Exhibit 1.01

 

 

2023 Conflict Minerals Report

 

Introduction

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation (“Wabtec” or the “Company”), prepared this Conflict Minerals Report (“Report”) for the year ending December 31, 2023, as provided for in Rule 13p-1 of the Securities Exchange Act of 1934, as amended, and Form SD (collectively, the “Conflict Minerals Rule”). Wabtec provides its products and services through two principal business segments, the Freight Segment and the Transit Segment.  The Freight Segment primarily manufactures and provides aftermarket parts and services for new locomotives; provides components for new and existing locomotives and freight cars; builds new commuter locomotives; supplies rail control and infrastructure products, including electronics, positive train control equipment, signal design and engineering services; overhauls locomotives; and provides heat exchangers and cooling systems for rail and other industrial markets.  The Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses; supplies rail control and infrastructure products, including electronics, signal design and engineering services; and refurbishes passenger transit vehicles.

 

Wabtec manufactures a wide range of products that contain tin, tantalum, tungsten or gold (“3TG” or “conflict minerals”), but Wabtec does not purchase ore or unrefined 3TG from mines and is generally many steps removed in the supply chain from the mining of these minerals. We purchase materials from a wide network of suppliers and rely on those suppliers to assist with our reasonable country of origin inquiry regarding the 3TG that are necessary to the functionality or production of products we manufacture. After performing our reasonable country of origin inquiry and due diligence for 2023, we are unable to definitively determine whether a portion of the 3TG contained in our products originated from the Democratic Republic of the Congo or an adjoining country (collectively, the “Covered Countries”) or the 3TG may not be solely from recycled or scrap sources.  Therefore, we are submitting this Report describing the due diligence we have performed pursuant to the Conflict Minerals Rule and our related processes and procedures.

 

This Report includes:

 

 

 

 

Due Diligence

 

Design of Wabtec’s due diligence measures

 

Wabtec has adopted Conflict Minerals Guidelines (the “Guidelines”) that lay out the design of our 3TG due diligence process. The Guidelines describe procedures that Wabtec Global Operations and its business units use to perform due diligence on the source and origin of 3TG contained in products we manufacture. Wabtec designed its due diligence measures to be in conformity, in material respects, with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas including, the Supplement on Tin, Tantalum, and Tungsten and the Supplement on Gold (collectively, the “OECD Guidance”).

 

Description of Wabtec’s due diligence measures for 2023

 

Wabtec’s 2023 due diligence measures are designed in conformity, in all material respects, with the Five-Step Framework for Risk-Based Due Diligence in the Mineral Supply Chain contained in the OECD Guidance.

 

 Step 1:  Establish strong company management systems

 

 

Wabtec’s Responsible Minerals Policy, which is available on Wabtec’s website, outlines our commitment to responsible supply chains and to the avoidance of conflict minerals that directly or indirectly finance or benefit armed groups in the Covered Countries.  Moreover, the Guidelines contain the operative provisions of the Policy, as well as the process for ensuring that risks are adequately managed. Additional Wabtec policies relating to the due diligence measures contained in the OECD Guidance are incorporated into Wabtec’s Supplier Code of Conduct, which is available on Wabtec’s website (for more information, see “Where You Can Find Additional Information” below).

 

 

Internal management system.  Wabtec’s internal management system for its supply chain due diligence is coordinated by Wabtec Global Operations, with support from the individual Wabtec business units.

 

 

 

 

 

 

Identifying suppliers. Sourcing Compliance identifies the following:

 

 

 

Identifying smelters and refiners in the supply chain. Wabtec Global Operations used its best efforts to identify smelters and refiners of 3TG by surveying Significant Suppliers using the Conflict Minerals Reporting Template (“CMRT”) and other survey tools developed by the Responsible Minerals Initiative (“RMI”). The survey tools are designed to collect, manage, and archive (for at least five years) supplier information relevant for 3TG due diligence including, among other things, the identity of smelters and refiners of 3TG in the supplier’s supply chain, as well as information related to their 3TG compliance efforts. We apply criteria based on the CMRT to assess the acceptability of survey responses and follow up with Significant Suppliers whose survey responses are identified as potentially incomplete or inaccurate to seek more complete information.

