UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM SD

Specialized Disclosure Report

EATON CORPORATION plc

(Exact name of registrant as specified in its charter)

 

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information on this form applies:

☑ Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2021.

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Item 1.01

Conflict Minerals Disclosure and Report

Conflicts Minerals Disclosure

The description of our reasonable country of origin inquiry process and the results of our inquiry are included in our Conflict Minerals Report, attached as Exhibit 1.01 to this Form SD.

Item 1.02

Exhibit

A copy of Eaton Corporation plc’s Conflict Minerals Report as required by Item 1.01 is provided as Exhibit 1.01 hereto.

Item 2.01

Exhibits

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

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EATON CORPORATION plc

CONFLICT MINERALS REPORT

FOR THE YEAR ENDED DECEMBER 31, 2021

This Conflict Minerals Report (Report) is filed as an exhibit to Eaton’s Form SD as required by Rule 13p-1 (the Rule) under the Securities Exchange Act of 1934, as amended.

Eaton Corporation plc (Eaton, the Company, we, us or our) is required to perform a reasonable country of origin inquiry (RCOI) into the sources of necessary conflict minerals in our products and disclose the results of such diligence. Conflict minerals have been defined as tin, tantalum, tungsten and gold (the Minerals). The design of our due diligence and related results are described below.

1.          COMPANY OVERVIEW

Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to improving the quality of life and protecting the environment for people everywhere. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power – today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we're accelerating the planet's transition to renewable energy, helping to solve the world's most urgent power management challenges, and doing what's best for our stakeholders and all of society.

Founded in 1911, Eaton has been listed on the New York Stock Exchange for nearly a century. We reported revenues of $19.6 billion in 2021 and serve customers in more than 170 countries.

Eaton has five key business segments: Electrical Americas and Electrical Global, Aerospace, Vehicle, and eMobility.  On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S, a Danish industrial company. Prior to the sale, the Hydraulics business was a reportable operating segment.  In 2021, Eaton considers all products to be in-scope and include, but are not limited to:

Electrical Americas and Electrical Global

These segments consist of electrical components, industrial components, residential products, single phase power quality, emergency lighting, fire detection, wiring devices, structural support systems, circuit protection, and lighting products. Electrical Systems and Services is also a part of this segment and consists of power distribution and assemblies, three phase power quality, hazardous duty electrical equipment, intrinsically safe explosion-proof instrumentation, utility power distribution, power reliability equipment, and services.

Aerospace

The Aerospace segment is a leading global supplier of aerospace fuel, hydraulics, and pneumatic systems for commercial

and military use. Products include hydraulic power generation systems for aerospace applications including pumps, motors, hydraulic power units, hose and fittings, electro-hydraulic pumps; controls and sensing products including valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems and nose wheel steering systems; fluid conveyance products, including hose, thermoplastic tubing, fittings, adapters, couplings, sealing and ducting; and fuel systems including fuel pumps, sensors, valves, adapters and regulators.

Vehicle

eMobility

The eMobility segment designs, manufactures, markets, and supplies electrical and electronic components and systems that improve the power management and performance of both on-road and off-road vehicles. Products include high voltage inverters, converters, fuses, onboard chargers, circuit protection units, vehicle controls, power distribution, fuel tank isolation valves, and commercial vehicle hybrid systems.

Purchased raw materials and parts are varied and are sourced from many suppliers. Eaton has a substantial number of suppliers globally that span across our business segments. Our supply chain is multi-tiered, and Eaton is typically many levels removed from the mines, smelters and refiners. Eaton does not purchase any Minerals directly from mines, smelters or refiners. Therefore, Eaton must rely on its suppliers to provide information about the origin of the Minerals in its products. Some of Eaton’s products may contain the Minerals either from recycled sources or in their processed form.

For additional information about our business segments, including the wide variety of products manufactured in each segment, refer to Eaton's 2021 Form 10-K.

2.          REASONABLE COUNTRY OF ORIGIN INQUIRY

For the reporting period from January 1 through December 31, 2021, Eaton conducted a good faith reasonable country of origin inquiry of the Minerals that are necessary to the functionality or production of the products that Eaton manufactured or contracted with others to manufacture during the reporting period. Based on this reasonable country of origin inquiry, Eaton was unable to conclude that these Minerals did not originate from the Democratic Republic of the Congo (the DRC) or adjoining countries.  Accordingly, Eaton undertook due diligence measures on the source and chain of custody of the identified necessary Minerals.

3.          DUE DILIGENCE

3.1 Design of Due Diligence

Our due diligence measures were designed to conform, in all material respects, with the due diligence framework set forth in 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 and the related Supplements for tin, tantalum, and tungsten and for gold.  Pursuant to this framework, we undertook to: (a) establish company management systems, (b) identify and assess risks in our supply chain, (c) design and implement a strategy to respond to the risks identified, (d) support the development and implementation of independent third party audits of smelter and refiner sourcing, and (e) report on the results of our supply chain due diligence.

