 I'm Sharon Squassoni. I direct the proliferation prevention program here at CSIS. I'm so glad that we have such a terrific crowd for today's event, which I'm very, very pleased to host. Before I start with introductions, I'd like to just a few administrative notes. We are webcasting this. So please, please, please turn your cell phones off. And we have plenty of time for questions and hopefully answers to. When you do, we'll have, I don't think we have mics. Do we have mics for questions? We do. So wait for the microphone. Introduce yourself, your organization, and hopefully have a question mark in there. I'm very pleased today to have both Gretchen Hund and Andrew Kurtzrock, both from Pacific Northwest National Laboratory. They recently published an article in the Bulletin of Atomic Scientists. I think you've got a copy outside. What's the title of that? Is it Beyond Compliance? I don't have it right in front of me. It's fantastic. It's a great article. Both Andrew and Gretchen have been working on this issue of industry and self-regulation and non proliferation for several years. We're going to hear from Gretchen Hund first. She's a senior scientist. And she leads the policy and analysis team within the global security technology and policy group at PNNL. You have bios on the back of the agenda here. You know, I didn't know Gretchen that you came from OTA, which just raises my esteem even higher. I'm an old fan of OTA. Andrew is a non-proliferation scientist, also at PNNL, where he focuses on proliferation of dual use commodities and multilateral nuclear policy. He's also been working on this issue for several years. And he was a member of the Secretariat for the 2012 Nuclear Suppliers Group plenary, which was held in Seattle. He has also worked at the US mission to the IEA in Vienna, Austria, and also at Stimson Center in Washington, DC. So without further ado, I'm going to give the floor over to Gretchen. Do you want to stand up there? Just stand up there? OK, fantastic. I think if I stand up here, maybe I'll be easier to capture with the camera and not have to have the camera moving around. I just want to offer my thank you as well. Sharon is just, it's really awesome for her to step up and be willing to host us for this event. Something we've been actually pretty excited about. And to have such a full room is a little daunting. So I hope we leave you with enthusiasm. And I guess that's my, I'll start and end with that note, is please, please, please become, hopefully we'll convince you by the end of this time that you're going to be with us to become believers in the role that industry really can play in non-proliferation. And that this isn't just a government job, even though we're all sitting here in Washington, DC. Who's on the front line of these issues? Israeli industry. And if we can't get them involved, frankly, you know, kind of shame on us. So with that, this is the outline. What I'm going to do is just kind of tee up the idea. I'm going to give you some of the history of what we've gone through to get to where we are today with respect to thinking about industry's role. Describe what this threat, as we see it is, define what we mean by this term self-regulation. And then I'm going to turn things over to Andrew, who's going to walk through this term of corporate social responsibility, which is a term that industry uses all the time to talk about how it's doing a great job and its shareholders care about these kinds of things. So we're trying to figure out how to get this non-pro language into their language, frankly, so that it means more to them. And then after we walk through these metrics of how a firm could actually demonstrate its commitment to non-pro, then I'll come up and give you a couple of slides about what's next. Okay, great, Gretchen. You and Andrew have thrown down the gauntlet. What comes next as far as making this real? So this is my one quick slide just to define that I am part of a national laboratory, and for those of you who may not know what a national lab is, I know we're lucky enough to have these students here from school. And so you guys, I'm sure, are well familiar. But we're part of what's called the Office of Science Lab, and a lot of the other national labs are not, they're a different part of within the Department of Energy. And so that makes this kind of unique. As you can see, there's 4,500 scientists, and there's about 50 of us from PNNL that sit out in Seattle, Washington. We think the fun part of the state, not that the other part of the state isn't fun, but it's a great, great place to be. So we've had a lot of fun doing that, and you can see there's about 32% of our businesses in this area. A huge amount, really, for the national lab. And as far as where did we come from to get this concept of industry self-reg, I came at this from really more of an environmental background. I was working with the World Business Council for Sustainable Development, working with the cement industry and other industries, working on an ISO standard around environmental communication, and thinking, why don't we have something similar now that I'm more in this non-pro field, coming at it from that direction? So it's been about eight years, and I've been so lucky to have really consistent, fabulous funding from the National Nuclear Security Administration, NNSA, which has been just terrific. And I've presented, in