Conducting a reasonable country of origin inquiry. For upstream due diligence to identify countries of origin and other relevant information about the conflict status of metals produced by the smelters and refiners identified as potentially in Wabtec’s supply chain, Wabtec relies on the information made available through the Responsible Minerals Assurance Process (“RMAP”) administered by RMI. Wabtec relied on this information to identify (1) the status of smelters and refiners potentially in Wabtec’s supply chain; and (2) the countries of origin of ores that are potentially in the supply chains of these smelters and refiners. Where the data showed that ores utilized by one or more of these smelters or refiners originated in one or more of the Covered Countries, Wabtec concluded that there is reason to believe that 3TG from the Covered Countries may be present in the products of the business for which such smelters or refiners were reported as potentially in the supply chain. Due to business confidentiality and other competitive concerns, as recognized by the OECD Guidance, the RMI does not publish detailed information on the specific mine and location of origin of ores that supply the smelters and refiners subject to verification reviews. Consequently, no such information is provided in this Report. RMI’s efforts to determine such information is described on the RMI website (see “Where You Can Find Additional Information” below).

 

 

Regular communications. Wabtec communicates its expectations on responsible supply chains of 3TG by transmitting surveys and other communications from the Sourcing leaders of the Wabtec business units to Significant Suppliers and other Relevant Suppliers.

 

Contractual obligations. Each Wabtec business unit utilizes standard terms and conditions that incorporate by reference Wabtec’s Supplier Code of Conduct, which can be found on Wabtec’s website (see “Where You Can Find Additional Information” below).  Suppliers are contractually obligated to (1) adopt policies and establish systems to procure 3TG from sources that have been verified as conflict free; (2) provide supporting data on their 3TG supply chains to Wabtec when requested; and (3) provide Wabtec with audit rights and the right to terminate the contract in the event of material non-compliance.

 

 

Open reporting system. Wabtec and its business units have an open reporting system – Speak Up Wabtec! – to allow employees and third parties to report concerns about policy violations, including concerns related to our 3TG policies. Concerns can be reported anonymously or for attribution through several channels, including any cognizant Wabtec Manager, any Compliance Resource (e.g. Wabtec legal counsel or auditor), by using the Speak Up Wabtec! e-tool at https://speakupwabtec.ethicspoint.com, by calling the Wabtec Speak Up Wabtec! Hotline in the US at (877) 860-1054 or using the e-tool to find country-specific telephone numbers, or by emailing speakupwabtec@wabtec.com.

 

No retaliation. Retaliation against any person for reporting a compliance or integrity concern is forbidden.

 Step 2:  Identify and assess supply chain risks

 

 

During 2023, using the processes described in Step 1.C above, Wabtec identified 4,338 Relevant Suppliers (up from 2,830 in 2022), including 639 Significant Suppliers (down from 933 in 2022). These year-over-year changes are primarily the result of the continued implementation of Wabtec’s electronic vendor management system for procurement that allows for a greater transparency and understanding of all suppliers across the company’s supply chain, including high-risk commodity groups.   Wabtec continues to include castings and raw material suppliers to the scope of 3TG Due Diligence in 2023. Our Significant Suppliers, mostly reporting at a company level, identified 421 smelters and refiners of 3TG that were potentially in their supply chains (as compared to 408 in 2022). See Table A below for a list of these smelters and refiners and a summary of their validation status under the RMAP.

 

 

Engaging with suppliers. Wabtec’s 3TG survey asks suppliers to identify smelters or refiners of 3TG in their supply chains. For Significant Suppliers that are identified as either not having a responsible 3TG sourcing policy or not implementing due diligence measures for conflict-free sourcing, we encourage those suppliers to implement such measures.  We seek to engage all Significant Suppliers to encourage the smelters and refiners in their supply chains to become validated as Conformant (as defined below) by the RMAP or a similar program.

