Keylight® Case Study
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Fossil Group uses the Keylight® Platform to comply with new Conflict Mineral reporting requirements without incurring millions in additional costs.
Companies have to comply with new regulations all the time. But what do you do when you realize the cost of complying with a new law could run between $2 million to $4 million per year?
That was the dilemma facing Fossil Group Inc., a manufacturer and retailer of high-end fashion accessories such as watches, jewelry, handbags, belts, and other items. As a publicly traded company, Fossil was required, beginning in 2014, to annually disclose whether its supply chain relies on conflict minerals.
Fossil uses more than 1,000 suppliers all over the world. Once the company assessed the resources needed to comply with conflict minerals reporting, it estimated the annual cost at around $3.5 million. While not a crippling expense for a company valued at more than $5 billion, management nonetheless had no desire to spend that amount for an initiative that generates zero revenue.
The Solution: Keylight
The following is a summary of what Fossil expected to need to comply with conflict minerals reporting compared with the resources they use with Keylight.
Dodd-Frank 1502 Compliance
Conflict minerals refer to minerals mined in areas of the world under heavy conflict from armies and rebel groups, such as the Democratic Republic of Congo in Central Africa. There is a sizable global market for these minerals, as they are used in consumer electronics, as well as dyes, fasteners, accessories and other manufactured goods. Selling these minerals helps fund conflicts, perpetuating violence in these regions. For humanitarian reasons, several international efforts have been made to reduce traffic in conflict minerals.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act included a provision, Section 1502, requiring companies to disclose annually whether conflict minerals exist in their supply chains. If so, companies had to report on their due diligence efforts, which must include a private sector audit. The first report to the Securities and Exchange Commission was due May 31, 2014. Bloomberg reported one month after the deadline that only 6 percent of companies met an “acceptable standard of compliance.”
Fossil not only met the deadline, but did so with minimal cost and manpower using LockPath’s Governance, Risk Management, and Compliance (GRC) platform, Keylight. Fossil was able to stand up a new conflict minerals compliance management program in just six weeks. Here is how Keylight simplified the company’s compliance process: