Survey by PwC Shows not Much Progress on Conflict Minerals

By Cydney Posner

According to this article in The Wall Streeet Journal reporting on a PwC survey, , companies are not making a whole lot of progress on conflict minerals: "Two-thirds of respondents to a new survey say their companies are in the early stages or have not yet started compiling information needed to meet the requirements of the Securities and Exchange Commission's conflict minerals reporting law…. One-third of the nearly 900 executives surveyed said they still are trying to figure out if the reporting requirement applies to their businesses, according to the survey released Wednesday by PwC. Less than 5% said their companies have gathered most of the required information from their suppliers and have begun assessing it."

According to the article, the toughest challenges identified by those surveyed "were getting accurate and complete information from suppliers, establishing an enterprise-wide conflict minerals policy and identifying relevant suppliers….The survey found nearly 13% of respondents said their companies have 5,000 or more suppliers, with nearly 14% saying they had over 1,000 but less than 5,000, more than 23% saying between 100 and 1,000 and 16.5% having fewer than 100. The more suppliers in a company's chain, the longer the collecting and verification of information will take, and those with thousands of suppliers will have to prioritize where to put their resources…. Nearly one-third of the respondents said their companies expected to spend less than $500,000 to comply with the law, while more than 56% said they did not yet know what the out-of-pocket expense would be."

The survey also showed that over "30% said they didn't know if any of their suppliers provided raw materials, products or components that contain one or more of the conflict minerals, with more than 32% saying fewer than 5% used these minerals. More than 54% said their companies have not yet identified any products within their supply chains that contain conflict minerals, while more than 23% said they have concluded they do not use conflict minerals from the Congo region. Just over 10% said they have identified products that contain conflict minerals that can be traced back to the region. Asked what [repercussions] their companies would be most concerned about if it were found their products or supply chain had minerals from the conflict zone, nearly 23% cited brand risk, 19% said possible loss of customers and more than 28% said they didn't expect the issue to have much of an impact on their business."

Even though many companies appear to be far from attaining these goals, approximately 11% "plan to become conflict-free sometime in the future, and almost a third of surveyed companies expect to require their suppliers to be conflict-free." But companies need "'to understand the population of products that are within scope, the number of suppliers that provide conflict minerals, and the depth of information accessible from suppliers before they can properly design their compliance program as a whole.'"

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