 

Wabtec seeks to continuously improve its due diligence efforts to reduce 3TG supply chain risk by encouraging suppliers to source from Conformant smelters and refiners.  In 2023, 57% of the smelters and refiners identified by our Significant Suppliers have been verified as Conformant (as compared to 56% in 2022).

 

 

Wabtec conducts due diligence to determine the degree of its suppliers’ compliance with the contractual obligations laid out in the Guidelines. Measures may include reviewing supplier responses for completeness, accuracy, and credibility, as well as confirming smelter status by checking against the Smelter Look-up tab list of the RMI’s CMRT and the RMI’s Conformant Smelter list.  When Significant Suppliers identify smelters and refiners not listed as Conformant by RMI or a similar program, we attempt to contact the smelter or refiner to validate their responsible 3TG sourcing process.

 

 

In accordance with OECD Guidance, including its audit recommendations for downstream companies, Wabtec implements upstream audits by participating in and cooperating with industry organizations. Wabtec is a member of RMI (member code: WABT) and relied on the RMAP to conduct a risk assessment at the upstream level. For each smelter identified within its supply chain, Wabtec assessed the information available from the RMAP to determine whether there were any “red flags” (as defined in OECD Guidance) and, if needed, develop a corrective action plan. We encourage removal of any high-risk smelters from our supply chain.

 Step 3:  Design and implement a strategy to respond to identified risks

 

 

See Step 1.B above for a description of Wabtec’s 3TG due diligence internal reporting processes.

 

 

Wabtec annually compiles a report of 3TG risks identified in its supply chain for review by Wabtec’s Chief Procurement Officer to determine the appropriate steps to take in mitigating any identified supply chain risks. In 2023, Wabtec continued to focus on reducing risk by (1) engaging Significant Suppliers to encourage the smelters and refiners in their supply chains to become validated as Conformant by the RMAP, (2) encouraging Significant Suppliers who identified high-risk smelters and refiners to remove them from their supply chains, and (3) engaging with non-Conformant smelters and refiners directly to encourage them to participate in the RMAP audit process to become Conformant.  A high-risk smelter or refiner is one for which there are credible reports that such smelter or refiner sources materials in a manner that directly or indirectly finances armed conflict.

 

For Significant Suppliers who identified high-risk smelters and suppliers, Wabtec Global Operations sent such supplier a letter requesting that: (a) the supplier confirm whether these smelters or refiners are in fact in their supply chain, and if so, whether such materials are used in Wabtec products; (b) that the supplier encourage these smelters or refiners to participate in the RMAP; and (c) that if a smelter or refiner refuses to participate in the RMAP, such supplier should develop a plan to remove the smelter from its supply chain.

 

 Step 4:  Carry out independent 3^rd-party audit of smelters/refiners’ due diligence practices

 

See Step 2.D above for a discussion of how Wabtec implemented upstream audits by participating in and cooperating with industry organizations like RMI.

 

 Step 5:  Report annually on supply chain due diligence

 

We file this Report annually with the SEC, and a copy is publicly available on our website at: https://ir.wabteccorp.com/static-files/8fd94988-3d8d-4111-a410-65af65580331.

 

Due diligence results

Wabtec relies on its suppliers to provide information on the origin of 3TG contained in the components and materials supplied to us.  These suppliers are similarly reliant upon information provided by their suppliers.  In 2023, Wabtec identified 4,338 Relevant Suppliers, including 639 Significant Suppliers. Our Significant Suppliers identified 21 smelters and refiners of 3TG that were potentially in their supply chains. Of these 21 unique facilities identified, 57% were validated as “conformant” under the RMAP as of April 17, 2024.  “Conformant” means that a smelter or refiner was audited by the RMI and has been found to be conformant with the RMAP.  See Table A below for a list of these smelters and refiners and a summary of their validation status under the RMAP.  Based on the information obtained as a result of the due diligence measures described above, we reasonably determined that the minerals processed by the smelters and refiners listed are from the countries listed in Table B.

