UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM SD/A | ||||||||||||||
SPECIALIZED DISCLOSURE REPORT
(Amendment No. 2)
RAYTHEON TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) | 001-00812 (Commission File Number) | 06-0570975 (IRS Employer Identification No.) | ||||||
870 Winter Street, Waltham, Massachusetts 02451
(Address of Principal Executive Offices) (Zip Code)
Frank R. Jimenez
Executive Vice President and General Counsel
(781) 522-3000
(Name and telephone number, including area code, of 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:
Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2019.
Explanatory Note
We are filing this Amendment No. 2 on Form SD/A (this “Amendment No. 2”) to further amend our Specialized Disclosure Report on Form SD for the reporting period from January 1 to December 31, 2019 (the “2019 Reporting Period”), which was filed under our predecessor name, United Technologies Corporation (“UTC”) with the Securities and Exchange Commission and subsequently amended on March 31, 2020 (as amended, the “Original Form SD Report”).
On April 3, 2020, Raytheon Company (“Raytheon”) became a wholly owned subsidiary of Raytheon Technologies Corporation, as a result of a merger transaction (the “Merger”). The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of June 9, 2019, as amended on March 9, 2020, by and among UTC, Raytheon and a wholly owned subsidiary of UTC. Upon the effectiveness of the Merger, UTC was renamed Raytheon Technologies Corporation.
During the 2019 Reporting Period, Raytheon was a publicly traded company listed on The New York Stock Exchange and was obligated to provide a Specialized Disclosure Report on Form SD with respect to its conflict minerals. Accordingly, Raytheon Technologies Corporation is filing this Amendment No. 2 solely to provide a separate Conflict Minerals Report for Raytheon for the 2019 Reporting Period (the “Raytheon Conflict Minerals Report”). The Raytheon Conflict Minerals Report relates solely to the operations of Raytheon for the 2019 Reporting Period.
Other than as expressly set forth herein, this Amendment No. 2 does not, and does not purport to, amend, update, or restate the information in any other item of the Original Form SD Report.
Raytheon Technologies Corporation and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or tradenames of Raytheon Technologies Corporation and its subsidiaries. Names, abbreviations of names, logos, and product and service designators of other companies are either the registered or unregistered trademarks or tradenames of their respective owners. As used herein, the terms “we,” “us,” “our,” “the Company,” or “RTX,” unless the context otherwise requires, mean Raytheon Technologies Corporation and its subsidiaries. References to internet websites in this Form SD/A are provided for convenience only. Information available through these websites is not incorporated by reference into this Form SD/A.
Section 1 – Conflict Minerals
Item 1.01 Conflict Minerals Disclosure and Report
A copy of the UTC and Raytheon Conflict Minerals Reports for the calendar year ended December 31, 2019 are filed as Exhibits 1.01(a) and 1.01(b) hereto and are publicly available through the Investors section of RTX’s website (http://www.rtx.com) under the heading “SEC Filings.”
Item 1.02 Exhibit
The UTC and Raytheon Conflict Minerals Reports required by Item 1.01 are filed as Exhibits 1.01(a) and 1.01(b) to this Form SD.
Section 2 – Exhibits
Item 2.01 Exhibits
Exhibit 1.01(a) – UTC Conflict Minerals Report (incorporated by reference from Exhibit 1.01 to the Original Form SD Report)
Exhibit 1.01(b) – Raytheon Conflict Minerals Report
SIGNATURES
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 duly authorized undersigned.
RAYTHEON TECHNOLOGIES CORPORATION (Registrant) | ||||||||
| Date: June 1, 2020 | By: | /s/ Frank R. Jimenez | ||||||
| Frank R. Jimenez | ||||||||
| Executive Vice President and General Counsel | ||||||||
Exhibit Index
Exhibit Number | Exhibit Description | |||||||||||||||||||||||||
Exhibit 1.01(a)
UNITED TECHNOLOGIES CORPORATION
Conflict Minerals Report
For the Year Ended December 31, 2019
1.Introduction
United Technologies Corporation (“UTC”) has prepared this Conflict Minerals Report (the “Report”) for the calendar year ended December 31, 2019, as required by Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”). Terms used and not defined in this Report have the meanings ascribed in Form SD, as adopted by the Securities and Exchange Commission (“SEC”) pursuant to the Rule. References in this Report to internet websites and certain of UTC’s internal policies and procedures are provided for convenience only. The referenced documents and information available through these websites are not incorporated by reference into this Report.
