The new public comment period initiated by SEC Acting Chairman Michael Piwowar is now closed and we have reviewed almost all the submittals. What is surprising is that there still seems to be significant misunderstanding or interpretations of the rule, and some issuers are spending far more than is likely necessary. The following comments and estimates that caught our attention:
- Two industry groups cite a company spending $10 million in initial implementation costs and $3 million in ongoing costs (most likely the same company). We were shocked to see those numbers. No client of ours, nor any of the many Fortune 500 we have direct or indirect contact with, has expended that much in relation to the Rule.
- One company is cited as needing 7 months to survey 300 suppliers. If that is indeed current information, there are most likely program implementation approaches available that the company is unaware of, or has chosen not to pursue.
- Another commenter privately disclosed their cost and associated scope of their efforts to us in an email dialogue. Based on our understanding, that company is expending approximately 90% more effort than needed. They have received poor guidance on the rule or made a voluntary decision to go down that path.
- There are multiple references to an estimate of an IPSA costing $250,000 – $350,000 and taking six months. This estimate appears to reflect the original proposed rule rather than the IPSA objectives and scope of the final rule and the subsequent guidance. During the proposed rule phase, little guidance was available on the IPSA and the auditing community anticipated full supply chain audits, or audits that confirmed product determinations. The final rule made it abundantly clear that the actual IPSA objectives/scope are far narrower.
If you think you are spending more than is necessary for your conflict minerals program, give us a call. We can probably find ways to reduce your effort and costs.