Due Diligence Program Execution
In furtherance of our 3TG due diligence, we performed the following due diligence measures in respect of 2016. These are not all of the measures that we took in respect of 2016 in furtherance of our 3TG compliance program or pursuant to the Conflict Minerals Rule and the OECD Guidance.
- OECD Guidance Step One: “Establish strong company management systems”
- We capitalized on the team of senior staff under the oversight of the General Counsel and Corporate Vice President, Worldwide Operations. This team of senior staff was charged with managing our 3TG compliance strategy. The following functional areas were represented on the working group (the “Conflict Minerals Compliance Team”): legal; operations; procurement; and supply chain engineering. The Conflict Minerals Compliance Team also consulted with the Director of Internal Audit.
- Selected internal personnel who were not involved last year with 3TG compliance were educated on the Conflict Minerals Rule, the OECD Guidance, our compliance plan and the procedures for reviewing and validating supplier responses to our inquiries.
- We used a third-party information management service provider (the “Service Provider”) to complement our internal management processes. The Service Provider was engaged to collect information and provide reports on our potentially in-scope suppliers’ 3TG sourcing practices and track information on smelters and refiners. Certain of our compliance activities described in this Conflict Minerals Report were performed on our behalf by the Service Provider. We also utilized specialist outside counsel to assist us with our compliance efforts.
- We determined to use the Conflict Minerals Reporting Template developed by the CFSI (“CMRT”) to identify smelters and refiners in our supply chain. We also were, and continue to be, a member of CFSI.
- We maintain business records relating to 3TG due diligence, including records of due diligence processes, findings and resulting decisions, for at least five years. Our Service Provider maintains the foregoing types of records on our behalf for the retention period contained in our document retention policy. The Service Provider has indicated that it maintains the records in its possession on a computerized database.
- We furnished the Suppliers with an introductory letter containing a link to third-party materials describing the Conflict Minerals Rule and various aspects of compliance relating to the rule.
- We have a Conflict Minerals Policy, as described earlier in this Conflict Minerals Report. We communicate the policy internally to relevant new employees. The Conflict Minerals Policy, which is posted on our website, also was communicated by email to the Suppliers.
- We maintain a mechanism for employees, suppliers and other interested parties to report violations of our Conflict Minerals Policy by email. The contact information for our grievance mechanism is email@example.com
- OECD Guidance Step Two: “Identify and assess risk in the supply chain”
- The Service Provider requested by email that the Suppliers provide us with information, through the completion of a CMRT, concerning the usage and source of 3TG in their products that we identified as potentially being in-scope, as well as information concerning their related compliance efforts. The Service Provider followed up by email or phone with Suppliers that did not respond to the request within a specified time frame.
- The Service Provider reviewed the completed responses received from the Suppliers. According to its written procedures, the Service Provider verifies and validates responses for accuracy and completeness. The Service Provider’s written procedures indicate the information to be validated by it. Under the Service Provider’s written procedures, incomplete or unsupported supplier declarations are to be returned to suppliers for correction as required. In addition, under the Service Provider’s written procedures, when the information provided by a supplier is found to be inconsistent or wrong, the supplier is to be re-contacted and a request for clarification or correction is to be made from the supplier.
- To the extent that a completed response identified a smelter or refiner, the Service Provider reviewed this information against the lists of compliant smelters and refiners published by the CFSI.
- To the extent that a smelter or refiner identified by a Supplier was not listed as compliant or the equivalent by an independent third-party, we consulted publicly available information to attempt to determine whether that smelter or refiner obtained 3TG from sources that directly or indirectly financed or benefitted armed groups in the DRC or an adjoining country.
- Based on the information furnished by the Suppliers, the Service Provider and other information known to us, we assessed the risks of adverse impacts.
- OECD Guidance Step Three: “Design and implement a strategy to respond to identified risks”
- Our Conflict Minerals Compliance Team reported the findings of its supply chain risk assessment to our General Counsel and Corporate Vice President, Worldwide Operations.
- We address identified risks on a case-by-case basis. This flexible approach enables us to tailor the response to the risks identified.
- To mitigate the risk that our necessary 3TG benefit armed groups, we also intend to engage in the additional measures discussed under “Additional Risk Mitigation Efforts” below.
- OECD Guidance Step Four: “Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain”
In connection with our due diligence, we, and the Service Provider on our behalf, utilized information made available by the CFSI concerning independent third-party audits of smelters and refiners. We support independent third-party audits through our membership in the CFSI.
- OECD Guidance Step 5: “Report on supply chain due diligence”
We filed a Form SD and this Conflict Minerals Report with the Securities and Exchange Commission and made available on our website the Form SD and this Conflict Minerals Report.
Product, Smelter and Refiner and Country of Origin Information
Due to the challenges of gathering information from a large, diverse and dynamic supply chain, for 2016, we were not able to determine the origins of a portion of the necessary 3TG contained within each of our in-scope products. However, none of the necessary 3TG contained within our in-scope products for which we were able to determine the countries of origin were determined by us to directly or indirectly finance or benefit armed groups in the DRC or an adjoining country. We did not conclude that any of our in-scope products were “DRC conflict free.” Our in-scope product categories for 2016 are indicated below.