2.Company Overview
UTC manufactures and contracts to manufacture products that contain tin, tantalum, tungsten, and gold (“3TG” or “Conflict Minerals”) necessary to the functionality or production of such products (“Necessary 3TG”). Specifically, UTC provides high technology products and services to the building systems and aerospace industries worldwide. UTC’s operations for the period presented herein are classified into four segments (for purposes of this Report hereinafter referred to as “business segments”): Otis, Carrier, Pratt & Whitney, and Collins Aerospace Systems, with each segment comprised of similar operating companies. References to each segment include the various operating companies established worldwide through which the operations of each segment are conducted.
Otis is the world’s largest elevator and escalator manufacturing, installation and service company. Otis designs, manufactures, sells and installs a wide range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings and infrastructure projects.
Carrier is a leading global provider of heating, ventilating, air conditioning (“HVAC”), refrigeration, fire and security solutions for residential, commercial, industrial and smart cold chain applications. Carrier provides a wide range of residential and building systems, including air conditioners, heating systems and controls, refrigeration, fire, flame, gas, smoke and carbon monoxide detection, portable fire extinguishers, fire suppression, intruder alarms, access control systems, video management systems and electronic controls.
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney designs, develops, produces and maintains families of large engines for wide- and narrow-body and large regional aircraft in the commercial market and for fighter, bomber, tanker and transport aircraft in the military market. Pratt & Whitney Canada (P&WC) is among the world’s leading suppliers of engines powering general and business aviation, as well as regional airline, and utility airplanes, and helicopters. Pratt & Whitney and P&WC also produce, sell and service auxiliary power units for military and commercial aircraft.
Collins Aerospace Systems is a leading global provider of technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, as well as military and space solutions. Collins Aerospace Systems’ product portfolio mainly includes electric power generation, power management and distribution systems, air data and aircraft sensing systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gear and wheels and brakes, space products and subsystems, integrated avionics systems, precision targeting, electronic warfare and range and training systems, flight controls, communication systems, navigation systems, oxygen systems, simulation and training systems, food and beverage preparation, storage galley systems, lavatory and wastewater management systems. Collins Aerospace Systems also designs, produces and
1
supports cabin interior, communications and aviation systems and products and provides information management services through voice and data communication networks and solutions worldwide.
Additional information about UTC and our business segments is included in UTC’s Annual Report on Form 10-K for the year ended December 31, 2019.
3.Supply Chain Description
UTC is a large and complex organization with thousands of globally dispersed suppliers. There are multiple tiers of suppliers between UTC’s business segments and the 3TG mines. Therefore, we rely on our first-tier suppliers to work with their upstream suppliers to provide us with accurate information (e.g., through the reasonable country of origin inquiry described below) about the origin of 3TG contained in the materials, components, parts, subassemblies, and products contracted to be manufactured (collectively “Components”) we purchase.
4.Reasonable Country of Origin Inquiry (“RCOI”)
The elements of our RCOI were: (i) identification of suppliers to survey, (ii) data collection, and (iii) assessment of data to determine whether further due diligence is required.
For this reporting period, each business segment identified a list of suppliers to survey for purposes of the RCOI (“Surveyed Suppliers”). The criteria for selecting the suppliers to include in the survey varied to account for each business segment’s unique circumstances, but generally considered the likelihood of 3TG content in the supplied Components, the amount paid to suppliers believed likely to incorporate 3TG in the supplied Components, and the business segment’s information technology infrastructure capabilities. For this reporting period, UTC’s business segments sent 1,650 surveys to suppliers, estimated to represent over $12 billion in spending by our business segments during 2019.
We collected information from the Surveyed Suppliers using the Conflict Minerals Reporting Template (“CMRT”), or a tool based on the CMRT. The survey included questions regarding whether the supplier’s products contain 3TG, its policy with respect to conflict-free sourcing, the supplier’s due diligence process, and information about the supplier’s supply chain, such as the names of the smelters or refiners that processed 3TG in the supplier’s products, and the origin of 3TG used by those facilities.
Based on the RCOI for this reporting period, UTC has reason to believe that at least a portion of its Necessary 3TG may have originated from the Covered Countries, and that this portion of the Necessary 3TG may not be from recycled or scrap sources. Accordingly, we conducted the due diligence described below on the source and chain of custody of the Necessary 3TG in our products.
5.Due Diligence
A. Due Diligence Framework
Our due diligence measures have been designed to conform, in all material respects, with the internationally recognized due diligence framework presented by the Organisation for Economic Co-operation and Development (“OECD”) in the publication OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Third Edition (2016), OECD Publishing and related supplements for gold, tin, tantalum, and tungsten.
