Watts Water (WTS) SDConflict minerals disclosure

Exhibit 1.01

CONFLICT MINERALS REPORT

This is the Conflict Mineral Report for Watts Water Technologies, Inc. and its subsidiaries (the “Company”) for calendar year 2019 as required by Rule 13p-1 under the Securities Exchange Act of 1934, as amended (“Rule 13p-1”).  Terms used and not otherwise defined in this Conflict Minerals Report have the definitions provided in Rule 13p-1 and the instructions to the Securities and Exchange Commission’s Specialized Disclosure Report on Form SD.   Pursuant to guidance from the staff of the Securities and Exchange Commission, the Company is not required to obtain an independent private sector audit of this report for 2019.  All information contained in this report is unaudited.

INTRODUCTION

The Company’s strategy is to be a preferred supplier of differentiated products and systems that manage and conserve the flow of fluids and energy into, through and out of buildings in the residential and commercial markets of the Americas, Europe, and Asia-Pacific, the Middle East and Africa (APMEA).  The Company classifies its many products into four universal product lines. These product lines are:

·                                          Residential & Commercial Flow Control Products- includes products typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves.  In 2019, residential & commercial flow control products accounted for approximately 52% of the Company’s total sales.

·                                          HVAC & Gas Products - includes commercial high-efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under-floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. (HVAC is an acronym for heating, ventilation and air conditioning.)  In 2019, HVAC & gas products accounted for approximately 31% of the Company’s total sales.

·                                          Drainage & Water Re-use Products- includes drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications.  Drainage & water re-use products accounted for approximately 11% of the Company’s total sales in 2019.

·                                          Water Quality Products—includes point-of-use and point-of-entry water filtration, conditioning and scale prevention systems for both commercial and residential applications, and water quality instrumentation products. Water quality products accounted for approximately 6% of the Company’s total sales in 2019.

The Company has determined that many of the products that the Company manufactured or contracted to manufacture during calendar year 2019 contained one or more of the following minerals that are necessary to the functionality or production of those products: tin, tantalum, tungsten and gold (the “conflict minerals”). Specifically, the Company has determined that many of such products have brass or bronze components that contain tin or have electrical components that contain tin, tantalum, tungsten and/or gold.

Accordingly, the Company conducted in good faith a reasonable country of origin inquiry (“RCOI”) in accordance with Rule 13p-1.  The Company’s RCOI was reasonably designed to determine whether the conflict minerals contained in its products originated from the Democratic Republic of the Congo (the “DRC”) or an adjoining country (together with the DRC, the “Covered Countries”) or came from recycled or scrap sources.  As a result of its RCOI, the Company concluded that it had reason to believe that certain of its necessary conflict minerals may have originated in the Covered Countries.  In accordance with Rule 13p-1 and the instructions to Form SD, the Company undertook due diligence efforts on the source and chain of custody of the conflict minerals in its products that are necessary to the functionality or production of those products.

DUE DILIGENCE

Design of Due Diligence Framework

The Company designed its due diligence measures to be in conformity, in all material respects, with the criteria set

forth in the internationally-recognized due diligence framework described in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Third Edition, 2016 and related supplements for tin, tantalum and tungsten and for gold.

Due Diligence Measures Performed

The Company is a “downstream” consumer of necessary conflict minerals and is many steps removed from the “upstream” companies that smelt or refine conflict minerals.  The Company does not mine conflict minerals or directly purchase any conflict minerals from conflict mineral smelters or refiners.  The Company also does not have any direct suppliers that are located in any of the Covered Countries. Accordingly, the Company approached its conflict minerals due diligence efforts consistent with its position as a downstream company in the conflict minerals supply chain.

