Exhibit 1.01
SodaStream International Ltd.
Conflict Minerals Report
For the reporting period from January 1, 2016 to December 31, 2016
Introduction and Background
This is the Conflict Minerals Report (the “Report”) of SodaStream International Ltd. (“SodaStream,” the“Company,” “we” or “us”) for the reporting period from January 1, 2016 to December 31, 2016 (the “2016 calendar year”), which has been prepared pursuant to Rule 13p-1 (the “Rule”) promulgated under the Securities Exchange Act of 1934, as amended. The Rule requires disclosure of certain information when a company manufactures or contracts to manufacture products and the minerals specified in the Rule are necessary to the functionality or production of those products. The specified minerals are gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives as limited to tantalum, tin and tungsten (collectively, the “Conflict Minerals”), that originated in the Democratic Republic of the Congo (the “DRC”) and certain adjoining countries (collectively with the DRC, the “Covered Countries”).
In accordance with the Rule, for the 2016 calendar year, the Company:
| · | concluded, in good faith, that during the 2016 calendar year, SodaStream manufactured, or contracted to manufacture, products (the “Covered Products”) as to which the Conflict Minerals are necessary to the functionality or production of those products; and |
| · | based on its good faith reasonable country of origin inquiry (“RCOI”) regarding the Conflict Minerals in its Covered Products, the Company had reason to believe that certain of the Conflict Minerals necessary to the functionality or production of the Covered Products may have originated in the Covered Countries and that such Conflict Minerals may not be from recycled or scrap sources. |
As a result, SodaStream is filing this Report with its Form SD to comply with the requirements of the Rule. This Report has not been subject to an independent private sector audit.
PART I. COMPANY OVERVIEW AND DESCRIPTION OF THE COMPANY’S PRODUCTS COVERED BY THIS REPORT
SodaStream manufactures home beverage carbonation systems that enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. SodaStream develops, manufactures and sells sparkling water makers and exchangeable carbon-dioxide cylinders, along with consumables, including carbon-dioxide refills, reusable carbonation bottles and flavors to add to the sparkling water. As of December 31, 2016, SodaStream’s products were sold through more than 80,000 individual retail stores in 45 countries.
This Report relates to the Covered Products, which consist of those products:
| · | for which Conflict Minerals are necessary to the functionality or production of such products; |
| · | that were manufactured or contracted to be manufactured by the Company; and |
| · | for which the manufacture was completed during the 2016 calendar year. |
Specifically, two models of SodaStream’s sparkling water makers that were sold during the 2016 calendar year contain electronic circuit boards and other electrical components which may comprise tin, tungsten and gold. Additionally, Conflict Minerals can be found in the brass components within certain of SodaStream’s sparkling water makers and in the brass valves on its carbon-dioxide cylinders. While brass mainly consists of copper and zinc, brass may contain trace quantities of tin as an impurity to the other metals.
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PART II. DESIGN OF THE COMPANY’S DUE DILIGENCE PROCESS
SodaStream has established a multi-stage due diligence inquiry intended to verify the possible sources of the Conflict Minerals contained in the Company’s Covered Products. The Company has designed its due diligence measures based on the five-step framework laid out by the Organization for Economic Co-operation and Development in its OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Third Edition (2016),including the related supplements on gold, tin, tantalum and tungsten (collectively, the “OECD Guidance”). Because the Company does not purchase raw or unrefined Conflict Minerals directly from mines, smelters or refiners, and makes no direct purchases of any minerals in the Covered Countries, it has tailored its due diligence to the OECD Guideline standards applicable to downstream companies. Set forth below are the components of the Company’s due diligence measures as they relate to the five-step framework from the OECD Guidance.
OECD Guidance Step 1: Establish strong company management systems for conflict minerals supply chain due diligence and reporting compliance.
Adopt and commit to a supply chain policy for minerals from conflict-affected and high-risk areas.
