheduled reviews and assessment updates. Risk rankings based on assessment feedback can also be automated. What's more, this all can be done through a time-stamping, secure extranet that shows up-to-date assessment progress. This removes the need to keep up with messy email strings and the need to constantly remind vendors to finish the assessment.

Standardized reporting processes and penalty assessments are imminent, and companies must be ready. Utilizing a GRC solution like LockPath's Keylight can increase an organization's preparedness for when these decisions are made, augment the effectiveness of report filing, and also reduce associated costs with con-min reporting. All of this will ensure reporting efforts aren't futile and, ultimately, being done in the aspiration of achieving the goal of reducing contribution to conflict and human rights abuses.

About LockPath
LockPath is a market leader in corporate governance, risk management, regulatory compliance (GRC) and information security (InfoSec) software. The company's flexible, scalable and fully integrated suite of applications is used by organizations to automate business processes, reduce enterprise risk and demonstrate regulatory compliance to achieve audit-ready status. LockPath serves a client base of global organizations ranging from small and midsize companies to Fortune 10 enterprises in more than 15 industries. The company is headquartered in Overland Park, Kansas.

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