Exhibit 1.02
Echelon Corporation
Conflict Minerals Report
For The Year Ended December 31, 2013
This Conflict Minerals Report (this “Report”) for Echelon Corporation (the “Company”, “Echelon”, “our” or “we”) covers the reporting period from January 1, 2013 to December 31, 2013, and is presented in accordance with Rule 13p-1 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 13p-1”).
This Report is filed as Exhibit 1.02 to the Company’s Specialized Disclosure Report on Form SD (the “Form”), and a copy of this Report and the Form are publicly available at http://www.echelon.com/company/investor/corpgov/
We use the term “conflict free” in this Report in a broader sense to refer to suppliers, supply chains, smelters and refiners whose sources of conflict minerals did not or do not directly or indirectly finance or benefit armed groups in the Covered Countries. For purposes of this Report, the term “conflict minerals” means columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which are limited to tantalum, tin, and tungsten. Numerous terms in this Report are defined in the Rule and the reader is referred to that source and to SEC Release No. 34-67716 issued by the Securities and Exchange Commission on August 22, 2012 for such definitions.
Introduction
In 2010, the United States enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). Pursuant to Section 1502 of the Act, the United States Securities and Exchange Commission (“SEC”) promulgated regulations requiring companies covered under the Act annually to file a Specialized Disclosure Report on Form SD with the SEC to disclose whether certain specified conflict minerals (as described below) used in their products directly or indirectly benefited armed groups in the Democratic Republic of the Congo and adjoining countries (collectively, the “Covered Countries”). This Report, which is an exhibit to the Form, describes the design of Echelon’s conflict minerals due diligence measures and provides an account of how these measures were implemented in 2013 to determine, to our knowledge, the source mines, the country of origin and the facilities used to process the conflict minerals used in our products. A description of our products covered by this Report is described under “Part 2: Product Determination” of this Report below.
Part 1: Due Diligence
Reasonable Country of Origin Inquiry Process
In accordance with Rule 13p-1 and Form SD, Echelon determined that conflict minerals are necessary to the functionality or production of our products, and undertook a reasonable country of origin inquiry (“RCOI”) with respect conflict minerals reasonably designed to determine whether any of the conflict minerals originated in the Covered Countries.
Due Diligence Process
In conducting our RCOI, Echelon employed a combination of measures to determine whether the conflict minerals in our products originated from the Covered Countries, and determined that the Company would survey direct suppliers that represented an aggregate of at least 95% of sales revenue generated from our products that contain or may be manufactured using conflict minerals. Echelon employed the Electronics Industry Citizenship Coalition (“EICC”) - Global eSustainability Initiative (“GeSI”) Extractives industry tools to collect due diligence information on the source and chain of custody of conflict minerals.
To maximize the efficiency and effectiveness of our efforts to identify smelters and refiners in our supply chain ,as a standardized protocol, we, along with other participants in the electronics industry, rely on the Conflict-Free Sourcing Initiative (CFSI)’s Conflict-Free Smelter Program (“CFSP”) or equivalent industry-wide program for audits of smelters and/or refiners. The CFSP is a voluntary initiative in which an independent third party audits smelter procurement and processing activities and determines if the smelter has provided sufficient documentation to demonstrate with reasonable confidence that the minerals it processed originated from conflict-free sources.
In addition, we designed our due diligence to conform, in all relevant material respects given our position in the supply chain, to 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 (the “Framework”) as it pertains to downstream companies. We believe the Framework is an internationally recognized due diligence framework and meets the requirements of the Rule.
Establishment of a Management System.
Echelon established a management system for addressing the sourcing of conflict minerals in our products, and implemented a conflict minerals governance structure that includes executive sponsors and a cross-functional team comprised of individuals from Operations, Finance, Accounting, Sales and Legal.
A copy of Echelon’s Supply Chain Policy for Conflict Minerals can be viewed at http://www.echelon.com/company/investor/docs/ech_corpgov_conflictmineralspolicy.pdf. Echelon has a worldwide whistleblower policy and hotline, and we accept and encourage reporting of illegal or unethical activity. We believe that our whistleblower hotline is an appropriate mechanism for our employees and employees of our suppliers to report known or suspected false information concerning conflict minerals in our supply chain.
Identification and Assessment of Risks in the Supply Chain
In 2013, Echelon selected and surveyed five first-tier direct suppliers, representing an aggregate of over 95% of our sales revenue generated from products containing or produced using conflict minerals. Echelon provided the Conflict Minerals Reporting Template (the “CMRT”) designed by the CFSI to all such suppliers in order to gather information about their use of conflict minerals, their mineral sourcing practices and the smelters and refiners in their supply chain. We elected to use the CMRT as we believe that it is a commonly used reporting template used in numerous industries, thereby easing the potential for confusion or misunderstanding by our suppliers and helping to foster even more widespread adoption of the CMRT.