B. Due Diligence Measures Undertaken
We performed the due diligence steps set forth below according to the OECD’s five-step framework:
OECD Step 1: Establish Company Management Systems
Conflict Minerals Policy
UTC has a corporate policy regarding the sourcing of Conflict Minerals. A copy of this policy is available through the Suppliers section of our website (https://www.utc.com) under heading “Doing business with UTC.” Among other things, under our
2
corporate policy, suppliers are expected to comply with the Rule and to support UTC in fulfilling its obligations under the Rule. The policy also expresses UTC’s preference to source 3TG originating in any of the Covered Countries from a smelter or refiner validated as conflict-free by an independent third-party – such as the Conflict-Free Sourcing Initiative’s Conflict-Free Smelter Program (“CFSP”), now known as the Responsible Mineral Initiative’s (“RMI”) Responsible Minerals Assurance Process (“RMAP”) or similar third-party programs. The policy also expresses UTC’s commitment to continue to support initiatives that enable the sourcing of conflict-free minerals. In the event we identify non-compliance with our corporate policy on the sourcing of Conflict Minerals, our business segments will attempt to work with the supplier to correct the situation. If a supplier remains non-compliant, the business segment may evaluate its options, including but not limited to reassessing the relationship with the supplier.
Conflict Minerals Team
UTC established a cross-functional team to develop and implement its Conflict Minerals compliance program. The Conflict Minerals team is comprised of representatives from UTC’s Corporate Office and each business segment, with representation from functions such as supply chain management, legal, and corporate responsibility. The Conflict Minerals team is supported by a steering committee comprised of supply chain executives from UTC’s Corporate Office and each business segment.
Supply Chain Controls and Transparency
UTC participates in industry-wide initiatives that raise awareness for responsible sourcing of 3TG and provide resources to improve disclosures regarding the origin of 3TG in supply chains. For example, UTC is a member of the Responsible Minerals Initiative (RMI) (member code: AUTC). The RMI’s flagship program is the Responsible Minerals Assurance Process (RMAP), through which the RMI identifies smelters and refiners that produce responsibly sourced materials in an effort to prevent the extraction and trade of minerals from becoming a source of conflict. The RMI uses specially trained third-party auditors to independently verify that the identified smelters and refiners have systems in place to responsibly source minerals in conformance with the RMAP. Another RMI program is the development and publication of the Conflict Minerals Reporting Template (“CMRT”), a free, standardized reporting template that facilitates the transfer of information through the supply chain regarding 3TG country of origin as well as the smelters and refiners that process such 3TG.
Additionally, UTC is a member of the Aerospace Industries Association (“AIA”) conflict minerals working group. The AIA, on behalf of its member companies, sent a letter through the RMI to smelters not yet participating in the RMAP. The letter urged these smelters to conduct due diligence on the origin of 3TG in their supply chains, and to become validated as conformant with the CFSP (now known as the RMAP) or validated as conflict-free under a similar program.
Supplier Engagement and Training
As mentioned above, we posted a position statement on our website to communicate our expectations regarding the responsible sourcing of Conflict Minerals. We also provided the Surveyed Suppliers with a message from UTC’s leadership about the Rule and our expectations of how our suppliers will help us to comply with this law. UTC provided Surveyed Suppliers with web-based training regarding the requirements of the Rule, our obligations under the Rule, instructions for responding to our survey, and an e-mail address for assistance in interpreting and completing our business segments’ survey.
We advised Surveyed Suppliers that we do not discourage the sourcing of 3TG from the Covered Countries; rather, we encourage our suppliers to source such 3TG from a smelter or refiner verified as compliant with the Conflict-Free Smelter Program (now known as the Responsible Minerals Assurance Process) or a similar program. We also asked Surveyed Suppliers, to the extent they believed the products delivered to UTC’s business segments may have contained 3TG originating from one of the Covered Countries, to provide 3TG information specific to such products (i.e., a “product-level” CMRT declaration).
The language in our standard contract terms and conditions requires our suppliers to comply with the RCOI and due diligence requirements of the Rule, except that suppliers who are not SEC registrants are not required to comply with the Rule’s filing requirements.
3
Internal Training
UTC developed training and reference materials for its employees about Conflict Minerals, including a training module summarizing the relevant requirements of the Rule, UTC’s obligations under the Rule, and UTC’s processes for evaluating and responding to the risk, if any, of Necessary 3TG in its supply chain that directly or indirectly financed or benefited armed groups in the Covered Countries.