Establish Company Management Systems.  As part of its due diligence efforts, the Company established in 2013 an internal, cross-disciplinary conflict minerals working group to guide its conflict minerals compliance efforts and designated a conflict minerals program manager to coordinate its conflict minerals program implementation.  The conflict minerals working group includes the Company’s General Counsel.  The program manager provides periodic reports to the working group regarding the Company’s conflict minerals program performance and efforts.  In 2013, the Company also adopted a global Conflict Minerals Policy applicable to its suppliers of products and materials that form part of a bill of materials for a product sold by the Company.  A copy of this policy is available on the Company’s corporate website at http://www.wattswater.com/Suppliers.  The Company’s Conflict Minerals Policy includes a grievance mechanism, whereby concerns regarding compliance with the Company’s policy may be reported by telephone or online through the Company’s ethics hotline.  The Company has distributed training materials to its suppliers representing approximately 95% of the Company’s total spending on products, components or materials which contain conflict minerals that were necessary to the functionality or production of a product manufactured or contracted to be manufactured by the Company during 2019 (the “3TG Suppliers”).  The Company compiled this list of 3TG Suppliers using supplier information provided by sourcing group members from the Company’s subsidiaries and divisions.  The training materials included an explanation of Rule 13p-1’s objective of furthering the humanitarian goal of ending the extremely violent conflict in the DRC, which has been partially financed by the exploitation and trade of conflict minerals originating in the DRC.  The training materials also provide an explanation of a reasonable country of origin inquiry and conflict minerals due diligence.  Finally, the training materials specifically communicate to 3TG Suppliers the Company’s expectation that these 3TG Suppliers support the Company’s public company reporting obligations by complying with the Company’s requests for information regarding the source and origin of any conflict minerals contained in materials or products supplied to the Company. The Company also makes a copy of the Company’s Conflict Minerals Policy available to its 3TG Suppliers.

Identify and Assess Risk in the Supply Chain.  To identify and assess risks regarding the source and origin of the conflict minerals in its supply chain, the Company electronically distributed to each of its 3TG Suppliers a questionnaire (“Questionnaire”) based on the questions contained in the standardized conflict minerals reporting template developed by the Responsible Minerals Initiative (“RMI”).  The Company surveyed a total of 338 3TG Suppliers.  The Company designed the Questionnaire to obtain information about each 3TG Supplier’s conflict minerals policy and due diligence processes and the origin or source of the conflict minerals contained in the materials and products that the supplier provided to the Company.  The Questionnaire also specifically requested that each 3TG Supplier provide the names of all known smelters or refiners in its supply chain for each applicable conflict mineral.  The Company used both daily automatic reminders and its global sourcing organization to follow up for missing or incomplete conflict minerals information from 3TG Suppliers who had not provided a satisfactory response to the Questionnaire.  The Company translated its Questionnaire to encourage responses from its global supplier base.  The Company also made its Questionnaire available to its 3TG Suppliers in a format that would facilitate its further distribution to companies further up the supply chain from the 3TG Suppliers in order to collect information regarding the source and origin of the conflict minerals supplied to the Company.  The Company evaluated the Questionnaire responses and information provided by its 3TG Suppliers.

Strategy to Respond to Identified Risks.  As part of identifying and assessing risk in its supply chain, the Company developed “red flags” designed to identify inconsistencies in its 3TG Suppliers’ responses to the Questionnaire or the risk that suppliers may be sourcing from the Covered Countries.  The Company reviewed Questionnaire responses received by its 3TG Suppliers to identify those presenting red flags.  The Company also followed up with 3TG Suppliers who did not provide an initial response to the Questionnaire.  During 2019, the Company’s conflict minerals program manager aggregated the results of the Company’s 3TG Supplier responses to the Company’s conflict minerals inquiries and shared those results with the Company’s conflict minerals working group as part of the Company’s conflict minerals risk-assessment efforts.

Independent Third-Party Audit of Smelter/ Refiner Due Diligence Practices. The Company does not have any direct supplier relationships with any tin, tantalum or tungsten smelters or gold refiners.  As a downstream company that is several layers removed in the supply chain from such smelters and refiners, the Company’s 2019 due diligence efforts relied on the Responsible Minerals Assurance Process (“RMAP”) led by the RMI.

Report Annually on Supply Chain Due Diligence.  The Company has filed this Conflict Minerals Report as part of its Specialized Disclosure Report on Form SD for calendar year 2019.  The Company has also made a copy of this Conflict Minerals Report for calendar year 2019 publicly available on its corporate website at http://www.wattswater.com/Suppliers.