Given our position in the supply chain, we relied heavily on our first-tier suppliers to provide information about the sources of conflict minerals used in our products. Upon receipt of responses to our CMRT request, we reviewed supplier responses for completeness, reasonableness, and acceptability in order to validate the smelters and refiners listed on the provided CMRTs.
Based on the data collected, the main risks that we have identified are suppliers providing incomplete or inconsistent responses in the CMRT, and suppliers providing the names of smelters or refiners that are unrecognized by the CFSI or not certified by the CFSP. As of the date of this Report, we have not identified a supplier, smelter or refiner which we have reason to believe may be sourcing conflict minerals from a Covered Country that, directly or indirectly, finances or benefits armed groups, but given the uncertainty in the provenance of materials from a variety of smelters that may be present in materials used by our suppliers, we are unable to determine with certainty whether or not any minerals used in our products are so sourced.
Conducting Independent Audits of Supply Chain Due Diligence
Echelon does not have a direct relationship with any smelters or refiners in our supply chain and, as a result, we do not directly conduct audits. Instead, Echelon identified conflict-free smelters and refiners reported from our first-tier direct suppliers by confirming with the published list from third party audits (the CFSP).
Part 2: Product Determination
Products
During the reporting period from January 1, 2013 to December 31, 2013, we identified the following products that may contain conflict minerals that Echelon contracted to manufacture:
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| • | Integrated Circuit (IC) and Module Products |
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| • | Interconnectivity Products |
DRC Conflict Status
In 2013 and 2014, we conducted the due diligence process described above for the reporting period from January 1, 2013 to December 31, 2013 in order to ascertain source and chain of custody information for the necessary conflict minerals in our supply chain. Based on the subsequent information we gathered, Echelon has determined that (i) certain smelters and refiners in the supply chain that are sources of the necessary conflict minerals for our products have received a “conflict free” designation from the CFSP or other third party audit program, and (ii) we are unable to determine the country of origin of conflict minerals and or chain of custody of all necessary conflict minerals procured by all smelters in our supply chain that contributed to our products because, for this reporting period, certain smelter and refiner facilities (1) had not yet received a “conflict free” designation from an independent third party audit program, and (2) did not respond to our requests for country of origin or chain or custody inquiries.
Table 1 below lists the facilities which, to the extent known, processed the necessary conflict minerals in our products:
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| Metal | Smelter Names | Country |
| Gold | Allgemeine Gold- und Silberscheideanstalt A.G. * | Germany |
| Gold | AngloGold Ashanti Mineração Ltda * | Brazil |
| Gold | Argor-Heraeus SA * | Switzerland |
| Gold | Asahi Pretec Corp * | Japan |
| Gold | Chimet SpA * | Italy |
| Gold | Dowa * | Japan |
| Gold | Heimerle + Meule GmbH * | Germany |
| Gold | HERAEUS HONG KONG * | Hong Kong |
| Gold | Heraeus Precious Metals GmbH & Co. KG * | Germany |
| Gold | Ishifuku Metal Industry Co., Ltd. * | Japan |
| Gold | Johnson Matthey Inc * | United States |
| Gold | Johnson Matthey Limited * | Canada |
| Gold | JX Nippon Mining & Metals Co., Ltd * | Japan |
| Gold | Kennecott Utah Copper * | United States |
| Gold | Kojima Chemicals Co. Ltd * | Japan |