Maintain Records
UTC has adopted a policy to retain relevant documentation.
Grievance Mechanism
General questions regarding UTC’s conflict minerals compliance program can be directed to UTC’s Corporate Responsibility Manager at cminfo@utc.com Employees or third parties may report any concerns about or violations of UTC’s corporate policy with respect to the sourcing of Conflict Minerals via UTC’s Ombudsman/DIALOG Program. Additional information regarding UTC’s Ombudsman/ DIALOG Program is available through the “Our Company” section of our website (https://www.utc.com) under the heading “Ethics and Compliance.”
OECD Step 2: Identify and Assess Risks in the Supply Chain
Our business segments conducted a supply chain survey using the Conflict Minerals Reporting Template (“CMRT”), or a tool based on the CMRT, to investigate the origin of Necessary 3TG in our products.
Suppliers who did not respond to our business segments’ survey received multiple reminders to submit their survey responses. In addition, business segment representatives, members of the UTC Conflict Minerals team, and others, such as account executives, asked contacts at non-responsive suppliers for their assistance in resolving overdue survey responses.
Members of the UTC Conflict Minerals team or business segment representatives reviewed the Surveyed Suppliers’ responses against an established set of criteria to determine whether further engagement was necessary. For example, if a supplier advised that it supplied Components containing 3TG from any of the Covered Countries, our business segments compared the smelters and refiners identified in a supplier’s survey response to the Responsible Minerals Initiative’s (RMI) published list of facilities that conform to the Responsible Minerals Assurance Process (RMAP) assessment protocols.
OECD Step 3: Design and Implement a Strategy to Respond to Risks
UTC designed and implemented a risk management plan to evaluate and respond to risks identified in our supply chain. If we identify non-compliance with our corporate policy on the sourcing of Conflict Minerals, our business segments will attempt to work with the supplier to correct the situation. A supplier’s failure to take corrective actions may lead to additional actions, including the reassessment of the supplier relationship. Risk assessment findings based on the supply chain survey and due diligence are reported to senior management.
OECD Step 4: Carry out Independent Third Party Audit of Smelter’s and Refiner’s Due Diligence Practices
We support audits of smelters and refiners through our participation in, and financial support of, the RMI. The RMI’s flagship program is the RMAP which uses independent third-party auditors to identify smelters and refiners that have systems in place to produce responsibly sourced materials. We do not perform direct audits of these entities within our supply chain.
OECD Step 5: Report Annually on Supply Chain Due Diligence
A copy of this Report and UTC’s associated Form SD are available free of charge on our website (https://www.utc.com) under the subheading “Financial Information” under the heading “Investors.”
6.Efforts to Determine Mine or Country of Origin
Our supply chain survey included questions that asked the Surveyed Suppliers for the name of the smelter(s) in their supply chain, the name of the mine(s), and the location of the mine(s) from where 3TG in their supply chain originated. The survey’s cover letter instructed suppliers, to the extent they had determined the products delivered to UTC’s business segments contained 3TG originating from one of the Covered Countries, to provide a “product-level” declaration with information specific to such
4
products (e.g., the name of the mine, country of origin, and/or the name of the smelter or refiner who processed 3TG in such products).
7.RCOI and Due Diligence Results
A. Survey Responses
We rely on our suppliers to provide information on the origin of 3TG contained in the Components purchased by our business segments. These suppliers are similarly reliant upon information provided by their suppliers.
In total, UTC’s business segments sent 1,650 suppliers a survey, estimated to represent over $12 billion in spending by our business segments during 2019. Of the 1,650 surveys sent, we received 1,536 completed surveys, representing a response rate of 93%.
The Surveyed Suppliers responses identified 336 unique facilities identified by the Responsible Minerals Initiative (RMI), of which 266 or approximately 79% are validated as conformant with the Responsible Minerals Assurance Program (RMAP).
In 279 of the survey responses, the supplier declared it sourced 3TG from one of the Covered Countries. Based on our review of these survey responses and the due diligence measures described above, we have reason to believe some of our suppliers sourced 3TG used in the Components supplied to our business segments from the smelters listed on Schedule A. We determined these smelters may have sourced their 3TG from the countries of origin listed on Schedule B. Each smelter identified on Schedule A was included on the RMI Conformant Smelter & Refiner List, and thus were obtaining 3TG from sources demonstrated not to support armed conflict.
