Development International, an NGO with affiliates around the world, recently published its third annual report (the “Report”) summarizing U.S. public company Conflict Minerals Reports (“CMRs”) filed on Form SD for reporting year 2016. Although the Report advances a very narrow reading of the recent D.C. Circuit case striking down part of the SEC conflict minerals rule, it otherwise provides a wealth of statistical information about the most recent round of Form SD filings. This information can be useful to retailers benchmarking their own Form SD reporting as well as the Form SD reporting of key suppliers.
The Report surveyed 1,153 SEC filings made through July 10, 2017. Seventy-four registrants classified as retailers filed Form SD for the 2016 reporting year, continuing a gradual year-over-year decline from 83 in 2013. Sixteen companies—including one retailer—submitted an independent private sector audit to accompany their Form SD filings, slightly down from 19 in the prior year.
As we previously reported, in April the SEC staff released a statement that it would not recommend enforcement action against companies that choose not to engage in the additional due diligence requirements imposed by Item 1.01(c) of Form SD and thus do not file a CMR as an attachment to the Form SD. Since 911 of the 1,153 Form SD filers completed a CMR, it appears that most companies did not take advantage of the SEC staff relief. Nevertheless, more than half of CMR filers (63 percent) implied or reported that their products were “DRC conflict undeterminable,” meaning that their due diligence efforts were inconclusive.