The Company has adopted a policy relating to the Conflict Minerals (the “Policy”), which incorporates the standards set forth in the OECD Guidance. As stated in the Policy, the Company expects its suppliers to implement sourcing and due diligence practices that prevent Conflict Minerals from the Covered Countries from entering the Company’s supply chain, and to require that their own suppliers do the same. Each supplier should also cooperate with the Company when the Company inquires as to the components of the supplier’s products and the details of the supplier’s supply chain, and should promptly inform the Company whenever the supplier has determined that such components originated in the Covered Countries. The Policy is available on the Company’s website athttp://sodastream.investorroom.com/CorporateGovernanceunder “Governance Documents.”
Structure internal management systems to support supply chain due diligence.
The Company has an internal team consisting of cross-functional team members from procurement, legal and finance departments. This internal team is charged with executing the Company’s Conflict Minerals strategy and compliance processes and with training employees outside of the team on their roles and responsibilities in connection with the due diligence and compliance.
Establish a system of controls and transparency over the Conflict Minerals supply chain.
The Company has established a system of controls to promote transparency over its conflict minerals supply chain by utilizing the Conflict Minerals Reporting Template (as further described below), which is designed to facilitate the transfer of information through the supply chain regarding each mineral’s country of origin and the smelters and refiners being utilized for the mineral. Communications from the Company to its suppliers and responses received from the suppliers are stored electronically by the Company together with copies of internal communications which relate to the Company’s due diligence.
Strengthen the Company’s engagement with suppliers.
The Company informs its in-scope manufacturers and suppliers of its disclosure requirements, including its compliance with the OECD Guidance and the Rule.
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Establish a Company level grievance mechanism
The Company maintains a third party confidential hotline service for the receipt of anonymous submissions by employees both online and by a toll free telephone number. Among other things, employees may use this service to report potential or actual violations of the Policy. Concerns can also be made to an employee's immediate manager or directly to the Company’s legal department.
OECD Guidance Step 2: Identify and assess risks in the Company’s supply chain.
Identify risks in the supply chain.
As explained above, the Company does not buy raw ore or unrefined Conflict Minerals directly from refiners, smelters or mines. The Company’s supply chain with respect to the Covered Products is complex, with multiple intermediaries and third parties in the supply chain between the manufacture of the Covered Products and the original sources of the necessary Conflict Minerals. Because the Company believes that the smelters and refiners of the Conflict Minerals are best situated to identify the sources of Conflict Minerals, the Company relies on its direct suppliers (i.e. “first-tier suppliers”) to provide information on the origin of the Conflict Minerals contained in components and materials supplied to the Company, including information about the sources of the Conflict Minerals that the first-tier suppliers obtain from their own suppliers (i.e. “second-tier suppliers”). For its due diligence during the 2016 calendar year, the Company reached out to its first-tier suppliers to discuss smelters and refiners of Conflict Minerals in the Company’s supply chain. In particular, the Company performed certain measures described below to identify and assess the risks in the Company’s supply chain.
Identify Company suppliers.
The first step in the Company’s due diligence process was to determine which products manufactured or contracted to be manufactured by the Company during the 2016 calendar year fell within the scope of the Rule. A description of the Covered Products appears in Part I of this Report. Then, the Company identified those suppliers from which it purchases components or materials for the Covered Products that may include Conflict Minerals. The Company identified its first-tier suppliers of components or products for the Company’s Covered Products. For components delivered to the Company by distributors, the Company added the distributors to the supplier list. Managers in the supply chain departments reviewed and finalized the supplier list (the “Supplier List”).
Request conflict minerals reporting templates from suppliers.
The Company uses good faith efforts to identify from the Conflict Minerals Reporting Templates the smelters and refiners in the Company’s supply chain. Annually, the Company sends a letter and the Conflict Minerals Reporting Template to each of its suppliers identified in connection with the creation of the Supplier List. The letter (i) reiterates the requirements of the Rule and its applicability to the Company, and (ii) requests that each in-scope supplier complete the Conflict Minerals Reporting Template for all Covered Products supplied to the Company for the reporting period. The Company contacts in-scope suppliers that do not respond to the Company’s request by a specified date and in-scope suppliers that submit incomplete or inaccurate requests for follow-up discussions and to request additional information, as applicable.