With respect to the other survey responses, despite our due diligence for this reporting period, we were unable to link 3TG from the Covered Countries to the Components supplied to our business segments. We were unable to do so because the information provided was generally at a supplier-company level that described the supplier’s overall potential 3TG sourcing. Of the remaining survey responses providing smelter information, the suppliers were unable to verify whether 3TG from those smelters was used in the Components supplied to one of our business segments. For this reason, with the exception of the smelters described above, we have been unable to identify with confidence the specific facilities used to process Necessary 3TG in our products, the country of origin, or the mine or location of origin of the Necessary 3TG in our products.
B. Continuous Improvement Efforts to Mitigate Risk
Since December 31, 2019, UTC has taken, or intends to take the following steps to improve the due diligence conducted to further mitigate risks that the Necessary 3TG used in our products could benefit armed groups in the Covered Countries. As part of our regularly scheduled compliance program activities, we intend to:
•Direct suppliers to our corporate policy with respect to the sourcing of Conflict Minerals;
•Encourage suppliers who source 3TG from one of the Covered Countries to do so from smelter(s) or refiner(s) validated as conformant with the Responsible Minerals Assurance Process (RMAP, formerly known as the Conflict-Free Smelter Program) or a similar conflict-free program;
•Identify and follow-up with suppliers who do not respond to our supply chain survey in an effort to increase our survey response rate and obtain additional information about the sourcing of 3TG in our supply chain; and
•Participate in trade association and/or industry-wide initiatives to define and improve best practices for conducting due diligence on supply chains containing 3TG and/or that support the development of conflict-free supply chains.
Cautionary Note Concerning Forward-Looking Statements
This Report contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. These forward-looking statements are intended to provide management’s current expectations or plans for our future business practices and performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,”
5
“intends,” “strategy,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and other words of similar meaning in connection with a discussion of future performance. Forward-looking statements may include, among other things, statements relating to future supply management practices, policies and plans for procurement of materials, risk management practices, supply chain infrastructure and efforts to improve supply chain transparency. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation, the ability of the Company, its suppliers, industry groups and supplier organizations to obtain reliable information as to the source of purchased production materials; the timing for the development of infrastructure allowing such information to be compiled and shared with others in a cost effective and efficient manner; the impact of changes in laws and regulations, and the interpretation thereof, and in political conditions; the impact of restructuring activities and the reorganizations of our operations; the impact of acquisitions, divestitures, joint ventures and other transactions; and other factors beyond our control. The forward-looking statements speak only as of the date of this Report and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
6
Schedule A to Conflict Minerals Report
| Metal | Smelter or Refiner Name | RMI ID* | Smelter or Refiner Location | ||||||||
| Gold | Heraeus Metals Hong Kong Ltd. | CID000707 | Fanling, Hong Kong, China | ||||||||
| Tin | Malaysia Smelting Corporation | CID001105 | Butterworth, Penang, Malaysia | ||||||||
| Tin | Thaisarco | CID001898 | Amphur Muang, Phuket, Thailand | ||||||||
* Each smelter or refiner identified above was included on the RMI Conformant Smelters & Refiners List.
7
Schedule B to Conflict Minerals Report
Possible Countries of Origin
Argentina, Australia, Azerbaijan, Bolivia (Plurinational State of), Botswana, Brazil, Burkina Faso, Burundi, Canada, Chile, China, Colombia, Cuba, Cyprus, Democratic Republic of the Congo, Dominican Republic, Ecuador, Egypt, Ethiopia, Fiji, Finland, Georgia, Ghana, Guatemala, Guinea, Guyana, Honduras, Indonesia, Iran, Ivory Coast, Japan, Kazakhstan, Kenya, Laos, Liberia, Malaysia, Mali, Mauritius, Mexico, Mongolia, Morocco, Myanmar, Namibia, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Papua New Guinea, Peru, Philippines, Portugal, Puerto Rico, Russian Federation, Rwanda, Saudi Arabia, Senegal, Serbia, Slovakia, Solomon Islands, Spain, South Africa, Suriname, Swaziland, Sweden, Taiwan, Tajikistan, Tanzania, Thailand, Turkey, United Kingdom of Great Britain and Northern Ireland, Uganda, Uruguay, United States of America, Venezuela, Vietnam, Zambia, Zimbabwe
8
Exhibit 1.01(b)
RAYTHEON COMPANY
CONFLICT MINERALS REPORT
FOR THE REPORTING PERIOD FROM
JANUARY 1 TO DECEMBER 31, 2019
This Conflict Minerals Report (“CMR”) has been prepared by Raytheon Company to comply with U.S. Securities and Exchange Commission (“SEC”) rules implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). The terms “we,” “us,” “our,” “Raytheon” and the “Company” mean Raytheon Company and its subsidiaries, unless the context indicates otherwise.