| Gold | LS-Nikko Copper Inc * | Korea, Republic Of |
| Gold | Materion * | United States |
| Gold | Matsuda Sangyo Co. Ltd * | Japan |
| Gold | Metalor Technologies (Hong Kong) Ltd * | Hong Kong |
| Gold | Metalor Technologies SA * | Switzerland |
| Gold | Metalor USA Refining Corporation * | United States |
| Gold | Mitsubishi Materials Corporation * | Japan |
| Gold | Mitsui Mining and Smelting Co., Ltd. * | Japan |
| Gold | Nihon Material Co. LTD * | Japan |
| Gold | Ohio Precious Metals LLC. * | United States |
| Gold | PAMP SA * | Switzerland |
| Gold | Rand Refinery (Pty) Ltd * | South Africa |
| Gold | Royal Canadian Mint * | Canada |
| Gold | SEMPSA Joyeria Plateria SA * | Spain |
| Gold | Solar Applied Materials Technology Corp. * | Taiwan |
| Gold | Sumitomo Metal Mining Co. Ltd. * | Japan |
| Gold | Tanaka Kikinzoku Kogyo K.K. * | Japan |
| Gold | Tokuriki Honten Co. Ltd * | Japan |
| Gold | Umicore SA Business Unit Precious Metals Refining * | Belgium |
| Gold | United Precious Metal Refining, Inc. * | United States |
| Gold | Valcambi SA * | Switzerland |
| Gold | Western Australian Mint trading as The Perth Mint * | Australia |
| Gold | AIDA Chemical Industories Co.,Ltd | Japan |
| Gold | Almalyk Mining and Metallurgical Complex (AMMC) | Uzbekistan |
| Gold | Asaka Riken Co Ltd | Japan |
| Gold | Aurubis AG | Germany |
| Gold | Bangko Sentral ng Pilipinas (Central Bank of the Philippines) | Philippines |
| Gold | Caridad | Mexico |
| Gold | Chugai Mining | Japan |
| Gold | Codelco | Chile |
| Gold | Daejin Indus Co. Ltd | Korea, Republic Of |
| Gold | DaeryongENC | Korea, Republic Of |
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| Gold | Do Sung Corporation | Korea, Republic Of |
| Gold | Faggi Enrico Spa | Italy |
| Gold | Harima Smelter | Japan |
| Gold | Henan Zhongyuan Gold Smelter Co., Ltd.
| China |
| Gold | Heraeus USA | United States |
| Gold | Hisikari Mine | Japan |
| Gold | Hwasung CJ Co. Ltd | Korea, Republic Of |
| Gold | Jiangxi Copper Company Limited | China |
| Gold | Jinlong Copper Co., Ltd. | China |
| Gold | Korea Metal | Korea, Republic Of |
| Gold | LBMA | Japan |
| Gold | Mitsui & Co. Precious Metals Inc. Hong Kong Branch | Hong Kong |
| Gold | Navoi Mining and Metallurgical Combinat | Uzbekistan |
| Gold | Niihama Nickel Refinery | Japan |
| Gold | Nippon Mining & Mtetals | Japan |
| Gold | Orelec | France |
| Gold | Pan Pacific Copper Co. LTD | Japan |
| Gold | Sabin Metal Corp. | United States |
| Gold | Samwon Metals Corp. | Korea, Republic Of |
| Gold | Senju Metal Industry Co.,Ltd. | Japan |
| Gold | Shandong Zhaojin Gold & Silver Refinery Co. Ltd | China |
| Gold | So Accurate Refining Group | United States |
| Gold | The Refinery of Shandong Gold Mining Co. Ltd | China |
| Gold | Torecom | Korea, Republic Of |
| Gold | UBS AG | Switzerland |
| Gold | United Refining | United States |
| Gold | UYEMURA | United States |
| Gold | Xstrata Canada Corporation | Canada |
| Gold | Yamamoto Precious Metal Co., Ltd. | Japan |
| Gold | Yokohama Metal Co Ltd | Japan |
| Gold | YOKOHAMA METAL CO.,LTD. | Japan |
| Gold | Zhaojin Group&Gold Mineral China Co., Ltd. | China |
| Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | China |
| Gold | Zijin Mining Group Co. Ltd | China |
| Tantalum | Duoluoshan * | China |
| Tantalum | Exotech Inc. * | United States |
| Tantalum | F&X * | China |
| Tantalum | Global Advanced Metals * | United States |
| Tantalum | H.C. Starck GmbH * | Germany |
| Tantalum | Hi-Temp * | United States |
| Tantalum | JiuJiang JinXin Nonferrous Metals Co. Ltd. * | China |
| Tantalum | Mitsui Mining & Smelting Co., Ltd * | Japan |
| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd. * | China |
| Tantalum | RFH * | China |
| Tantalum | Solikamsk Metal Works * | Russian Federation |
| Tantalum | Taki Chemicals * | Japan |
| Tantalum | Tantalite Resources * | South Africa |
| Tantalum | Telex * | United States |