In February 2017, the Company provided all suppliers identified in connection with the Covered Products during the 2016 calendar year with a supply chain survey in the form of version 4.20 of the Electronic Industry Citizenship Coalition Conflict Minerals Reporting Template (the “Template”). The Template requires suppliers to make representations regarding (i) the country of origin for the Conflict Minerals contained in the components or products it provides to the Company, (ii) all of the smelters in the supplier’s supply chain for such Conflict Minerals, (iii) whether such smelters have been validated as being in compliance with the Conflict-Free Smelter Initiative’s (“CFSI”) Conflict Free Smelter Program (“CFSP”), (iv) whether the supplier has its own Conflict Minerals policy that requires its own direct suppliers to be “DRC conflict-free” and (v) whether the supplier uses the Template with its own suppliers to gather similar information.
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Analyze surveys for CFSI compliant and active smelters and refiners.
SodaStream received responses from all of the identified suppliers to its request for information. SodaStream analyzed the survey responses to evaluate the level of compliance exercised by each surveyed supplier, and, to the extent possible, by upstream suppliers, with the Company’s Policy. The information received from suppliers was also reviewed against the CFSI’s Conflict-Free Smelter list. To compile its list, the CFSI employs independent third-party auditors to audit the source, including mines of origin and chains of custody, of the Conflict Minerals processed by smelters and refiners which agree to undergo an audit. SodaStream determined whether smelters and refiners identified in its supply chain qualified as “conflict-free compliant” on the CFSI Conflict-Free Smelter list. SodaStream also designated smelter or refiners as “active,” where applicable, according to the CFSI Conflict-Free Smelter list.
A smelter or refiner receives a “conflict-free compliant” designation from CFSI if (i) the audited smelter or refiner adheres to the CFSP’s assessment protocols by disclosing to auditors the identities and locations of the mines from which it sources Conflict Minerals and (ii) the independent auditor verifies separately that the smelter’s or refiner’s Conflict Minerals originated from conflict-free sources. The CFSI Conflict-Free Smelter list provides the names, locations and links to conflict minerals policies of all smelters and refiners deemed compliant with the CFSP’s assessment protocols. Smelters and refiners labeled as “active” have committed to undergo an audit which remains in progress. “Active” smelters and refiners may be at various stages of the audit cycle, anywhere from completion of the necessary documents to scheduling the audit date to enacting corrective actions in the post-audit phase, but may not retain their “active” status if they are unresponsive to requests for re-audit or corrective action past a certain time.
OECD Guidance Step 3: Design and implement a strategy to respond to identified risks.
Participate in existing industry conflict minerals initiatives.
In light of the complexity of the Company’s and its suppliers’ supply chains, the Company is currently unable to assess adequately all of the risks in its supply chain. However, the Company continues to engage with suppliers to obtain current, accurate and complete information about its supply chains through the use of the Template and to improve due diligence efforts to ensure responsible sourcing in compliance with the Company’s Policy and to participate in industry initiatives promoting “conflict-free” supply chains.
Report findings to designated senior management.
The members of the Company’s internal Conflicts Minerals team collaborate as and when required to assess the progress of the Company’s compliance program and periodically update the audit committee of the board of directors with respect to the Company’s due diligence efforts and ongoing compliance obligations.
OECD Guidance Step 4: Carry out independent third-party audit of smelter/refiner due diligence practices.
Due to the Company’s downstream position in the supply chain, the Company does not have a direct relationship with smelters and refiners, nor does it perform direct audits of the smelters and refiners that provide its supply chain with the Conflict Minerals contained in the Company’s Covered Products. The Company relies upon industry efforts to influence smelters and refiners to undergo audits and become certified through the CFSP.