On April 3, 2020, Raytheon became a wholly owned subsidiary of Raytheon Technologies Corporation, as a result of a merger transaction (the “Merger”). The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of June 9, 2019, as amended on March 9, 2020, by and among United Technologies Corporation (“UTC”), Raytheon and a wholly owned subsidiary of UTC. Upon the effectiveness of the Merger, UTC was renamed Raytheon Technologies Corporation.
As a result, this CMR relates solely to the operations of Raytheon for the reporting period from January 1 to December 31, 2019 (the “2019 Reporting Period”) and does not contain any information with respect to the operations of UTC for the 2019 Reporting Period.
Overview
Raytheon is a technology and innovation leader specializing in defense and other government markets throughout the world. We develop technologically advanced and integrated products, services and solutions in our core markets: sensing; effects; command, control, communications, computers, cyber and intelligence (C5I™); mission support; and cybersecurity. We serve both domestic and international customers, primarily as a prime contractor or subcontractor on a broad portfolio of defense and related programs for government customers. Additional information about Raytheon, our products and our subsidiaries may be obtained by accessing our corporate website, www.rtx.com. As a leader in our industry, Raytheon remains firmly committed to ethical business conduct and the responsible sourcing of minerals throughout our global supply chain.
Raytheon’s products are typically complex, requiring many suppliers to support their development and manufacturing. Our supply chain is correspondingly geographically diverse, complex and multi-tiered. To identify the risk that tin, tantalum, tungsten or gold (collectively known as “3TG”) in our products may directly or indirectly benefit armed groups operating in the Democratic Republic of the Congo and its immediate adjoining countries (collectively known as the “Covered Countries”), we evaluated our hardware products. The majority of our products contain 3TG, 3TG is essential to the functionality of those products, and it is not from recycle or scrap sources. As a result, Raytheon conducted a Reasonable Country of Origin Inquiry (“RCOI”) in 2019 with our suppliers to identify the risk associated with 3TG in our products.
In this reporting year, Raytheon continued to rely on certain “targeted” suppliers to provide information on the sources of 3TG in the products they sell to us. The targeted suppliers represent over ninety (90) percent of spend on 3TG-containing products. In order to obtain 3TG information and conduct our RCOI, we requested completion of the Conflict Materials Reporting Template (“CMRT”) developed by the Responsible Minerals Initiative (“RMI”; http://www.responsiblemineralsinitiative.org) from first-tier suppliers. The CMRT asks the supplier to provide information about the 3TG smelters or refiners (“SORs”) in their supply chain, along with other questions related to their efforts to identify and address risk in their own 3TG supply chains. The resulting responses from the suppliers were compiled in a data management system, providing the capability to track responses and identify risk. To ensure a high percentage of supplier responses, we followed up multiple times with non-responsive suppliers and those that did not initially provide sufficient information.
At the conclusion of the RCOI effort, Raytheon analyzed each supplier response to determine whether the supplier indicated that 3TG in their products originated in the Covered Countries. If the 3TG identified in the supplier’s response was sourced from the Covered Countries, and was not from recycle or scrap sources, our process required us to conduct due diligence to assess the identified risk, and subsequently take appropriate actions to mitigate it, when needed. The due diligence measures performed on those suppliers are described below.
Summary of the 2019 RCOI Process and Results
•Raytheon requested information from suppliers representing over ninety (90) percent of supplier spend for 3TG-containing products, representing five-hundred-seventy-three (573) separate suppliers.
•Five-hundred-one (501) survey responses were received for a response rate of eighty-seven (87) percent.
1
•Fifty-three (53) responses indicated that 3TG was being sourced from the Covered Countries, and was not from recycle or scrap sources, thus representing risk in our supply chain.
•Seventy-two (72) suppliers either did not respond, or provided incomplete information (that did not allow us to identify risk), despite several requests for information. This represented a decrease from ninety-seven (97) suppliers in our 2018 annual reporting.
As a result of these efforts, we determined that 3TG in our products may have been sourced in part from the Covered Countries and was not from recycle or scrap sources, thus requiring that we conduct due diligence on the suppliers where we identified risk. However, we were not able to tie 3TG supplier content sourced from the Covered Countries to specific products supplied to us.
