Perspectives

Conflict minerals: Private companies

Compliance considerations

As a result of the Securities and Exchange Commission’s (SEC) final rule on Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Final Rule”), private companies not legally subject to the Final Rule’s reporting requirements are still impacted. Many private companies in the supply chain of registrants find themselves obligated to put in place a conflict minerals compliance program to enable credible and reliable reporting to meet commercial requirements of their customers. Specifically, many private companies that are suppliers to registrants are receiving requests from these customers to investigate their supply chain and provide information regarding the use of conflict minerals in the products they sell.

What does this mean for private companies?

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Bottom line–doing nothing may not be an option. As registrants subject to the Final Rule continue to gain greater insight and visibility into their supply chain procurement practices, they will increase their ability to take actions against non-compliant suppliers. Suppliers that do not comply with registrant customer information requests and other forms of engagement may find themselves at risk of being replaced by other suppliers. Impacted registrants will increasingly be held accountable for the performance of their conflict minerals compliance program performance and thus will increase the pressure on their suppliers to do the same.

 

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Kristen Sullivan

Kristen Sullivan

Partner | Deloitte & Touche LLP

Kristen leads Sustainability Reporting, Assurance ...More

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