fact, you just heard we hosted the NSG meeting this last summer in Seattle, and I think I've been at three of those presenting. And then there's been the missile technology control regime, IEA in certain forms. So anyway, it's been a lot of fun. So the first slide is really looking at the threat, and I guess the takeaway here is it's complicated. Most of you probably know, but this nuclear supplier, as far as the whole, looking at the chain and all the different players involved, you can see that green box on the left, you know, you start with who that supplier is, and you look at all those different avenues of where things can either go right or go wrong. And you end up with that, you know, that final, you know, basically end user and really understanding who that end user is and making sure that you know along the road where that widget or technology intel is going is really critical to making sure that this is done right. So it isn't easy. I mean, I know I've got the figures here that the US alone has prosecuted 16 cases on nuclear or missile proliferation since January 2011. But what that doesn't capture are the hundreds and hundreds of cases that are basically voluntary disclosures that companies come to the Department of Commerce and say, you know, I messed up and this is what happened. So that number is just, you know, as I said, hundreds and hundreds of cases. And one quote we heard, because we've been doing a lot of interviews with industry, is, you know, guess what? Nobody really comes up to me and says, hey, I'd really like to buy some maraging steel to build a nuclear weapon. You know, it's not really quite that simple. And so there are all these different kind of under the, you know, the radar ways that people are asking for units. And if you're in one of these little silos over here within the Julius industry, you may have no clue about the requests that are going out of all these other related components that are all, you know, basically intended to help in designing a weapon. And so I guess our premise is that you can't govern your way out of this problem. You know, the private sector is the one who's on the front line. And it's up to them to make the decision when they get a request. Is this something I'm gonna fill or not? Does this smell fishy to me? Or does it actually seem legit? And what's been interesting is we've done these interviews and I've said to somebody, you know, all these different companies. So whose role is non-proliferation? No surprise. They say, well, that's government's role. And I say, but whose role is it to control and secure the goods and services across that whole supply chain? Well, that's my job, obviously. I'm responsible for that. Okay, that's kind of what I'm talking about here. So part of it is really semantics, but why not, why shouldn't we in government or associated or NGOs, all of us in this room, why shouldn't we be using language that means something to industry? So that's kind of how we've gotten to where we are today. So this is just, you know, some clips just to kind of hopefully demonstrate to you that this threat is not hypothetical, that it really is real. And I think everybody in the room knows about the AQ Khan incident where obviously uranium enrichment was the focus. That's Atlantic clip is probably the most real to everybody here. But you know, the Department of Justice clip up there, it's a uranium enrichment as well as far as the two indicted for alleged efforts to supply Iran with U.S. materials of gas centrifuge. The Bureau of Industry and Security, Pennsylvania company, that's a Kim bio case, which is very related. This doesn't have to only be nuclear, same exact thing applies, even to rad sources, radiological sources. The Department of Treasury clip, this is fascinating. J.P. Morgan, I mean, J.P. Morgan, right? I mean, violation with multiple sanctions. So it's not just manufacturers of widgets, it's also those people who are funding the shipment and the deals, if you will. And what to me was amazing about this case with J.P. Morgan is the amount of fine that they were given really wasn't that tremendous at the end of the day. It just wasn't. But what was amazing to me was the amount of money that they set aside to fight these cases every year. So it can become almost a material to them. It's like a little annoying fly that they want to get rid of. I'm not saying J.P. Morgan knowingly wanted to do this. Not at all. I think they're an upstanding, but it's tough. It's really tough to really know when you're being asked to do something at the end of the day is not the right thing to be doing. And then anyway, you can see there's the ICE case. It's another uranium enrichment case. It could also be used for missiles. This is the New York man's sentence to attempt to allegedly export carbon fiber to Iran. So hopefully I've convinced you, and I've got this whole list of cases in the Q&A that go back five years of all these cases that have been tried. So I think most people would say, you know, is this really an issue or is it just this hypothetical direction that you're getting us all worried about? So that was the attempt to get you to feel like this really is an issue. So again, some history on where we came up with this term industry self-regulation. You can read the definition up here on the board, you know, this voluntary program. And one thing that's been really important