Raytheon Products Containing 3TG
Raytheon products that contain 3TG are listed with their descriptions in Table 1, below. The listed products include systems and system components, including components needed for operation, maintenance, and/or repair or provided for the upgrade of existing products. Also, the listed products are not exclusive to each other; some products may contain several product categories in a single, integrated Raytheon-produced product.
Table 1: Raytheon Manufactured Products and Product Descriptions
| Product | Description | ||||
| Air and Missile Defense | Interceptors, radars and space sensors that provide protection against ballistic missiles, cruise missiles, aircraft and other threats | ||||
| Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance | Products that are used to provide increased situational awareness and control capabilities through the collection, analysis and distribution of information in real time for a variety of missions and applications ranging from force command and air traffic management to border and maritime protection | ||||
| Cyber | Products used to defend networks and build cyber resiliency into software, hardware and architecture including cross domain information sharing, counterintelligence solutions, network monitoring and traffic analysis, and encryption hardware | ||||
| Electronic Warfare (EW) | Products that use the electromagnetic (EM) spectrum or directed energy to control, attack, or impede the enemy or ensure friendly access to the EM spectrum, including radar warning receivers, airborne decoys, electronic attack, tactical signal intelligence, EW battle management, and jammers | ||||
| Sensors and Imaging | Products intended to detect the presence, direction, distance and speed of objects such as aircraft situational awareness radars, fire control radars, and space sensors, not included in the Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance or Air and Missile Defense categories | ||||
| Precision Weapons | Guided missiles, torpedoes, bombs and munitions, as well as ordnance and weapons delivery equipment including navigation and target seeking technologies | ||||
| Training | Products for training and mission support, including test equipment, training equipment, simulation and security systems | ||||
| Classified | Products whose make-up and/or details are deemed sensitive information based on national or regional security interests | ||||
Description of Due Diligence Measures Performed
Raytheon has designed its 3TG supply chain due diligence measures to conform to the framework developed by The Organization for Economic Co-operation and Development (“OECD”) document Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Third Edition (2016) and the related individual supplements for gold, and for tin, tantalum and tungsten.
2
In accordance with the five-step process in the OECD Guidance, Raytheon conducted the following due diligence and other activities in 2019:
Step 1. Maintained a Strong Conflict Minerals Management System
| Raytheon Conflict Minerals Policy Statement | |||||
The Raytheon Conflict Minerals Policy Statement remains in place and is available at:
https://www.raytheon.com/suppliers/safeguarding/protecting-people
| Internal Management and Control | |||||
Raytheon continued to employ a dedicated and cross-functional team to implement our policy statement and manage the efforts of the Raytheon Conflict Minerals Program. The activities of the team are led by the Raytheon Corporate Supply Chain organization, with oversight by a Conflict Minerals Executive Team, providing program coordination and direction. The Team includes senior leaders from Supply Chain, Engineering, Finance, Contracts, and Legal. Internal reviews were conducted to monitor progress in meeting program goals and implementing the Raytheon policy statement.
| Industry Engagement | |||||
Raytheon continued to actively support several industry groups that are working to improve development of conflict-free 3TG supply chains. These industry groups include the RMI and the Conflict Minerals Working Group (CMWG) of the Aerospace Industries Association (AIA) (http://www.aia-aerospace.org). Raytheon was a participating member throughout 2019 of both the RMI and the AIA CMWG. The RMI conducts voluntary third-party audits of SORs to promote responsible sourcing practices, through the use of the “Responsible Minerals Assurance Process” (“RMAP”) and publishes a list of SORs that are “RMAP Conformant” (i.e., those successfully participating in the RMAP), as well as those actively seeking conformance (“Active”). The AIA CMWG, through the RMI, has engaged known SORs that are not participating in the RMAP to encourage them to source responsibly, and to encourage them to participate in the RMAP or an equivalent mineral due diligence certification program. Raytheon also continued to actively support the conflict minerals activities of the electronics industry IPC trade organization (http://www.ipc.org), which maintains two different committees focused on conflict minerals due diligence and supply chain data exchange.
| Supplier Engagement | |||||
Raytheon engaged with our suppliers through our RCOI and due diligence activities; the continued use of conflict mineral terms and conditions on purchase orders; and through information provided to suppliers on conflict minerals regulatory compliance requirements. Communications occurred through: (a) messages to suppliers; (b) our “Our Supplier Community” website (https://www.raytheon.com/suppliers/safeguarding/protecting-people), where suppliers can access information, resources and guidance related to conflict minerals; and (c) through our supplier portal, Exostar.
| Reporting Process | |||||
Raytheon’s ethics reporting process is in place to address concerns related to conflict minerals, with the following central reporting options: through a toll-free helpline (1-800-423-0210), or by submission using the Raytheon Ethics Checkline (https://raytheonethicscheckline.webline.saiglobal.com/; which includes an on-line web form for reporting) or by email (comments-ethics@raytheon.com). Interested parties may also contact Raytheon with conflict minerals concerns via email to conflict_minerals@raytheon.com.
