Using a documented reasonable process, we work diligently with our direct suppliers to determine the presence and origin of conflict minerals in our supply chain. Recognizing the complexity of this issue, Axon appreciates the need for broad collaboration with all of our suppliers in our supply chain throughout this process. The RMI reporting template, the Conflict Minerals Reporting Template (“CMRT”), is used to determine the source and chain of custody of 3TG in the components and materials that are supplied to us. Our reporting relies on the information provided through the CMRT by our supply chain, as well as smelter information provided by the RMI and other industry organizations.
In our commitment to conduct our business worldwide with respect for human rights, we:
| · | Expect our direct suppliers to source materials from suppliers and smelters who also source responsibly, including, but not limited to, from legitimate, conformant mines in the DRC region; |
| · | Expect our direct suppliers to conduct the necessary due diligence and provide us with proper verification of the country of origin and source of the materials used in the products they supply to Axon; and |
| · | Reserve the right to verify information received from our suppliers. |
Based on the information learned through our due diligence efforts, we continue to evaluate and make changes to our supplier base and hope to make additional progress toward ensuring responsible mineral sourcing throughout our supply chain, and improved transparency for our investors and customers.
Reasonable Country of Origin Inquiry
The Company's reasonable country of origin inquiry (“RCOI”) corresponds to the first and second steps defined by the Organisation for Economic Co-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Third Edition, and related Supplements on Tin, Tantalum and Tungsten and on Gold (collectively, “OECD Guidance”). The OECD Guidance applies to each of the conflict minerals and to Axon as a “downstream company.” The OECD Guidance provides a framework for detailed due diligence to support responsible global supply chain management of minerals, including conflict minerals.
As a direct manufacturer, the Company does not directly source conflict minerals. We source products and components from direct suppliers, which source materials from their subtier suppliers. Our supply chain is extensive and complex with many layers of suppliers positioned between ourselves and conflict mineral smelters, refiners, and mines. Due to our extended supply chain, we rely on our direct suppliers, including our component manufacturers, to provide us with information concerning the sources and chains of custody of conflict minerals necessary to the functionality or production of our hardware products. The Company does not have complete information about the conflict minerals in its entire supply chain.
For the 2023 reporting period, the Company focused on efforts on collecting product-specific information from our Tier 1 suppliers. In 2023, we identified 167 Tier 1 suppliers, determined to be in-scope for regulatory purposes based on the Company’s influence over the manufacturing process (i.e., meeting the manufacture or contract to manufacture criteria in Rule 13p-1) and the use of conflict minerals in materials supplied, out of a total of 179 Tier 1 suppliers. Of the in-scope Tier 1 suppliers, the Company received an 81% response rate.
The surveyed suppliers identified 341 operational smelter and refiner facilities that were to have processed the necessary conflict minerals contained in our products. Of the 341 operational smelter or refiner facilities, the Company identified 254 smelter or refiner facilities as enrolled in the RMAP program and received a 100% response rate to accurately identify the reasonable country of origin. We know or have reason to believe that a portion of the conflict minerals processed by at least 77 of these 341 smelters and refiners may have originated in the DRC Region and may not be solely from recycled or scrap sources.
Design of Due Diligence Framework
Inherent Limitations on Due Diligence Measures: As a downstream purchaser of products which contain conflict minerals, the Company's due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals. The Company's due diligence processes are based on the necessity of seeking data from our direct suppliers and those suppliers seeking similar information within their supply chains to identify the original sources of the necessary conflict minerals.
The good faith due diligence process that Axon undertook was designed in accordance with the OECD Guidance. The OECD Guidance provides practical guidance to companies throughout the supply chain on a set of actions that can be taken to ensure responsible due diligence. Aligning with the OECD’s diligence framework, the steps that Axon implemented were as follows: