For the non-initiated, it might be hard to see the links between a Seattle-based, running shoe and apparel firm and brutality in the Congo.
Yet when the Securities and Exchange Commission’s Conflict Minerals Rule went into effect in January, tracing such connections is exactly what Berkshire-Hathaway subsidiary Brooks Sports had to start doing.
Under the rule, which was mandated under the Dodd-Frank Act, companies must disclose their use of tantalum, tin, tungsten or gold (commonly called the “3TG” minerals) if they are “necessary to the functionality or production of a product” manufactured by the companies.
The minerals are found in “thousands of products ranging from cell phones and laptop computers to jewelry, golf clubs, drill bits and hearing aids,” according to a PwC report, which cited estimates that “6,000 SEC issuers will have to provide new disclosures under the rule.”
Further, about 275,000 non-public companies that are part of the issuers’ supply chains will be affected, according to PwC.
Unlike many companies, Brooks started planning its effort to comply with the rule months ago, says David Bohan, the firm’s president and chief operating officer and former CFO. Then again, the company had a leg up on compliance with materials-disclosure rules, having reported via the Reach Restricted Substances List.
Nevertheless, gathering the data for the first conflict-minerals reports, which are due May 31, 2014, will be “a huge challenge” for Brooks, requiring the firm to delve deeper than ever before into the sourcing of its supply chain than ever before, Bohan told CFO.
That will be true even though the company’s use of potential conflict minerals boils down to just the tin in the zippers of the running clothes it sells. An edited version of an interview with Bohan follows.