Establish strong company management systems ("Step One");
Identify and assess risk in the supply chain ("Step Two");
Design and implement a strategy to respond to identified risks ("Step Three");
Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain ("Step Four"); and
Report on supply chain due diligence ("Step Five").
OECD Guidance Step One: "Establish strong company management systems"
We created a task force that included senior staff under the General Counsel charged with implementing our Conflict Minerals compliance strategy. The following functional areas were represented on the task force: Financial Reporting; Information Technology; Internal Audit; Legal; Overseas Offices; Quality Assurance/Product Integrity; Risk Management; and Social Compliance. We also included merchants and product development teams from all of our business divisions in the compliance process.
We communicated to our merchants and selected other internal personnel our commitment to comply with the Conflict Minerals Rule. We did so in writing, by telephone and through in-person meetings. In addition, senior management at both Macy’s and Bloomingdale’s, our merchants, our international general managers, our product development personnel and selected other internal personnel were educated on the Conflict Minerals Rule and our compliance plan.
We retained specialist outside counsel and other consultants to advise us in connection with our Conflict Minerals Rule compliance. In addition, we hired a third-party information management services provider (the "Service Provider") to, on our behalf, (i) engage in supplier outreach and follow-up, (ii) validate supplier responses, (iii) identify risks based on smelter and refiner sourcing practices of suppliers and (iv) store records of due diligence processes, findings and resulting decisions on a computerized database.
We determined to use the Conflict Minerals Reporting Template developed by the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative ("EICC/GeSI") to identify smelters and refiners in our supply chain.
We are members of the Conflict Minerals committees of the American Apparel and Footwear Association and the National Retail Federation.
We adopted a policy requiring the maintenance of business records relating to Conflict Minerals due diligence, including records of due diligence processes, findings and resulting decisions, for at least five years. The policy recommends that these records be maintained on a computerized database where practicable. The Service Provider also was instructed to maintain our records in its possession for at least five years.
We furnished the Suppliers with written communications discussing the Conflict Minerals Rule, the OECD Guidance and our compliance requirements. We also communicated to the Suppliers our commitment to comply with the Conflict Minerals Rule. The foregoing communications occurred through written communications, telephone and/or in-person meetings.
OECD Guidance Step Two: "Identify and assess risk in the supply chain"
Inquiries concerning the usage and source of Conflict Minerals in the Suppliers' products, as well as information concerning their related compliance measures, were made by the Service Provider of all private brand suppliers for 2013. Following the initial introduction to the Conflict Minerals compliance program and information request, the Service Provider sent reminder emails to each non-responsive Supplier requesting completion of the Conflict Minerals Reporting Template. The Service Provider contacted by phone the Suppliers who remained non-responsive to the email reminders. When needed, the Service Provider obtained assistance from our personnel in reaching out to non-responsive Suppliers.
The Service Provider, in conjunction with our personnel, reviewed the completed responses received from Suppliers. The Service Provider followed up by email or phone with Suppliers that submitted an incomplete response or a response that we or the Service Provider concluded contained errors or inaccuracies or that otherwise provided a written response determined not to be suitable by us or the Service Provider, in each case requesting the Supplier to submit a revised response. The Service Provider followed up with other Suppliers where deemed appropriate by it or us. Under the Service Provider's procedures, responses that did not identify a smelter or refiner, responses that indicated a sourcing location without supporting information and organizations that were identified as smelters or refiners but were not identified as such by the Conflict-Free Sourcing Initiative ("CFSI") triggered follow-up with the Supplier.
If a Supplier was unable to provide information concerning the processors of Conflict Minerals in its supply chain, the Service Provider requested information on the Supplier's suppliers of products or components that may have required Conflict Minerals for their functionality or production (the "Tier 2 Suppliers"). The Tier 2 suppliers, and subsequent
If a Supplier indicated that there was no Conflict Minerals content in the products that it supplied to us, a senior executive of the Supplier was requested to certify to that determination.
To the extent that a completed response identified a smelter or refiner, the Service Provider reviewed this information against the list of conflict free smelters and refiners published in connection with the CFSI's Conflict-Free Smelter Program ("CFSP"), the London Bullion Market Association's ("LBMA") Good Delivery List and the Responsible Jewelery Council's ("RJC") Chain-of-Custody Certification.
To the extent that a smelter or refiner identified by a Supplier was not certified as conflict free by an independent third-party, the Service Provider attempted to contact that smelter or refiner to gain information about its sourcing practices and to determine whether that smelter or refiner obtained Conflict Minerals from sources that directly or indirectly financed or benefitted armed groups in the DRC or an adjoining country.
OECD Guidance Step Three: "Design and implement a strategy to respond to identified risks"
Our Conflict Minerals task force reported the findings of its supply chain risk assessment to our General Counsel.
We took such risk mitigation efforts as we deemed to be appropriate based on the findings of our supply chain risk assessment. Our risk mitigation efforts in respect of our 2013 supply chain were determined by the particular facts and circumstances and risks identified.
To mitigate the risk that our necessary Conflict Minerals benefit armed groups, we intend to engage in the additional measures discussed under “Product Information; 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"
OECD Guidance Step 5: "Report on supply chain due diligence"
During 2013, we published a Report on Social Responsibility, which we made publicly available on our website, that discussed our position on Conflict Minerals sourcing.
We filed a Form SD and this Conflict Minerals Report with the Securities and Exchange Commission and made available on our website certain information from this Conflict Minerals Report and the Form SD.
We adopted a Conflict Minerals policy. We communicated the policy internally to impacted personnel by e-mail. The policy also was communicated by email to the Suppliers. In addition, the Conflict Minerals policy was posted on our website. The Conflict Minerals policy is described in the Form SD to which this Conflict Minerals Report is included as an exhibit.
We have a mechanism at www.macysinc.com/contact-us that enables individuals to provide comments or questions to the Company on various subjects, including, for example, with respect to the sourcing of Conflict Minerals contained in our products.
Continue to review the sourcing strategies of Tier 2 nominated trim suppliers (which are trim suppliers that we require our direct suppliers to source from), with the intention of developing a conflict free nominated trim supplier list and related compliance policies and procedures.
Based on the results of our inquiries and due diligence in respect of 2013, adopt and implement a risk management plan that, among other things, addresses supplier non-responsiveness and non-compliance.
Based on the results of our inquiries and due diligence in respect of 2013, formalize the performance metrics to be reported to designated senior management on an ongoing basis.
Develop additional compliance training for relevant internal personnel and suppliers.
Update our testing manuals, vendor standards manual, private brand master contract and purchasing terms and conditions to support our Conflict Minerals Rule compliance program.
Develop policies and procedures relating to Conflict Minerals Rule compliance as part of the on-boarding process for private brand suppliers, including education of suppliers and communication of our sourcing expectations.
Encourage Suppliers that provided company, division or product category level information for 2013 to provide product level information for 2014 through ongoing outreach with these Suppliers.
Engage with Suppliers that provided incomplete responses or that did not provide responses for 2013 to help ensure that they provide requested information for 2014.
Monitor and encourage the continuing development and progress of traceability measures at Suppliers that indicated for 2013 that the source of Conflict Minerals was unknown or undeterminable.
Participate in additional selected industry initiatives to identify smelters and refiners in the supply chain.
Encourage uncertified smelters and refiners identified in our due diligence process to participate in a program such as the CFSP to obtain a “conflict free” designation.