With regard to the specific smelters or refiners identified by Wabtec, we cannot be certain that the identified smelters and refiners supplied 3TG for parts and components supplied to Wabtec rather than to other customers. Wabtec does not purchase raw ore or unrefined tin, tantalum, tungsten or gold.  Wabtec is many steps removed from the mining of the conflict minerals.  For this reason, we have been unable to establish chain of custody or identify with confidence the specific facilities used to process the 3TG in our products and/or the country of origin, the mine, or the location of origin of the 3TG in our products.

Continuous improvement

 

Wabtec intends to continue its efforts in 2024 to improve its supply chain due diligence and further mitigate the risk that 3TG contained in its products supports armed conflict in Covered Countries by focusing on:

 

 

Our new vender management system allows for coordination with any new supplier to ensure that they understand Wabtec’s responsible sourcing policy and compliance requirements, the requirements of the Conflict Minerals Rule, and the OECD Guidance, while also collecting CMRTs from suppliers before they are initiated into the supply chain.  This helps Wabtec more proactively identify, assess, and respond to supply chain risks

 

(as of April 14, 2024)

 

Summary of Smelters and Refiners

# of Smelters and Refiners Reported in Our Supply Chain

We note the following in connection with the information contained in the foregoing table:

(1) While the smelters and refiners reflected in the table were identified by our Significant Suppliers as potentially being part of our 2023 supply chain, not all of the smelters and refiners may have processed the necessary 3TG contained in the in-scope products that we manufactured.  Many Significant Suppliers reported to us at a “company level” the 3TG contained in all of their products, not just those in the products that they sold to us. Some Significant Suppliers also may have reported to us smelters and refiners that were not in our supply chain due to over-inclusiveness in the information received from their suppliers or for other reasons. In addition, the smelters and refiners reflected above may not be all of the smelters and refiners in our supply chain.  Some Significant Suppliers may be unable to identify all of the smelters and refiners used to process the necessary 3TG content contained in the products that we manufactured, and not all of the Significant Suppliers responded to our inquiries.

(2) “Conformant” means that a smelter or refiner was audited by the RMI and has been found to be conformant with the RMAP. The information reflected in the table is based solely on information made available by the RMI to its members, without independent verification by us.

(3) “Active” means that a smelter or refiner is a participant in the RMAP committed to undergoing an assessment and has scheduled an assessment date, or is participating in one of the cross-recognized certification programs.

(4) A smelter or refiner is listed as "On Smelter Look-up Tab Only" if it was not Conformant or Active, but appears on the Smelter Look-Up Tab of the CMRT.

(5) The information reflected in the table is based solely on information made available by the RMI to its members, without independent verification by us.

 

Status of Identified Smelters and Refiners for 2023

	Metal		Smelter Look-up (*)		Smelter Country (*)		Status
	Gold		Advanced Chemical Company		United States		Active
	Gold		Bangalore Refinery		India		Active
	Gold		Abington Reldan Metals, LLC		United States		Conformant
	Gold		Agosi AG		Germany		Conformant

 

(as of April 17, 2024)

 

Helpful Resources

 

Acronyms Used in This Report

 

Forward-Looking Statements

 

This Report contains "forward-looking statements" – that is, statements based on our current expectations and projections about future events.  These forward-looking statements are subject to various risks, uncertainties, and assumptions.  For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see our annual reports on Form 10-K and quarterly reports on Form 10-Q. We undertake no obligation to update any statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

 

Where You Can Find Additional Information*

 

Wabtec Responsible Minerals Policy

Wabtec Supplier Code of Conduct

 

Wabtec Code of Business Conduct and Ethics

 

Responsible Minerals Initiative

 

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas

 

Wabtec’s 2023 Annual Report on Form 10-K

 

*These web links are provided for convenience only, and the content on the referenced websites does not constitute a part of this Report.

 

Wabtec and the Wabtec logo are trademarks and service marks of Wabtec Corporation. Other marks used throughout are trademarks and service marks of their respective owners.