| Tantalum | Ulba * | Kazakhstan |
| Tantalum | Zhuzhou Cement Carbide * | China |
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| Tantalum | CIF | Brazil |
| Tantalum | Ethiopian Minerals Development Share Company | Ethiopia |
| Tantalum | Fujian Nanping | China |
| Tantalum | Jiangxi Yichun | China |
| Tantalum | Metal Do | Japan |
| Tantalum | Niotan | United States |
| Tantalum | NTET, Thailand | Thailand |
| Tin | Gejiu Non-Ferrous Metal Processing Co. Ltd. * | China |
| Tin | Malaysia Smelting Corporation (MSC) * | Malaysia |
| Tin | Mineração Taboca S.A. * | Brazil |
| Tin | Minsur * | Peru |
| Tin | Mitsubishi Materials Corporation * | Japan |
| Tin | OMSA * | Bolivia |
| Tin | PT Bukit Timah * | Indonesia |
| Tin | PT Tambang Timah * | Indonesia |
| Tin | PT Timah * | Indonesia |
| Tin | Thaisarco * | Thailand |
| Tin | White Solder Metalurgia * | Brazil |
| Tin | Yunnan Tin Company Limited * | China |
| Tin | Cookson Electronics - Alpha Metals Korea | Bangka,Indonesia |
| Tin | Senju Metal | Japan |
| Tin | Alpha Metals Korea Ltd. | Korea, Republic Of |
| Tin | Alpha Metals Taiwan | United States |
| Tin | Amalgamet | United States |
| Tin | An Xin Xuan Xin Yue You Se Jin Shu Co. Ltd. | China |
| Tin | Baoshida Swissmetall | Switzerland |
| Tin | CFC Cooperativa dos Fundidores de Cassiterita da Amazônia Ltda. | Brazil |
| Tin | China Tin Smelter Co.Ltd | China |
| Tin | CNMC (Guangxi) PGMA Co. Ltd. | China |
| Tin | Cooper Santa | Brazil |
| Tin | Corporation Berhad (MSC) | Malaysia |
| Tin | CV Duta Putra Bangka | Indonesia |
| Tin | CV JusTindo | Indonesia |
| Tin | CV Makmur Jaya | Indonesia |
| Tin | CV Nurjanah | Indonesia |
| Tin | CV Serumpun Sebalai | Indonesia |
| Tin | CV United Smelting | Indonesia |
| Tin | Electro.oy Metal Pte. | Singapore |
| Tin | EM Vinto | Bolivia |
| Tin | Fenix Metals | Poland |
| Tin | FSE Novosibirsk Refinery | Russian Federation |
| Tin | Fuji Metal Mining | Thailand |
| Tin | Gebrueder Kemper GMBH | Germany |
| Tin | Gejiu Gold Smelter Minerals Co.,Ltd | China |
| Tin | Gejiu Yunxin Colored Electrolytic Co.,Ltd | China |
| Tin | Gejiu Zi-Li | China |
| Tin | Gold Bell Group | China |
| Tin | Gomat-e-K. | Germany |
| Tin | GUANGXI CHINA TIN GROUP CO.,LTD | China |
| Tin | Heraeus Technology Center | Hong Kong |
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| | |
| Tin | Huichang Jinshunda Tin Co. Ltd | China |
| Tin | Jean Goldschmidt International | Belgium |
| Tin | Jiangxi Nanshan | China |
| Tin | Kai Unita Trade Limited Liability Company | China |
| Tin | Linwu Xianggui Smelter Co | China |
| Tin | Liuzhou China Tin | China |
| Tin | Malaysia Smelting Corp | Malaysia |
| Tin | Metahub Industries Sdn. Bhd. | Malaysia |
| Tin | Metallo Chimique | Belgium |
| Tin | Minmetals Ganzhou Tin Co. Ltd. | China |
| Tin | Minsur | China |
| Tin | Mitsubishi Electric Metecs Co., Ltd. | Japan |
| Tin | Novosibirsk Integrated Tin Works | Russian Federation |
| Tin | OM Manufacturing Phils. Inc. | Philippines |
| Tin | PT Alam Lestari Kencana | Indonesia |
| Tin | PT Artha Cipta Langgeng | Indonesia |
| Tin | PT Babel Inti Perkasa | Indonesia |
| Tin | PT Babel Surya Alam Lestari | Indonesia |
| Tin | PT Bangka Kudai Tin | Indonesia |
| Tin | PT Bangka Putra Karya | Indonesia |
| Tin | PT Bangka Timah Utama Sejahtera | Indonesia |
| Tin | PT Bangka Tin Industry | Indonesia |
| Tin | PT Belitung Industri Sejahtera | Indonesia |
| Tin | PT BilliTin Makmur Lestari | Indonesia |
| Tin | PT DS Jaya Abadi | Indonesia |
| Tin | PT Eunindo Usaha Mandiri | Indonesia |
| Tin | PT Fang Di MulTindo | Indonesia |
| Tin | PT HP Metals Indonesia | Indonesia |
| Tin | PT Koba Tin | Indonesia |
| Tin | PT Mitra Stania Prima | Indonesia |
| Tin | PT Refined Banka Tin | Indonesia |
| Tin | PT Sariwiguna Binasentosa | Indonesia |
| Tin | PT Stanindo Inti Perkasa | Indonesia |
| Tin | PT Sumber Jaya Indah | Indonesia |
| Tin | PT Timah Nusantara | Indonesia |
