Emerging Dangers of Benchmarking Your Conflict Minerals Program

A recent report about the general state of conflict-minerals-readiness has spurred much on-line conversations and articles.  Research firm IHS published the results of its analysis of electronics companies, summing things up

 As of August, the percentage of electronics component manufacturers with available conflict minerals information amounted to only 11.3 percent of the peer group…

Moreover, a webinar last month sponsored by KPMG and the law firm King & Spalding polled over 1000 participants (only 21% of whom were from the electronics industry) on their current program status.  Only 22% of those polled have done anything more than establish a company policy on conflict minerals, with 68% indicating they have not developed any strategy or do not know where they stand.

Even though the electronics industry has generally been on the forefront of conflict minerals program advocacy and development, this isn’t completely unexpected.  The final SEC rule was adopted only two months ago, and most companies were waiting for the final rule to begin working on their programs.

Companies are now talking amongst themselves about how each are tackling the massive scope of conflict minerals due diligence and program development.  This is to be expected and can help companies create solutions in a cost effective and expedited manner.

But we are beginning to see a problematic trend in our work with clients and other companies we talk with.  With almost 90% of electronics firms behind the curve, such informal benchmarking activities are establishing inappropriate expectations on the part of those companies.  In other words, companies are comparing their programs and progress to others who are no further along the education, awareness and program development timeline – rather than the applicable industry standards or regulations.

We have seen that this is establishing inappropriate and unrealistic expectations of program needs, scope and timelines among these groups.

Understanding that many organizations are interested in “emerging industry consensus”, we strongly advise that caution be used in interpreting and applying information obtained from these benchmarking activities.

Perhaps the most important task is to benchmark that information against the conflict minerals requirements and standards themselves, then make your own decisions about your company needs and status.

We invite you to contact us with any questions you may have about benchmarking or gap analyses.

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