Through the CFSP validation process, which is voluntary, an independent third party audits the procurement and processing activities of a smelter or refiner to determine if such smelter or refiner shows sufficient documentation to demonstrate with reasonable confidence that the minerals the smelter or refiner processed originated from conflict-free sources. The CFSP’s audit process is discussed in more detail in “OECD Guidance Step 2: Identify and assess the risks in the Company’s supply chain.”
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OECD Guidance Step 5: Report on supply chain due diligence.
The Company has filed with the Securities and Exchange Commission its specialized disclosure report on Form SD, which includes this Report as Exhibit 1.01, for the reporting period in the 2016 calendar year. In accordance with OECD Guidance and the Rule, the Company has also made these disclosures available on its website athttp://sodastream.investorroom.com/.
PART III. THE COMPANY’S DUE DILIGENCE FINDINGS AND CONCLUSIONS
Based on the information that was provided by the Company’s suppliers and otherwise obtained through the due diligence process, the Company believes that, to the extent reasonably determinable by the Company, the facilities that were used to process the Conflict Minerals contained in the Covered Products included the smelters and refiners listed inAppendix A attached to this Report.
As discussed in “Part II. Design of the Company’s due diligence process” above, the Company relies on the completed Templates received from its suppliers as its main source of documentation supporting the representations made by such suppliers regarding the source and chain of custody of relevant Conflict Minerals in its Covered Products during the 2016 calendar year. The smelters and refiners identified inAppendix A to this Report were identified by the Company’s suppliers and the Company cannot be certain that these smelters and refiners were in fact in the Company’s supply chain.
Following the process outlined above, one out of four of SodaStream’s suppliers to whom a Conflict Minerals Reporting Template was sent has not been able to verify the origin of all of the Conflict Minerals incorporated into the components and materials such supplier supplied to SodaStream during the 2016 calendar year. Therefore, after exercising its due diligence, the Company was unable to determine conclusively the origin of all of the Conflict Minerals contained in the Covered Products.
Country of Origin of the Conflict Minerals in the Covered Products
Based on the information obtained by the Company during the due diligence process, the Company does not have sufficient information, with respect to the Covered Products, to determine the country of origin of all of the Conflict Minerals in all the Covered Products. However, based on the information that has been obtained, to the extent reasonably determinable by the Company, with respect to the smelters and refineries identified by the Company, such countries of origin are believed to include Belgium, Bolivia, Brazil, China, Indonesia, Japan, Malaysia, Peru, Poland, Taiwan, Thailand and USA.
Facilities Used to Process the Conflict Minerals in the Covered Products
Based on the information obtained by the Company during the due diligence process, the Company was unable to conclusively determine the origin of all the Conflict Minerals contained in the Covered Products. However, based on the information that was provided by the Company’s suppliers and information otherwise obtained through the due diligence process, to the extent reasonably determinable by the Company, the facilities that were used to process the Conflict Minerals contained in our Covered Products during the reporting period in the 2016 calendar year are believed to include the smelters and refiners listed inAppendix A attached to this Report.
The smelters and refiners that the Company has been able to determine as CFSP “compliant” and CFSP “active” are specifically identified as such inAppendix A.
PART IV. IMPLEMENTATION OF STRATEGIES TO RESPOND TO IDENTIFIED RISKS AND FUTURE STEPS
The Company has taken, and intends to continue to take, steps to improve its due diligence processes. Due diligence is an ongoing, proactive and reactive process, and the Company is continually working to improve the process to identify Conflict Minerals in its Covered Products. The Company plans to continue to inform suppliers about their role in the Company’s conflict minerals compliance program and to engage with its suppliers to obtain current, accurate and complete information about the supply chain. Since the Company’s supply chain due diligence processes could assist in mitigating the possible risk that the necessary Conflict Minerals in the Company’s products could benefit armed groups in the Covered Countries, the Company intends to monitor the performance and efficiency of its due diligence efforts to ensure responsible sourcing in compliance with its Policy and increase transparency in its supply chain.
