1. Joel Pekay Sales and Marketing Director January 2014
The Changing Face of Compliance: A Positive Approach to Conflict Minerals
Joel Pekay Sales and Marketing Director January 2014

2. Why are we here?
To protect children from forced abusive labor and other illegal mining activities in the Congo and surrounding areas

3. Common Concerns about Conflict Minerals
What is the most striking aspect of the Conflict Minerals rule?
It requires SEC filings for compliance
Executive management will need to sign-off on a disclosure
Rather than with conventional compliance or quality staff, compliance responsibility lies with investor relations

4. Common Concerns about Conflict Minerals
Is a socially responsible image important?
Corporate Social Responsibility is a crucial aspect of corporate and stakeholder value
What would happen to your business if the media claimed you were tied with abused child labor?

5. Common Concerns about Conflict Minerals
Can Conflict Minerals tie in with other global, regional, or local requirements?
This is a chemical related disclosure; why handle it totally different?
Build a single (chemicals/minerals) compliance assurance process
Include such in your overall Corporate Responsibility Strategy
Try to utilize your overall strategy as a competitive advantage
Additional regional CM rules are pending in Europe

6. Who is Intertek? More than 1,000 laboratories and offices
Over 36,000 people
More than 100 countries
FTSE 100 company in the Support Services sector
Market capitalization at £5.4 billion
Revenue generation of over £2bn in

7. Our People We are We are Embedded in more than 25 industries
Experts and leaders in our fields
Local with international understanding
We are
Chemical, Electrical, Mechanical and Petroleum engineers, Chemists, Physicists and Materials Scientists, Toxicologists, Medical Consultants, Biologists, Geologists, Surveyors and Inspectors, Advisors to the UN, Lawyers, Auditors…and more

8. Overview of Dodd-Frank S1502
Basics of Section 1502
On August 22, 2012, the Securities and Exchange Commission adopted S1502 of the Dodd-Frank Act.
As noted by the United nations, the regulation intends act as a ‘catalyst’ to avert direct or indirect financing of conflict in the Democratic Republic of Congo (‘DRC’) and 9 neighboring countries through pressuring companies to disclose origin of materials used in the supply chain.
The metals covered are Gold, Tungsten, Tantalum and Tin.
The law is written in a ‘guilty until proven innocent’ fashion
Who will this Affect?
Companies who file under Exchange Act; manufacture or contract to manufacture products with the minerals; supply chain sources from DRC or surrounding countries; mineral is necessary to functionality of product
Impact on Companies
Will likely affect 850k companies; SEC estimates this final ruling will have a final impact of $3-4 billion; other studies suggest much more. Costs are likely to affect non-reporting companies in a disproportionate manner.
The ruling includes no de minimis exception for amounts found in a company’s supply chain.
Companies are expected to analyze their supply chains for country of origin risk, and depending on applicability, conduct due diligence to reasonably and in good faith determine origin of the applicable minerals.

9. What does it really mean?
Understand the chemical composition of your product
Identify presence of gold, tin, tungsten, or tantalum
Disclose annually whether the minerals originated from a conflict area
If they do, the registrant must file a separate report detailing the measures taken to exercise due diligence on the source and chain of custody

10. Typical Conflict Minerals Usage in Electronics
Tantalum
Tin
Tungsten
Gold
PCB √
Solders
Component lead frames, contacts, and connectors
Processors and chipsets
Capacitors
Hard disk drive
LCD screens and displays
Power supplies and adaptors
Speakers
Cameras
Batteries
Cables
Mechanical Parts

11. Typical Conflict Minerals Usage in Automotive and Aerospace
Tantalum
Tin
Tungsten
Gold
Computer Systems √
Anti-Lock Braking Systems (ABS)
Airbag Protection Systems
Jet Engines
Rockets

12. Typical Conflict Minerals Usage in Consumer Products
Tantalum
Tin
Tungsten
Gold
Food Cans √
PVC in Soles of Shoes
Buckles, Fasteners, Zippers, & Buttons
Jewelry
Fashion Jewelry (solder)
Hearing Aids
Tools (i.e. drill bits, cutting tools, sanding disks)

13. Complexity of the 3T+G Supply Chain
In-Country Bag and Tag Systems
Solutions for Hope (SfH): Tech sector initiative launched in July 2011 to create an initial flow of conflict-free tantalum from the DRC
1,000s
Mines
Trading Houses …
Chain of Custody Audits should be conducted; Companies can “piggy back” onto Industry initiatives, such as the Conflict Free Smelter Program
Smelter / Refiner
100s …
Product/Component Manufacturer
OEM
Companies conduct self assessment questionnaires, traceability audits
1,000s
Companies have the most impact further downstream.

