SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SPECIALIZED DISCLOSURE REPORT
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
2211 South 47th Street,
Phoenix, Arizona 85034
(Address of principal executive offices)
Senior Vice President and General Counsel
(Name and telephone number, including area code, of the
person to contact in connection with this report)
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
|x||Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2015.|
Section 1 CONFLICT MINERALS DISCLOSURE
|Item 1.01||CONFLICT MINERALS DISCLOSURE AND REPORT|
Conflict Minerals Disclosure
This Form SD is filed by Avnet, Inc. (together with its consolidated subsidiaries, the Company) pursuant to Rule 13p-1 (the Rule) under the Securities Exchange Act of 1934, as amended, for the reporting period January 1, 2015, to December 31, 2015.
A copy of the Companys Conflict Minerals Report is provided as Exhibit 1.01 to the Form SD and may be found publicly on the Companys website at http://www.avnet.com/ under the Who we are Corporate Responsibility links.
The Company has filed, as an exhibit to this Form SD, the Conflict Minerals Report.
Section 2 EXHIBITS
Exhibit 1.01 Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form SD.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|Date: April 29, 2016||
By: /s/ Kevin Moriarty
Chief Financial Officer
Conflict Minerals Report
This is the Conflict Minerals Report of Avnet, Inc., together with its consolidated subsidiaries (herein referred to as Avnet or the Company), for calendar year 2015 in accordance with Rule 13p-1 under the Securities Exchange Act of 1934 (the Rule). Conflict Minerals are defined as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten, and gold (collectively 3TG).
Avnet is a global value-added distributor of electronic components, enterprise computer and storage products, IT solutions and services, and embedded subsystems. The Company creates a vital link in the technology supply chain that connects the worlds leading electronic component and computer product manufacturers and software developers with a global customer base of original equipment manufacturers, electronic manufacturing services providers, original design manufacturers, systems integrators, independent software vendors, and value-added resellers. The Company distributes electronic components, computer products, and software, as received from its suppliers or through a customized solution, and offers assembly and other value-added services. In addition, the Company provides engineering design, materials management and logistics services, system integration and configuration, and supply chain services customized to meet specific requirements of customers and suppliers.
Conflict Minerals Policy
The Company adopted a Conflict Minerals Policy, which provides, in part, that:
As a global value-added distributor of electronic components, enterprise computer and storage products, IT solutions and services, and embedded subsystems, Avnet promotes the traceability of these minerals and the transparency of the supply chain. Avnet firmly believes that its customers should be fully informed about the products they purchase. While Avnet, as a distributor, is not able to certify as to the country of origin of the minerals contained in the products manufactured by Avnets suppliers, Avnet is committed to working with its customers to supply products that meet the customers specifications.
With respect to those limited aspects of Avnets business that manufacture or contract to manufacture products that contain conflict minerals that are necessary to the functionality or production of the product, Avnet does not directly purchase any conflict minerals from any source and endeavors not to purchase products that contain conflict minerals that directly or indirectly finance or benefit armed groups in the [Democratic Republic of the Congo] or adjoining countries. Avnet expects its suppliers to these aspects of its business to only source minerals from responsible sources and provide Avnet with proper verification of the country of origin and source of the materials used in the products they supply to it. Avnet fully understands the importance of this issue to its customers and is committed to supply chain initiatives and overall corporate social responsibility and sustainability efforts that work towards a conflict free supply chain. Avnet is encouraging all of its suppliers to likewise support these efforts and make information on the origin of their product components easily accessible on their websites.
The Conflict Minerals Policy is available on the Companys website at http://www.avnet.com/ under the Who we are Corporate Responsibility links.
