EXHIBIT 1.01

 

NU SKIN ENTERPRISES, INC.

2023 CONFLICT MINERALS REPORT

May 29, 2024

 

We prepared this 2023 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 wellness 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 2023, these products consisted of our beauty devices, a water purifier product that we sell in our Southeast Asia region, and certain beauty or cosmetics products. We contracted with six suppliers to manufacture these products in 2023.

 

Results of Supplier Inquiries

 

The six 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. All six of the suppliers completed the Reporting Templates. One of the six suppliers indicated that the 3TG Minerals that they use do not originate from any of the Covered Countries. The other five suppliers were unable to make this representation.

 

Our suppliers source directly from smelters, refiners or other suppliers. As a result, our efforts to identify the origins of the 3TG Minerals in our supply chain were based on the information we received from the suppliers. The suppliers’ information-gathering process, in turn, consists of their own efforts to retrieve information from their smelters, refiners or other suppliers. We must rely on the suppliers to provide information regarding the origin of the 3TG Minerals that are included in the Covered Products. We recognize that this process may result in inaccurate or incomplete information.

 

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 2023. However, all six suppliers of our Covered Products provided a list of the smelters and refiners supplying 3TG Minerals to their respective supply chains. Based on our review of these smelters and refiners, 201 of the 222 unique smelters and refiners identified by our suppliers were conformant with RMI’s Responsible Minerals Assurance Process (“RMAP”) assessment standards as of the date we prepared this aspect of the report. According to RMI’s website, the RMAP program offers companies and their suppliers an independent, third-party assessment that determines which smelters and refiners can be verified as having 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 further detailed in footnotes (2) to (4) of Exhibit A, at least one of the following three mitigating circumstances applies to every non-conformant smelter and refiner:

 

 

 

 

Two of the five suppliers that were unable to state that the 3TG Minerals they use do not originate from the Covered Countries indicated that their lists of smelters were incomplete; these suppliers provided additional 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

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