| Tin | PT Tinindo Inter Nusa | Indonesia |
| Tin | PT Yinchendo Mining Industry | Indonesia |
| Tin | Pure Technology | Russian Federation |
| Tin | Richard Stenzhorn GmbH | Germany |
| Tin | Samhwa non-ferrorus Metal ind.co.ltd | Korea, Republic Of |
| Tin | Singapore LME Tin | Singapore |
| Tin | Sundwigger Messingwerk | Germany |
| Tin | Tamura | Japan |
| Tin | The Miller Company | United States |
| Tin | XiHai | China |
| Tin | Yunnan Chengfeng | China |
| Tin | Yunnan Chengo Electric Smelting Plant | China |
| Tin | Yunnan Tin | China |
| Tin | Yuntinic Chemical GmbH | Germany |
| Tin | YunXi | China |
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| | |
| Tungsten | Central Glass @Co.,Ltd Ube, Yamaguchi | Japan |
| Tungsten | Dayu Weiliang Tungsten Co.,Ltd | China |
| Tungsten | A.L.M.T. Corp. | Japan |
| Tungsten | ATI Tungsten Materials | United States |
| Tungsten | Buffalo Tungsten | China |
| Tungsten | Chaozhou Xianglu Tungsten Industry Co Ltd | China |
| Tungsten | China Minmetals Nonferrous Metals Co Ltd | China |
| Tungsten | China National Non-ferrous | China |
| Tungsten | Chongyi Zhangyuan Tungsten Co Ltd | China |
| Tungsten | Ganzhou Grand Sea W & Mo Group Co Ltd | China |
| Tungsten | Global Tungsten & Powders Corp * | United States |
| Tungsten | HC Starck | Russian Federation |
| Tungsten | HC Starck GmbH | Germany |
| Tungsten | Hunan Chun-Chang Nonferrous Smelting & Concentrating Co., Ltd. | China |
| Tungsten | Jiangxi Rare Earth & Rare Metals Tungsten Group Corp | China |
| Tungsten | Jiangxi Tungsten Industry Group Co Ltd | China |
| Tungsten | Kennametal Inc. | United States |
| Tungsten | Kyoritsu Gokin Co., Ltd. | Japan |
| Tungsten | Mitsubishi Materials Corp. | Japan |
| Tungsten | Mitsui Mining & Smelting Co., Ltd | Japan |
| Tungsten | Nanchang Cemented Carbide Limited Liability Company | China |
| Tungsten | North American Tungsten | Canada |
| Tungsten | Plansee | Austria |
| Tungsten | Sandvik Material Technology | Sweden |
| Tungsten | Sumitomo | China |
| Tungsten | Wolfram Bergbau und Hütten AG | Austria |
| Tungsten | Wolfram Company CJSC | Russian Federation |
| Tungsten | Xiamen Golden Egret Special Alloy Co. Ltd. | China |
| Tungsten | Xiamen Tungsten Co Ltd | China |
| Tungsten | Zhuzhou Cemented Carbide Group Co Ltd | China |
* Denotes smelters and refiners which have received a "conflict free" designation from an independent third party audit as updated by the CFSI after the Reporting Period.
Efforts to Determine Mine Location
Echelon has very limited engagement with the majority of parties beyond our first-tier direct suppliers in our supply chain. Consequently, identifying, with certainty, the smelters, refiners and recyclers and the source of the conflict minerals they process is an extraordinary challenge. In 2013, the primary focus of our due diligence on the source and chain of custody of the necessary conflict minerals in our supply chain was on the collection and assessment of the data gathered, consolidated and provided by our direct first-tier suppliers. As a downstream supplier, we base our due diligence program on current industry guidance and practices for implementing the Framework, Echelon’s primary means of determining mine location is through the CFSP audits, industry lists and reports that we expect to gather through our participation in the various organizations identified above.
Future Steps
We recognize that this is a complicated process given the complexity of our supply chain, and that Echelon has very limited engagement with the majority of our supply chain beyond our first-tier direct suppliers. As a result, in 2014, we expect to continue to focus our efforts on collaborating with our first tier direct suppliers to improve the systems of transparency and control in our supply chain, including through our use of the CMRT in connection with our diligence of our supply chain.