We determined that the following categories of our products were in-scope products for 2015: (1) point-of-care veterinary diagnostic instruments; (2) practice management and digital imaging systems; (3) biological materials testing and laboratory diagnostic instruments; (4) diagnostic, health-monitoring and food safety testing products for livestock, poultry and dairy; (5) products that test water for certain biological contaminants; and (6) human point-of-care electrolytes and blood gas analyzers.
For a further discussion of our products, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Annual Report”). The information contained in the Annual Report is not incorporated by reference into our Form SD or this Conflict Minerals Report and should not be considered part of our Form SD or this Conflict Minerals Report.
Smelter and Refiner Information
As of May 19, 2017, for 2016, the Suppliers identified to us 297 facilities that processed the necessary 3TG contained within our in-scope products.
Of these 297 facilities that were identified to us by the Suppliers:
- 136 of these facilities process gold, and 93 of these facilities are listed by the CFSI as being in compliance with the relevant Conflict-Free Smelter Program assessment protocol, including those indicated as in the process of undergoing a re-audit (collectively, “Compliant”). An additional 7 refiners are on the “Active” list, which means they have committed to undergo a Conflict-Free Smelter Program (“CFSP”) audit and are in various stages of the audit cycle (“Active List”).
- 37 of these facilities process tantalum, and all of them are listed as Compliant.
- 86 of these facilities process tin, and, of these facilities, 68 are listed as Compliant and 7 facilities are on the Active List.
- 38 of these facilities process tungsten, and, of these facilities, all are listed as Compliant.
The foregoing description of these 297 facilities is based solely on our review as of May 19, 2017 of information made publicly available by the CFSI on its website, without independent verification by us. All of the information publicly available on the CFSI website was not necessarily updated through May 19, 2017, and the facilities that are listed as Compliant as of the date of our review of such publicly available information were not necessarily listed as Compliant for all or part of 2016 and may not continue to be so listed for any future period.
In addition, not all of the facilities described above may have processed the necessary 3TG contained within our in-scope products. In some cases, multiple sources of 3TG may have been used by our Suppliers, and some Suppliers may have reported to us smelters and refiners that were not in our supply chain due to over-inclusiveness in the information received from their suppliers or for other reasons. The facilities described above also may not include all of the smelters and refiners in our supply chain; the Suppliers were unable to identify the processors of some of the 3TG content contained within our in-scope products and not all of the Suppliers responded to our request.
Country of Origin Information
We sought to determine the mine or location of origin of the necessary 3TG contained in our in-scope products by requesting that the Suppliers provide us with a completed CMRT concerning the source of the 3TG in the components, products and parts sourced from them, and through the other efforts described in this Conflict Minerals Report.
Based on our RCOI and due diligence, as applicable, as of May 19, 2017, we determined that the countries of origin of the necessary 3TG contained within our in-scope products may have included the countries listed below. The listed countries of origin are derived from information made available by the CFSI to its members. Except for the DRC, the CFSI does not indicate individual countries of origin of the 3TG processed by Compliant smelters and refiners. Instead, the CFSI indicates country of origin by category. The Compliant smelters and refiners described above were in each of the categories below:
L1 – Countries that are not identified as conflict regions or plausible areas of smuggling or export from the DRC and its nine adjoining countries: Australia, Austria, Benin, Bolivia, Brazil, Burkina Faso, Cambodia, Canada, Chile, China, Colombia, Ecuador, Eritrea, Ethiopia, France, Ghana, Guatemala, Guinea, Guyana, Honduras, India, Indonesia, Japan, Laos, Madagascar, Malaysia, Mali, Mexico, Mongolia, Myanmar, Namibia, Nicaragua, Nigeria, Panama, Peru, Portugal, Russia, Senegal, Sierra Leone, Spain, Thailand, Togo, United States of America, Uzbekistan, Vietnam, Zimbabwe
L2 – Countries that are known or plausible countries for smuggling, export out of region or transit of materials containing 3TG: Mozambique and South Africa.
L3 – The DRC and its adjoining countries: Burundi, Rwanda and Uganda.
DRC – The Democratic Republic of the Congo.
Because the CFSI generally does not indicate individual countries of origin of the 3TG processed by Compliant smelters and refiners, we were not able to determine the countries of origin of the 3TG processed by the Compliant smelters and refiners described above with greater specificity. In addition, for some of the Compliant smelters and refiners described above, country of origin information is not disclosed. We were not able to determine the countries of origin of the 3TG processed by the smelters and refiners described above that are not listed as Compliant.
Due to the manner in which the CFSI provides country of origin information, we do not believe that all of the necessary 3TG contained within our in-scope products originated in all of the countries named above. In addition, prior to the certification date of any Compliant smelter or refiner described above, such smelter or refiner may have sourced 3TG from additional or different countries.