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Specific steps the Company has taken and continues to take to manage risks include:
| · | continuing to engage with manufacturers and suppliers to obtain current, accurate and complete information about the supply chain; and |
| · | continuing to improve due diligence efforts to ensure responsible sourcing in compliance with the Company’s Policy. |
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Appendix A
Currently known Smelter and refinery List
| METAL | SMELTER / REFINER NAME | SMELTER / REFINER COUNTRY | SMELTER / REFINER IDENTIFICATION | SMELTER / REFINER STATUS |
| Tin | Jiangxi Ketai Advanced Material Co., Ltd. | China | CID000244 | Compliant |
| Tin | Alpha | United States Of America | CID000292 | Compliant |
| Tin | Cooperativa Metalúrgica de Rondônia Ltda. | Brazil | CID000295 | Compliant |
| Tin | PT Aries Kencana Sejahtera | Indonesia | CID000309 | Compliant |
| Tin | CV United Smelting | Indonesia | CID000315 | Compliant |
| Tin | EM Vinto | Bolivia (Plurinational State Of) | CID000438 | Compliant |
| Tin | Fenix Metals | Poland | CID000468 | Compliant |
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | China | CID000538 | Compliant |
| Tin | Malaysia Smelting Corporation (MSC) | Malaysia | CID001105 | Compliant |
| Tin | Mineração Taboca S.A. | Brazil | CID001173 | Compliant |
| Tin | Minsur | Peru | CID001182 | Compliant |
| Tin | Mitsubishi Materials Corporation | Japan | CID001191 | Compliant |
| Tin | Operaciones Metalúrgicas S.A. | Bolivia (Plurinational State of) | CID001337 | Compliant |
| Tin | PT Babel Inti Perkasa | Indonesia | CID001402 | Compliant |
| Tin | PT Bangka Tin Industry | Indonesia | CID001419 | Compliant |
| Tin | PT Belitung Industri Sejahtera | Indonesia | CID001421 | Compliant |
| Tin | PT Bukit Timah | Indonesia | CID001428 | Compliant |
| Tin | PT DS Jaya Abadi | Indonesia | CID001434 | Compliant |
| Tin | PT Eunindo Usaha Mandiri | Indonesia | CID001438 | Compliant |
| Tin | PT Mitra Stania Prima | Indonesia | CID001453 | Compliant |
| Tin | PT Prima Timah Utama | Indonesia | CID001458 | Compliant |
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| Tin | PT Refined Bangka Tin | Indonesia | CID001460 | Compliant |
| Tin | PT Sariwiguna Binasentosa | Indonesia | CID001463 | Compliant |
| Tin | PT Stanindo Inti Perkasa | Indonesia | CID001468 | Compliant |
| Tin | PT Timah (Persero) Tbk Kundur | Indonesia | CID001477 | Compliant |
| Tin | PT Timah (Persero) Tbk Mentok | Indonesia | CID001482 | Compliant |
| Tin | PT Tinindo Inter Nusa | Indonesia | CID001490 | Compliant |
| Tin | Rui Da Hung | Taiwan | CID001539 | Compliant |
| Tin | Thaisarco | Thailand | CID001898 | Compliant |
| Tin | White Solder Metalúrgica e Mineração Ltda. | Brazil | CID002036 | Compliant |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | China | CID002158 | Active |
| Tin | Yunnan Tin Company, Ltd. | China | CID002180 | Compliant |
| Tin | PT Wahana Perkit Jaya | Indonesia | CID002479 | Unknown |
| Tin | PT ATD Makmur Mandiri Jaya | Indonesia | CID002503 | Compliant |
| Tin | PT Inti Stania Prima | Indonesia | CID002530 | Compliant |
| Tin | CV Ayi Jaya | Indonesia | CID002570 | Compliant |
| Tin | Matallo-Chimique N.V. | Belgium | CID002773 | Compliant |
| Tin | PT Sukses Inti Makmur | Indonesia | CID002816 | Compliant |
| Gold | The Refinery of Shandong Gold Mining Co., Ltd | China | CID001916 | Compliant |
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