Step 2. Identified and Assessed Risks in Our Supply Chain
Suppliers who indicated that 3TG in their products originated in the Covered Countries represent risk in our supply chain, as revenues from 3TG mining and trade in that region could be supporting local armed groups. If a supplier indicated 3TG in their products was, or may have been sourced from the Covered Countries, Raytheon conducted further inquiries with that supplier as to whether (a) it could determine whether the SORs in its supply chain demonstrated responsible sourcing practices, and (b) it could tie 3TG from the Covered Countries to products directly supplied to Raytheon. During our RCOI we found fifty-three (53) suppliers that indicated they were sourcing 3TG originating in the Covered Countries, and thus became our focus for subsequent due diligence activities.
Major findings from our due diligence activities include:
•Fifty (50) of the fifty-three (53) responding suppliers (approximately ninety-four (94) percent) indicated they were sourcing 3TG from the Covered Countries, but also indicated they were sourcing exclusively from SORs that were RMAP Conformant, and thus were obtaining 3TG from sources demonstrated to not support the armed groups.
3
•The remaining three (3) suppliers indicated they were, or may be sourcing from the Covered Countries, using SORs identified as not RMAP Conformant. Further investigation identified that those suppliers were sourcing tin from the same smelter, the smelter maintains a 3TG sourcing due diligence policy, and is committed to responsible sourcing in its 3TG procurement practices. As a result, it was concluded that the smelter represented only very limited risk in the Raytheon supply chain and did not warrant additional risk management activity at this time.
Step 3. Implemented Our Strategy to Respond to Identified Risks
Our Risk Management Plan includes provisions for addressing risk in our supply chain, ranging from supplier communication and education that strongly emphasizes the importance of responsible sourcing, as well as reminders about the conflict minerals clause in Raytheon’s terms and conditions. The risk management measures employed are determined by analysis and review, considering the nature and extent of the risk, and identified supplier efforts to manage such risk. Our risk management process also requires providing timely information to our Executive Team and affected stakeholders for their oversight and participation in managing risk. In addition, as part of our risk management activities, we do not support restricting sourcing 3TG minerals from the Covered Countries, as we recognize that many legitimate and law-abiding parties depend on the revenues obtained from the trade of 3TG minerals. Accordingly, we support industry initiatives that promote the responsible sourcing of 3TG from the Covered Countries.
Step 4. Worked with Industry Groups to Strengthen Smelter/Refiner’s Due Diligence Practices
Raytheon continued to support industry-wide initiatives that provide information from upstream suppliers within our 3TG supply chain. One such industry initiative is through the RMI, which audits SOR due diligence activities and promotes the responsible sourcing of 3TG through the RMAP. Raytheon also actively supported the conflict minerals initiatives of the AIA and IPC.
Step 5. Reported on Supply Chain Due Diligence.
Raytheon submitted its annual Conflict Minerals Report to the SEC, the public and our shareholders, and provided additional information on our conflict minerals efforts internally and externally through various Raytheon websites and communications tools.
Information Related to Conflict Minerals in Raytheon Products
We were not able to establish a direct connection between 3TG from SORs not listed as RMAP conformant or active, and products supplied to us during this reporting year. Therefore, we cannot determine if 3TG from the Covered Countries may be contained in our products.
Conclusion
Raytheon received a high percentage of responses from targeted suppliers identifying the sources of 3TG in their products, indicating strong and increasing levels of responsible sourcing practices in our mineral supply chain. However, gathering comprehensive information on our products during our 2019 due diligence efforts remained challenging. Once again, supplier responses commonly indicated that only limited information is available through their supply chains on sources of 3TG in their products. Further, the majority of our suppliers continued to provide only summary information at the company level, covering numerous products. These factors again sharply limited our ability to determine the specific sources of 3TG in the majority of products specifically supplied to us. Even when receiving such limited information, we attempted to determine if sourcing was conducted responsibly and provided feedback to suppliers where we identified risk.
4