Results of Due Diligence Measures

Of the 338 3TG Suppliers the Company surveyed, 84.6% responded by either completing the Questionnaire or providing another form of conflict minerals statement or response regarding the source or origin of the conflict minerals contained in the materials or products supplied to the Company.  Where a 3TG Supplier’s response included the names and locations of smelters and refiners in that supplier’s conflict minerals supply chain, the Company compared those names to the most recent list of known conflict minerals smelters and refiners published by the RMI and to other publicly available information.  Supplier responses identified 300 smelters and refiners included in the RMI Smelter Reference List.  These identified smelters and refiners are listed in Appendix A to this Report.  Of the 300 identified smelters and refiners, 236 were validated as compliant with the RMAP assessment protocols and are listed as “Compliant” on Appendix A.  An additional 5 smelters and refiners are listed on Appendix A as “Active in Audit Process,” meaning that they have committed to undergo a RMAP audit or are participating in one of the following cross-recognized certification programs: RMI Responsible Minerals Assurance Process Gold Standard, RJC Chain-of-Custody Standard, or London Bullion Market Association Responsible Gold Certification or Responsible Jewelry Program Chain-of-Custody Certification.  The remaining 59 smelters and refiners are identified on Appendix A as “Not Determined.”

After reviewing the smelter and refiner information received from its suppliers through its RCOI and due diligence efforts, the Company determined that, in a majority of cases, the smelter and refiner information the Company received was provided by its 3TG Suppliers at a company level or divisional level, meaning that this information may not apply specifically to the products, components or materials purchased by the Company from these suppliers.  In addition, some of the Company’s suppliers who responded to the Company’s Questionnaire did not provide smelter or refiner information, so the Company’s supply chain may contain additional smelters and refiners that have not yet been identified.  Accordingly, the Company concluded that it did not receive sufficient information from its 3TG Suppliers to determine with certainty all of the facilities used to process the conflict minerals contained in its products, the country of origin of the conflict minerals contained in its products or the location of the mines from which such conflict minerals originated.

PRODUCT DESCRIPTION

The Company’s four universal product lines containing conflict minerals are described in detail as follows:

·                                          Residential & Commercial Flow Control Products.  The Company’s products typically sold into plumbing and hot water applications, such as backflow preventers; water pressure regulators; temperature and pressure relief valves; automatic control valves; gate, globe and check valves; thermostatic mixing valves; flow measurement valves; air separators; flow control valves; hydronic and steam heating products; tempering valves; manifolds; dielectric unions; gauges; strainers; water heater installation products and related accessories.

·                                          HVAC and Gas Products.  The Company’s HVAC and electronic control products and related accessories, such as:

·                  commercial high-efficiency boilers and water heaters, hydronic pump groups for boiler manufacturers and alternative energy control packages;

·                  controls and accessories for boiler, steam and mixing; heat pumps; solar thermal systems; under-the-floor radiant heating applications; thermostats; zone heating and cooling controls; setpoint controls and snow melting controls; valves; actuators; timers; remote access controls; sensors and wire.

·                  certain products in the Company’s gas appliance connector product line offerings for commercial

food service and residential applications that are not made of stainless steel, including the Company’s portable outdoor gas connectors, foodservice moveable gas connectors, SnapFast bar locks, Safety Quick fittings and couplings.

·                  warm wire, heat weave mats, fittings, couplings and mini ball and balancing valves and manifolds.

·                                          Drainage & Water Re-Use Products.  The Company’s drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications, such as Raincycle® commercial rainwater harvesting systems; floor, trench and parking drains; floor sinks; pipe fusion systems; couplings; floor cleanouts; alarms and electronic components of pH monitoring systems.

·                                          Water Quality Products.  The Company’s point-of-use and point-of-entry water filtration, reverse osmosis, conditioning and scale prevention systems for both commercial and residential applications that contain valves, pumps, adapters and electronic components, and electronic instrumentation and accessories used for monitoring water quality in a variety of applications.

IMPROVEMENTS TO DUE DILIGENCE FOR CALENDAR YEAR 2019

To improve its conflict minerals due diligence efforts for calendar year 2019, the Company took the following actions:

·                                          conducted on-site audits of the Company’s Taiwan-based suppliers, which are representative of the Company’s Asia supply base as a whole with respect to the methods, volume and sources of 3TG material purchases, to review material purchase records and material certifications;

·                                          provided additional training to the Company’s internal sourcing personnel to further improve Questionnaire software utilization skillsets, data analytics capabilities, and engagement with 3TG Suppliers in the Company’s RCOI process; and

·                                          reviewed and updated the Company’s supplier contact information in order to engage more fully with key personnel at its largest conflict minerals suppliers.