14. Let’s Simplify It for a Single Product
If I have a product, what do I need to do?
Assess the product to determine the likelihood of Conflict Minerals being present
If Conflict Minerals are likely in a product….
Contact your suppliers to determine the origin of the materials
Collect and aggregate the data
Am I still at risk?
If the data shows it is from a conflict free zone, no.
If data is not available, yes.
What then?
Report

15. Best Steps to Ensuring Compliance
Identify Applicable Requirements
Include applicable requirements (including CM) in Restricted and Declarable Substances Strategy
Define Market and Customer Drivers
Assess Regulatory Requirements for all
Creation of RSL (if applicable)
Set up a Compliance Assurance Management Process
Employee and Vendor Communication
Supplier Data Collection
GAP Analysis and Risk Assessment
If Discrepancy with the Requirement, Identification of Applicable Supplier Alternatives (If Available)
Product Screening and Testing Based Upon GAP/Risk Assessment
Product Re-engineering (if required)

16. OECD Guidance & Recommendations
The Organization for Economic Co-operation and Development Guidelines are a systems based approach to managing country of origin due diligence and reporting.
Endorsed by 30 companies in pilot program
Endorsed by US Department of State
Referenced by the SEC in the adoption of the 1502 Dodd-Frank Ruling
OECD Requirement
Intertek’s Approach
1. Establish strong company management systems √
2. Identify and assess risks in the supply chain
3. Design and implement a strategy to respond to identified risks
4. Carry out independent third-party audit
5. Report on supply chain due diligence
Your SEC Filing

17. Determine Applicability Actions and Communicate
Recommended Approach
Determine Applicability
Does your company file Pursuant to Exchange Act
Does Your Company Manufacture or Contract to Manufacture?
Do your products contain any of the four minerals?
Are the Minerals Necessary to the functionality of Product
Actions and Communicate
Company should position itself for compliance
Set Supplier Expectations and Reporting Requirements
Create Corporate Value Statement
Setup or Enhance Internal Management Systems
Supply Chain Management
Distribute Self Assessment Questionnaires, Manage the Data and Profile Suppliers
Create and Implement Supplier Management Solutions
Chain of Custody Auditing
Utilize EICC CFS Program (if applicable)
Disclose
Issuance of a Conflict Minerals Report
Post on website
Understand potential conflicts

18. Determine Applicability
Get to Know Your Products
Understand your Contracting and Procurement Processes
Filing Status: The Ruling Affects All Issuers that File Reports Pursuant with the Exchange Act

19. Actions and Communicate
Create and Distribute a Company Wide Value Statement and Position on Conflict Minerals Compliance. Such Management System and Policy enhancements are in line with OECD Guidance
Clients & Customers
- Prepare Statements on Conflict Minerals for concerned buyers/retailers
- Amend management systems
- Share milestones and timeline of implementation/roadmap
Suppliers
- Revise Code of Conduct; benchmark on Annex II of OECD Guidance
- Supplier and Vendor Policy revision and communication
- RSL Lists and Manuals/Guides
Other Stakeholders
- Communicate position and time and milestones/goals on website
- Institute conflict minerals verification in manuals and train employees on requirements

20. Supply Chain Management
Supplier data collection and cleansing
Business Profile completion
Risk based analysis
Verification Services 1
Collection and cleansing of
supplier information 2
Business profile completion 3
Risk-based analysis 4
Verification

21. Supply Chain Management – Data Collection
Data Collection will be the most labor intensive activity in the compliance process. Understanding internal capacity will be crucial to meeting the reporting requirements of the Conflict Mineral Act.
If a high risk component or material, conduct testing for 3T&G
Creation of survey / questionnaire to meet regulatory requirements for Conflict Minerals and others including RoHS 2, Prop 65, REACH, etc..
Contact suppliers directly and gather the necessary declarations, statements, reports, etc. for compliance to Conflict Minerals Act
Review and interpretation of collected data to provide detailed report for internalization and declaration for CM compliance.

22. Supply Chain Management – Auditing
Supply Chain Auditors conduct traceability audits on a sampled basis of High Risk Suppliers
The purpose is to determine transparency levels with regard to documentation tracking for purchases, policies and practices involving high risk suppliers and their utilization of applicable conflict minerals.
This on-site assessment is conducted at the smelter/refiner or OEM level of the supply chain. Documentation is reviewed to ensure conflict materials are excluded in the supply chain.
Examples include: Bill of Ladings, Country of Origin Certification, Site visit documentation, Export Licenses
SUPPLIER A
SUPPLIER B
SUPPLIER B
DUE DILIGENCE / AUDIT
REPORT
SUPPLIER C
Risk Filter
SUPPLIER D
SUPPLIER D
Etc…

23. Disclosure Disclosure Requirements
Minerals do not originate in Conflict Mineral countries or they may, but the sourced minerals did not finance or benefit armed groups.
File Conflict Minerals Report with Annual Report;
Include private sector audit report and identify auditor
If minerals DID or issuer is UNDETERMINABLE:
Conflict Minerals Report exhibit to Annual Report with additional requirements, including but not limited to:
The products manufactured or contracted to manufacture that are found to be “Not DRC Conflict Free”
The facilities used to process the conflict minerals in those products
The country of origin of the conflict minerals in those products.
The efforts to determine the mine or location of origin
The country of origin of the conflict minerals in those products, if known.

24. Disclosure Liabilities for Disclosure/Non-Disclosure
Dodd-Frank silent on penalties
According to the SEC, filing Form SD as opposed to 10K does not create strict liability and a person shall not be held liable for misleading statements in a filed document if it can be established that the person acted in good faith and had no knowledge that the statement was false or misleading.

25. In Summary: Key Actions
Create a comprehensive solution:
Build a single (chemicals/minerals) compliance assurance process
Include all relevant regulations, requirements, market drivers
Collect supplier data, where needed
Follow up on high-risk suppliers
Communicate, communicate, communicate
Do your “due diligence”
Partner…..
with

26. Valued Quality. Delivered.