The Rule requires that the Company disclose in an annual Form SD and associated Conflict Minerals Report information regarding any 3TG that is necessary to the functionality or production of any products that the Company manufactures or contracts to be manufactured. Further, the Rule requires that the Company conduct a reasonable country of origin investigation to determine whether any such 3TG originated in the Democratic Republic of the Congo or its adjoining countries (the Covered Countries) or is from recycled or scrap sources. If, based on the Companys reasonable country of origin inquiry, the Company knows that any of the
Companys necessary 3TG originated in the Covered Countries and are not from recycled or scrap sources, or the Company has reason to believe that the Companys necessary 3TG may have originated in the Covered Countries and the Company has reason to believe that such 3TG may not be from recycled or scrap sources, the Company is required to exercise due diligence on the source and chain of custody of such 3TG that conforms to a nationally or internationally recognized due diligence framework.
Design of the Companys Reasonable Country of Origin Inquiry and Due Diligence Process
The Companys 3TG program was divided into the (i) program definition and scoping phase, (ii) country of origin inquiry and due diligence phase, and (iii) reporting phase. The Companys program was designed to conform in all material respects to the framework in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Second Edition (the OECD Framework). The Companys reasonable country of origin inquiry was designed such that it functioned as the first step of the Companys due diligence measures. Consequently, the Company does not separately discuss its reasonable country of origin inquiry in the following discussion.
In response to the Rule, the Company reviewed its operations to determine which parts of its business, if any, may be subject to the disclosure requirements of the Rule. As provided by the Rule, this process did not include products that were not entered into the stream of commerce in the calendar year ended December 31, 2015, or products manufactured or contracted to be manufactured by entities acquired by the Company after April 2014. As a result of the process discussed in greater detail below, the Company determined that the following products were subject to the disclosure requirements of the Rule for the calendar year 2015:
|||Embedded systems manufactured or contracted to be manufactured by Avnet (Lifecycle Solutions);|
|||Products manufactured or contracted to be manufactured by RGS;|
|||Electromechanical solutions manufactured or contracted to be manufactured by DEM Manufacturing;|
|||Avnet Design Kits manufactured or contracted to be manufactured by Avnet;|
|||Development boards manufactured or contracted to be manufactured by EBV;|
|||ArchiTech Boards manufactured or contracted to be manufactured by Avnet MemecSilica; and|
|||Development boards and display solutions manufactured or contracted to be manufactured by MSC Technologies.|
These products are hereinafter referred to as the Covered Products.
Due Diligence Framework
As noted in the Companys Conflict Minerals Policy, the Company does not purchase 3TG directly from any mine, refiner or smelter. The Companys supply chain with respect to the Covered Products is highly complex and there are many parties in the supply chain between the Companys direct supplier and the mine from which the 3TG originated. Because of the Companys downstream position in the supply chain, it followed the principles outlined in the OECD Framework for downstream companies with no direct relationships to smelters or refiners. In this context, downstream refers to the supply chain from smelters and refiners to retailers; it includes companies such as the Company, as well as product and component manufacturers. In this regard, the Company must rely on its suppliers to provide information regarding the country of origin and chain of custody of the 3TG included in the Covered Products. It is likely that years of engagement and propagation of expectations through many tiers of the supply chain will be necessary before information returned to downstream companies, such as the Company, may be considered accurate and complete.
Due Diligence Efforts
The Companys due diligence efforts since the adoption of the Rule include the following steps:
|1.||Establish company management systems|
As part of the Companys 3TG program, the Company created a governance team and a working team. The governance team is responsible for ensuring that the Companys program meets regulatory requirements and enterprise goals, and to provide direction to the working team. The working team is responsible for the day-to-day execution of the Companys program, diligence efforts, and risk mitigation strategy. The Company also established a policy with respect to sourcing of minerals from the Covered Countries and published this statement on the Companys website.
