How to Gather CMRTs and Submit Your Form SD

by Source Intelligence

on February 24, 2020

Designed to increase global social responsibility and transparency in conflict mineral sourcing, the SEC requires companies to provide a Special Disclosure (Form SD) every year (Section 1502 of the Dodd-Frank Act). This applies to you if:

  1. Your company trades on US exchanges.
  2. Your company utilizes the supply chain of tin, tantalum, tungsten, and gold (3TG).

Even if you are not a public company, you have to do your part for your customers.

Form SD’s function is to prove to the government that your company has done its due diligence in respect to ethical sourcing. In the case of 3TG, these minerals are found in locations where purchasing from the wrong suppliers could mean funding war crimes or modern-day slavery.

The Conflict Mineral Report Template (CMRT) is an industry-standard form you can use to list smelters or refiners involved in your procurement scheme. It includes information such as name, country of origin, details of minerals and conflict-free sourcing policies. The purpose of the CMRT is to help you gather the information you need from your suppliers to complete the Form SD.

We recommend that organizations get started sending suppliers the CMRTs as early as August or September. In fact, many companies have implemented an ongoing process so their suppliers can update documents year-round. Gathering all necessary information is extremely time-consuming since the CMRTs affect the entire supply chain, which could consist of 7 tiers or more. Even if you collect from only the first tiers of your business partners, they must work upstream and trace the mineral’s origin on a global scale.

Mineral sourcing supply chain

The task is increasingly difficult if you have been sourcing from new suppliers who are not aware of the importance of this submission or have not yet been sufficiently educated and trained.

 

Our Recommended CMRTs Collection and Form SD Timeline

 

At Source Intelligence, our experts have had over 30 years of supply chain compliance experience and found a timeline that works best to make sure you file the Form SD on time.

 

March 31st: Deadline to Collect Your CMRTs

Work closely with your suppliers to gather all necessary information and analyze the data to identify:

    • Smelters that are known to source from the DRC
    • Smelters that are known to source from neighboring countries (i.e. countries that share an internationally recognized border with the DRC: Rwanda,
    • Burundi, Tanzania, Uganda, South Sudan, Central African Republic, Republic of the Congo, Angola, Zambia)
    • Smelters who process recycled or scrap materials
    • Smelters that are known to source from outside the DRC and neighbors
    • Smelters sourcing from unknown origins

You can compare the list against the CFSI Reasonable Country of Origin Inquiry report and third-party databases. Source Intelligence’s proprietary algorithms identify and merge smelter aliases to provide you with the most accurate verification process. We also continuously update the list with newly identified high-risk providers.

 

April 15th: Draft a Summary Report

The summary report will help you organize and verbalize the information to include in the special disclosure report. Using this summary as an outline will help clarify and address all items that may be included in the report:

    • Reasonable Country of Origin Inquiry (RCOI)
    • Due diligence program, including company management system, risk assessment, and risk management strategy
    • Independent Private Sector Audit (ISPA), if applicable
    • Product disclosures (description and clarification on which products are DRC conflict-free and which are not)
    • Smelters or refiners disclosures, including efforts taken to locate the mine of origin
    • Measures taken since the previous reporting period and future measures to ensure to further improve the due diligence program

 

May 31st: Form SD and CMR Submission

Once your Form SD is completed, all that’s left is to electronically submit it to the SEC through their EDGAR portal.

 

Obstacles Hindering the Report Preparation Process

 

Sending CMRTs to priority suppliers and collecting, sorting and organizing information may sound easy on paper. However, many roadblocks may slow down the process to the point of risking a missed deadline.

Unless you purchase metal directly from smelters or refiners, collecting and analyzing data is a lengthy process with limited visibility and leverage past the first tier of suppliers. You are dependent on your partners completing their assignment and starting too late may not give you enough time to do the following:

    • Follow up with unresponsive suppliers
    • Address missing smelter information
    • Deal with missing suppliers in the survey
    • Correct erroneous data
    • Resolve inaccurate or incomplete reports due to language barriers
    • Fix incomplete submissions

Other common pitfalls include:

    • Using the wrong version of CMRTs
      The template has been updated several times both in terms of language and the content. The most current version was released in April 2019 and is CMRT 5.12.
    • Formatting conflicts
      The CMRT is not designed to support narrative but rather acts as a concise list of information about smelters to facilitate the exchange and improve the accuracy of data.

 

Ready. Set. Submit: Using a Third Party Compliance Solution

 

Due diligence in mineral sourcing – and conflict minerals in particular – is an ongoing process. Compliance is not a one-time awarded badge but an annual commitment that mobilizes time and human resources. Whether you operate in the US market, need to report to your customers, or must adhere to the EU’s more stringent regulations, you can’t assume nothing has changed from one year to the next. A third party conflict minerals compliance program like Source Intelligence provides a streamlined, efficient process to ensure the transparency of your supply chain, however far and wide its reach, and keeps you and your teams free to focus on your core business functions and growth objectives.

Mineral sourcing compliance

Looking for Help in Filing Your Form SD?

 

Fulfilling your legal obligations concerning supply chain transparency and conflict-mineral sourcing due diligence measures need not be the vampire-like process that sucks the time and energy out of your organization. At Source Intelligence, we are well aware of the multi-faceted and complex implications of compliance, including administrative requirements such as CMRTs and Form SD.

Our highly customizable software solution, covers all your needs for regulatory reporting, supplier engagement and education, intelligence analysis for data-driven strategic decisions, responsible sourcing and global engagement. With over 30 years of experience, our compliance experts can help you navigate the intricacies of supply chain management.

Whether you feel you are falling behind on this year’s special disclosure submission and need assistance to quickly turn-around or are considering your long-term compliance goals and seek a robust yet flexible program, Source Intelligence is your one-stop-shop.

Request a free consultation call with one of our experts to assess and discuss your high-level compliance objectives and find a custom solution for you.

Get a Consultation Call

 

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