Conflict Mineral Due Diligence for a Chinese Consumer Electronics Manufacturer
The client, a Chinese consumer electronics firm, required due diligence on their suppliers to ensure compliance with their existing conflict mineral policy. Furthermore, the client wished to identify potential risks deeper down the supply chain, which included many undefined sub-suppliers.
ARC Consulting provided on-the-ground support for due diligence to the client, based on a predetermined set of criteria and risk assessment methodology. The result was a comprehensive risk mitigation strategy to assist the customer in preparing for future operations.
The client faced the challenge of ensuring that their products remained untainted by conflict minerals, a problem that could jeopardize the client’s brand name amid rising customer expectations. As such, the client recognized the need to conduct a thorough due diligence process on their suppliers, many of which were undefined.
ARC Consulting, with extensive experience in China, a skilled team of consultants, and a track record of successfully conducting CSR due diligence in clients’ supply chains, was well placed to provide the client with the necessary expertise to carry out the conflict mineral due diligence.
ARC Consulting developed a set of standards and conditions for due diligence, based on a profound understanding of the client’s current policy, thus establishing a comprehensive risk assessment framework.
The ARC Consulting team conducted a rigorous risk assessment by analysing the entire supply chain using primary information and documentation obtained directly from the suppliers’ management teams and workers at supplier locations. The team also cooperated with multiple tiers along the value chain to support and validate initial findings. All supplier data were then benchmarked according to ARC Consulting’s risk assessment criteria to identify potential risk areas.
Through ARC Consulting’s comprehensive due diligence process, including on-site visits, the client was provided with a list of suppliers that failed to meet the criteria of their conflict mineral policy. This provided the client with a clear understanding of potential risks within their supply chain. Additionally, ARC Consulting offered guidance to the client on how to mitigate and manage potential risks that could threaten their future operations, providing a detailed step-by-step action plan.
ARC Consulting was subsequently tasked by the client to offer ongoing support to monitor the progress of the action plan and report the implementation of the client’s conflict mineral policy along the supply chain.