|2.||Identify and assess risks in the supply chain|
The Company has performed the following steps to identify and assess risks in the supply chain:
|||The Company identified the business segments that manufacture or contract to manufacture products reasonably believed to contain 3TG. As a global value-added distributor, a significant percentage of the Companys operations are out of scope of the Rule. The Company has determined that the Covered Products are within scope of the Rule.|
|||The Company has identified the active suppliers of materials or components that may contain 3TG that are necessary to the functionality or production of the Covered Products. Once those suppliers are determined, the Company contacts each supplier and provides them with the 3TG reporting template (the Template) created by the Conflict Free Sourcing Initiative (the CFSI). The Company believes that the Template is the most appropriate way to exercise due diligence on the source and chain of custody of the 3TG in the Covered Products and to determine whether the 3TG included in the Covered Products came from recycled or scrap sources.|
|||The Template includes questions relating to, among other items, the use of 3TG in the suppliers products, the suppliers due diligence efforts, the source and chain of custody of any 3TG in the suppliers products, and whether the supplier has a policy on conflict-free sourcing.|
|||Upon receipt of a Template or other relevant information from a supplier, the Company evaluates responses for plausibility, completion, and predetermined red flags. To the extent that a completed Template or other relevant information was not provided by a supplier, the Company follows up with such unresponsive supplier to request compliance with the Companys request.|
|||The Company continued to follow-up with all unresponsive suppliers during calendar year 2015 and into 2016 to the extent necessary. Smelters identified in the responses received were compared against the list of facilities that have been identified as conflict free through the CFSI Conflict Free Smelter Program for 3TG (CFSP).|
|3.||Design and implement a strategy to respond to identified risks|
The Company has designed and implemented a number of steps to respond to the identified risks in its supply chain:
|||The Company sent all of its direct suppliers that were part of the due diligence process the Template and has publicly disclosed the Companys expectations regarding their participation in the Companys due diligence process.|
|||The Company designed a risk mitigation approach to manage suppliers that may potentially not be deemed conflict free pursuant to the Rule.|
|||The Company worked with suppliers on an as-needed basis to understand the requirements of the Rule.|
|||The Company sought to include 3TG related provisions in new or amended supplier agreements with respect to the Covered Products and has included 3TG related diligence in the Companys acquisition activities.|
|||The Company has implemented processes for new product introductions and changes to the bill of materials for the Covered Products to help ensure compliance with the Companys 3TG program.|
|||The Company has established procedures for employees, shareholders, suppliers, and customers to communicate concerns about the Companys policies.|
|4.||Carry out independent third-party audit of smelter/refinery due diligence practices|
The Company is a downstream consumer of 3TG and is generally many steps removed from smelters and refiners who provide minerals and ores. The Company does not purchase 3TG from smelters or refiners, and does not, to the best of the Companys knowledge, directly purchase from any of the Covered Countries. Therefore, as contemplated by the OECD Framework for downstream companies, the Company did not perform direct audits of smelters and refiners within the supply chain. Instead, as noted above, the Companys due diligence efforts relied on cross-industry initiatives such as those led by the CFSI, such as the CFSP, to conduct smelter and refinery due diligence.
|5.||Report annually on supply chain due diligence|
This report and the associated Form SD are available online on the Companys website at http://www.avnet.com/ under the Who we are Corporate Responsibility links.
Efforts to Determine the Mine or Location of Origin with the Greatest Possible Specificity
The Rule requires that the Company provide a description of the Covered Products, the facilities used to process the 3TG in those products, the country of origin of the 3TG in those products, and the efforts to determine the mine or location of origin with the greatest possible specificity. Based on the information that the Company has been able to collect through the Template and other information, it is unable to definitively determine the identity of the upstream smelters from which its suppliers source 3TG or the mine or location of origin of the 3TG included in the Covered Products.
Steps to be taken in Calendar 2016
As the Company endeavors not to purchase products that contain 3TG that directly or indirectly finance or benefit armed groups in the Covered Countries, in order to mitigate the risk of purchasing such products, the Company has continued with its 3TG program discussed above during calendar year 2016. Specifically, the Company has pursued and will continue to pursue the following steps:
|||the Company will continue to pursue obtaining further information from suppliers of 3TG;|
|||the Company will proactively analyze whether any 3TG materials are present in future products that the Company develops or to the extent it revises the materials included in existing Covered Products;|
|||the Company will seek to include 3TG related provisions in new or amended supplier agreements with respect to the Covered Products; and|
|||the Company will monitor its ethics alert line for issues related to the Companys 3TG program.|