3.2 Due Diligence Measures Performed

a. Establishment of Company Management Systems

b. Identify and Assess Risks in our Supply Chain

As a downstream user of Minerals, Eaton is many layers removed from the mine or location from which the Minerals originated and the smelters and refiners which processed the Minerals.  We solicited relevant suppliers using due diligence tools including the RMI’s CMRT.  Our solicitation letter included an explanation of the Minerals and the related legal regulations, a request for suppliers to comply with the regulations and respond to us, and our contact information to direct any questions.  Additional solicitation requests, including in additional languages beyond English, were sent to suppliers that did not respond or provide sufficient information.  Through this process, during 2021 we solicited approximately 1,000 suppliers.

We verified the information provided by our suppliers (to the extent possible) by comparing it to the information contained on the RMI website and against CMRT acceptance criteria for completeness and consistency of responses.  Through this process, for suppliers who provided names of smelters and refiners, we confirmed the validation status of those supplier-reported smelters and refiners.  For those suppliers who provided country of origin information for the Minerals, we confirmed the listed countries of origin for each smelter and refiner if that information was available from RMI.

c. Design and Implement a Strategy to Respond to Identified Risks

Eaton monitors the information received from suppliers in response to our solicitations, and periodically shares summaries of this information with our Conflict Minerals Steering Committee.  Eaton is a member of RMI (member Code EATN) and uses data from the RMI to confirm the validation status of supplier-reported smelters and refiners, as well as reported country of origin information related to the Minerals sourced from such smelters or refiners, if available. Through our membership in RMI, Eaton further supports several complementary programs such as iTSCi, Better Sourcing Program, and Solutions for Hope, with which RMI collaborates to jointly address Minerals issues in the DRC and adjoining countries.

Suppliers that are either non-responsive or provide incomplete or inconsistent responses to Eaton’s solicitations are escalated within Eaton’s Supply Chain Management organization for follow-up engagement. Responding suppliers reporting smelters and refiners that are non-conformant or have other identified red flag triggers receive follow-up communication to remind them of Eaton’s expectations relating to the use and sourcing of Minerals as well as to notify them of further resources and training available to them through RMI.

As a downstream user of Minerals, Eaton and its direct supply chain are many layers removed from the mine or location from which the Minerals originated and smelters and refiners that process the Minerals.  Through our membership and participation in the RMI, we collaborate at a cross-industry level, and we continue to support the development and implementation of due diligence practices, the RMI Responsible Minerals Assurance Process (RMAP) and tools such as the CMRT.

e. Report on Supply Chain Due Diligence

4.          RESULTS OF REVIEW

For the reporting period of January 1, 2021 through December 31, 2021, Eaton solicited approximately 1,000 suppliers to gather detailed information regarding the existence of the Minerals in products sold to us, as well as the origin and chain of custody of the Minerals, using the CMRT.  Based on the information provided by Eaton’s suppliers and our own due diligence efforts through December 31, 2021, we do not have sufficient information to conclusively determine the countries of origin or chain of custody of Minerals in our products. A majority of our suppliers responded that their materials did not contain the Minerals, they used recycled materials, they were unable to determine whether the products they sold to us contained Minerals, or they were still in the process of evaluating the source of the Minerals in their products.

Based on the information provided by our suppliers, Eaton believes the smelters and refiners that may have been used to produce Minerals in Eaton’s products include those listed in Annex I.  Based on information provided by our suppliers and information available from the RMI, Eaton believes that the countries of origin of Minerals processed by these smelters and refiners may include the countries listed in Annex II.  Eaton found no reasonable basis for concluding that any Minerals known to be in its supply chain directly or indirectly financed or benefitted armed groups in the DRC or surrounding countries.

5.          STEPS TAKEN TO MITIGATE RISK

Eaton intends to continue to evaluate its due diligence program in accordance with the provisions of the Rule. In particular, we intend to annually review the criteria used to select suppliers for solicitation and to continue to engage with our suppliers to identify the Minerals used within our supply chain, as well as the origin and chain of custody of those Minerals.  We intend to continue to engage with third party programs such as the RMI.  Finally, to the extent any Eaton supplier is found to be using non-conformant smelters or refiners within its supply chain, Eaton intends to engage that supplier and re-communicate our requirement for suppliers to commit to be conflict-free, as per Eaton’s policy.

ANNEX I

 

* = Conformant or actively participating in the RMI Responsible Minerals Assurance Process (as reported by RMI as of April 28, 2021).

ANNEX II

 

POSSIBLE COUNTRIES OF ORIGIN OF MINERALS PROCESSED BY SUPPLIER-REPORTED

SMELTERS AND REFINERS*

 

*The list of possible countries of origin of Minerals processed by supplier-reported smelters and refiners is based upon RCOI information available from The Responsible Minerals Initiative.  As a downstream manufacturer many tiers removed from the smelters/refiners and mines of origin, Eaton does not have sufficient information to conclusively determine the countries of origin or chain of custody of Minerals in our products.