GRC Platform Saves the Company From Incurring Millions in Compliance & Audit Costs
Companies that source raw materials around the world to manufacture products may be unaware of or disregard the materials country of origin. It is a concern when minerals are mined in war-torn regions with profits going to fund warring factions.
Additionally, companies are often removed from mineral sourcing as suppliers typically manage that process. Given a company may work with hundreds or thousands of suppliers, it is difficult to know which, if any, are sourcing conflict minerals.
Dodd-Frank Section 1502 addresses the issue of minerals mined in areas of the world under heavy conflict from armies and militias such as the Democratic Republic of Congo in Central Africa. There is a sizeable global market for these minerals, as they are used in consumer electronics, as well as dyes, fasteners, accessories and other manufactured goods. Section 1502 requires public companies to disclose annually whether these conflict minerals exist in their supply chains. If so, companies must report on due diligence efforts and conduct a private sector audit.
For a luxury fashion accessories manufacturer and retailer with over 1,000 suppliers around the world, meeting compliance and audit requirements mandated by Section 1502 would cost around $3.5 million annually and take six to 12 months to complete.
The challenge for the manufacturer/retailer is two-fold: one, compliance and audit challenges with meeting 1502 requirements. Two, public pressure on organizations for transparency.
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About NAVEX Global, Inc.
NAVEX Global is the worldwide leader in integrated risk and compliance management software and services. Our solutions help organizations manage risk, address complex regulatory requirements and foster an ethical, productive workplace culture.