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Greening the Supply Chain: 3M Case Study on Conflict Minerals.

Nancy E. Walsh, Ph.D.Material EHS

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Sustainable sourcing not just about EHSSustainable sourcing not just about EHS

3M Sustainability Principles▪ Economic Success: Build lasting customer

relationships by developing differentiated, practical and ingenious solutions to their sustainability challenges.

▪ Environmental Protection: Provide practical and effective solutions and products to address environmental challenges for ourselves and our customers.

▪ Social Responsibility: Engage key stakeholders in dialogue and take action to improve 3M's sustainability performance.

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2010 Dodd-Frank Financial Reform Act*

▪ Trade in Tin, Tantalum, Tungsten and Gold financing extreme violence in African Congo region

▪ Publicly held companies (“issuers”) must disclose conflict mineral sources in annual financial reports

▪ Under proposed Securities & Exchange Commission regulations:

● Use of these minerals far upstream in manufacturing may be in scope, e.g., catalysts

● Even non-publicly held companies who are suppliers may need to provide such information to issuers, e.g., trace back to smelter or even mine

*H.R. 4173 §1502*H.R. 4173 §1502

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Suppliers a key stakeholder

▪ As part of our Sourcing Sustainability Standard, expectations are set for suppliers through 3M’s Supply Chain Policies: EHS, Transportation, Labor/Human Resources and Supplied Materials.

● Selection and retention of suppliers worldwide● Selective review of supplier performance to these policies● Corrective action process● Business relationship termination if warranted

▪ Conflict Minerals Policy added June 2011

Working with SuppliersWorking with Suppliers

New Goal: Review at least 80% of Supplier Spend in certain countries to Drive Conformance with 3M’s Standard by 2015

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Supplier inquiries▪ Driven by regulations, customer demands and internal

goals▪ Corporate template “information forms” for businesses to

query new/existing suppliers for EHS information● 100% composition● Presence/use of specific chemicals, e.g., regulated lists● Regulatory classifications, compliance statements…

▪ Challenges● Non-electronic● Incompletely filled out forms or no response● Management of change● Data freshness● Multiple businesses contacting same supplier● Non-product EHS topics, e.g., conflict minerals, Lacey Act

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“Campaign” approach for conflict minerals

▪ Conflict minerals requires auditable due diligence and reporting

▪ Initiating supplier contact at a Corporate Sourcing level using 3M's “Single Face”

▪ Developing single electronic solution for supplier contact, follow-up and data collection

● Allows for one way and two way communication● Better integration into Sourcing Supplier Escalation Process

▪ Interface planned to ultimate system of record for purchased material and product conflict mineral status, smelter name, etc.

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The customer side

▪ Major customers (if issuers) have their own conflict minerals SEC reporting obligations

▪ Different industries may demand suppliers to provide status information on their prescribed form

● Caution with exact language – what liabilities are incurred?● Can raw data be downloaded into these different formats?

▪ 3M’s businesses have taken self-service approaches for customer EHS communication on 3M.com

● Move to seamless customer interface

www.3M.com/regswww.3M.com/regs

www.3M.com/rohswww.3M.com/rohs

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Nancy E. Walsh, Ph.D.

Material EHS3M Medical Department

3M Center/Bldg. 220-6E-03St. Paul, MN 55144-1000

newalsh@mmm.com

Tel: 651/733-3696