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EXHIBIT 1.01

 

NU SKIN ENTERPRISES, INC.

2020 CONFLICT MINERALS REPORT

 May 25, 2021

 

We prepared this 2020 Conflict Minerals Report pursuant to Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”), which was promulgated in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to impose reporting, disclosure and other requirements on registrants that manufacture, or contract the manufacture of, products for which any of the following minerals are necessary to their functionality or production: columbite-tantalite (coltan), cassiterite, wolframite or gold, or derivatives of these minerals, which include tantalum, tin and tungsten (collectively, the “3TG Minerals”).

 

If a registrant has reason to believe that any of the 3TG Minerals necessary to the functionality or production of its products may have originated in certain “Covered Countries,” consisting of the Democratic Republic of the Congo and its adjoining countries, or if a registrant is unable to determine the country of origin of such 3TG Minerals, then the registrant must exercise due diligence on the source and chain of custody of such 3TG Minerals.

 

Products

 

We develop and distribute innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions under our three primary brands: our beauty and personal care brand, Nu Skin®; our nutritional products brand, Pharmanex®; and our anti-aging brand, ageLOC®.

 

We reviewed our products to identify the products for which 3TG Minerals are necessary to their functionality or production (the “Covered Products”). For 2020, these products consisted of our home-use skin care treatment devices, a water purifier product that we sell in our Southeast Asia region, and certain cosmetics products. We contracted with seven suppliers to manufacture these products in 2020.

 

Results of Supplier Inquiries

 

The seven suppliers of our Covered Products were asked to complete and submit the Conflict Minerals Reporting Template (the “Reporting Template”) developed by the Responsible Minerals Initiative (“RMI”). The Reporting Template is a standardized questionnaire that requests, among other things, information regarding the country of origin of the 3TG Minerals contained in the products and/or components that are supplied to us and the suppliers in our supply chain. Six of the seven suppliers completed the Reporting Templates. One of these six omitted information about two of its upstream suppliers (the “Upstream Suppliers”) in the Reporting Template; we received the Upstream Suppliers’ information separately. Three of the seven suppliers and one Upstream Supplier indicated that the 3TG Minerals that they use do not originate from any of the Covered Countries. The other four suppliers and the other Upstream Supplier were unable to make this representation.

 

Based on our efforts and those of our suppliers, we do not have conclusive information regarding the specific countries of origin of the 3TG Minerals in our Covered Products for 2020. However, six of the seven suppliers of our Covered Products, including all four that were unable to state that the 3TG Minerals they use do not originate from the Covered Countries, provided a list of the smelters and refiners supplying 3TG Minerals to their respective supply chains. One of the two Upstream Suppliers also provided such a list.  Based on our review of these smelters and refiners, 238 of the 240 unique smelters and refiners identified by our suppliers were conformant with RMI’s Responsible Minerals Assurance Process (“RMAP”) assessment standards. According to RMI’s website, the RMAP program identifies, through independent, third-party audits, smelters and refiners that have systems in place to responsibly source minerals in line with current global standards.

 

A consolidated list of the smelters and refiners used by the suppliers of our Covered Products is included in Exhibit A. As indicated in footnotes (2) and (3) of Exhibit A, the suppliers that sourced from the two smelters and refiners that were not RMAP Conformant, or the smelters and refiners themselves, have taken actions to address the deficiencies.

The suppliers and Upstream Supplier that either did not complete the Reporting Template or indicated that their lists of smelters were incomplete provided information to us regarding their responsible-sourcing practices.

 

Due Diligence

 

We designed a program to exercise due diligence on the source and chain of custody of the 3TG Minerals that are necessary to the functionality or production of our Covered Products. We designed our due diligence program based on the internationally recognized due diligence framework set forth in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, including the related Supplement on Tin, Tantalum and Tungsten and the Supplement on Gold (the “OECD Framework”).

 

In accordance with the OECD Framework, our due diligence measures include the following steps:

 

 

 

In response to violence and human rights violations related to the mining of certain minerals in the Democratic Republic of the Congo (the “DRC”), Congress enacted Section 1502 of the Dodd‐Frank Wall Street Reform and Consumer Protection Act, which directed the U.S. Securities and Exchange Commission (the “SEC”) to adopt a rule requiring reporting on “conflict minerals” (the “Conflict Minerals Rule”).  Conflict minerals include gold, tantalum, tin, and tungsten, which are used in many electronic components and computer products.  The Conflict Minerals Rule requires companies that are required to file reports with the SEC to report annually on their products that may contain conflict minerals sourced from mines in the DRC or adjoining countries.

 

Nu Skin Enterprises, Inc. (the “Company”) supports the goal of ending violence and human rights violations in the DRC and adjoining countries.  The Company is committed to the responsible sourcing of conflict minerals throughout its supply chain and to continuing to comply with the Conflict Minerals Rule.

 

The Company does not directly source minerals from smelters or mines.  Therefore, the Company relies on the information provided by its raw material or product suppliers regarding their sourcing of minerals.  The Company expects its suppliers to source minerals from socially responsible suppliers and to provide all necessary declarations to the Company to support the Company’s compliance with the Conflict Minerals Rule.  The Company expects suppliers to pass this requirement on to their supply chain to the extent necessary to determine the source of the specified minerals.  The Company may reconsider its relationship with suppliers that do not comply with this policy.

 

The Company is committed to ethical practices and compliance with applicable laws and regulations wherever it does business.  The Company will regularly survey its suppliers and will perform due diligence as appropriate to verify compliance with this policy.

 

 

 

 

 

 

We take the following steps to identify and assess risks in our supply chain:

 

 

 

 

 

After identifying and assessing risks in our supply chain, we design and implement a strategy to respond to any identified risks.  This strategy includes the following:

 

 

 

 

We do not have direct relationships with the mines, smelters or refiners of any minerals, including 3TG Minerals, and we do not perform or direct audits of these entities within our supply chain. However, we leverage the audit work conducted by third parties to comply with the OECD Framework to conduct independent third-party audits.

 

 

We report on our efforts to understand the sourcing of the 3TG Minerals in our supply chain by annually filing a Form SD with the SEC.  We also provide a Conflict Minerals Report, which describes our supply chain due diligence policies and practices, when required.

 

Risk Mitigation Efforts

 

To mitigate the risk that the 3TG Minerals that are necessary to the functionality or production of our products benefit armed groups, and to improve our due diligence, we have taken or intend to take the following steps:

 

 

 

Exhibit A

Smelters and Refiners Used by Suppliers of Covered Products

(2)

As of May 24, 2021, this refiner is on RMI’s Active Refiner list, which according to RMI’s website means it has committed to undergo an RMAP assessment, completed the relevant documents, and scheduled the on-site assessment.

(3)

The supplier that sourced from this smelter during 2020 indicated to us that it no longer sources from this smelter.

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