for me to make clear, particularly if there's anybody in here from the Department of Commerce is, I am not by any means saying that this should replace or basically do away with the regulations that are on the books. The regulations we have are fabulous and necessary. This is icing on the cake. This is what goes beyond what we have on the books. So please, please, please take that to heart. That's what we mean. As far as what other industries we've looked at, we've done these case studies that you can see and they've been really fascinating. Everybody knows about conflict diamonds and it turns out at the end of the day, those people selling diamonds wanna continue. So they created this Kimberly process to be able to demonstrate that the diamonds that they're selling are not conflict diamonds or coming from those zones. So after Bhopal, the horrible disaster in India, the chemical industry got together and decided to put together this kind of responsible care program. That was really important for them to be able to continue business. I mentioned the cement case. That's one I personally worked on and was the US rep in designing an ISO standard around that work. The commercial satellites is just a fascinating one. A dear friend of mine from OTA was front and center involved in and these are commercial folks who make satellites and guess what? They don't really wanna run into each other up there. Not a good thing. And so how could they come together and form a third party and share information so that that doesn't happen? And initially the lawyer said, no way, you can never be able to share that information. Anti-trust, all these issues, you'll never be able to pull it off. Well, they have and they've done it and they have this third party entity and it's working really well. The rest of them I won't go through except the most obvious one is INPO. So there is a group after Three Mile Island that got together and decided, isn't it gonna be important for us to make sure that no other nuclear operator has such an incident as this? So let's self police. Let's make sure that nobody's doing something that is gonna hurt us at the end of the day. So what I'm interested in is in addition to the sticks that are out there, the regulations that make sure that people do the right thing, I'm interested in coming up and being pretty creative about what are the carrots? What are these kind of incentives and fun things, not fun, but important things that companies could get their arms around and maybe even industries as a whole, not just individual companies, but industries as a whole. So that's the challenge. So what you look at here is a spectrum of these different options. From the far left being kind of corporate code of conduct where an individual company could do this, and they have done this that you'll hear about, all the way through to setting up a working group to a third party, somewhat akin to the one I just described with the space as far as the satellites, where there's this third party entity that kind of helps serve as a clearinghouse for best practices and lets people know what's going on to a possible ISO standard or ISO-like standard, and then all the way to something that would be an ISO standard that would actually be third party verified, which is kind of the ultimate important next step. So if you kind of zero in on that second component that I have, which is up there as far as having an industry working group, as most of you probably know, we have the Carnegie Institute, which is just a fabulous thing that they did. Carnegie Endowment set up this principles with the power plant manufacturers, and almost all of them are members of this, and this was a chance for them to get together. A lot of lawyers took an amazing amount of work to put together this kind of principles of conduct for all those manufacturers to sign on to, to say we won't allow these certain things to happen, and my argument is that's great, but look at that whole circle there. Look how big that supply chain is. Look at all those players. If we only focus on the manufacturers, it's a great first step. Don't get me wrong, but we need to be thinking about everybody else along that supply chain. So there's my challenge as far as the dual use industry. At the end of the day, reactors don't fall off the backs of trucks. We just don't lose reactors, but guess what? We do lose components that can be used in enrichment or whatever. Those are things that do fall off the backs of trucks. I'm using that glibly obviously, but can be a problem. So that's my tee up, my introduction, and now I'm gonna turn things over to Andrew to kind of get into the meat of what we're gonna talk about with respect to corporate social responsibility. Well thank you, and thank you to Sharon for hosting us today and to Bobby Kim from the proliferation prevention program for putting this event on for us. Gretchen's really laid out the public policy problem, and what I'd like to do is sort of flip the telescope around and look in the other end, really look at it from the eyes of industry, because frankly industry doesn't really care about public policy problems. At the end of the day, their goal is to be profitable. And even those firms that have an explicitly social mission, if they're not profitable, they're not gonna be around to do their good work. So at the end of the day, we really need to start talking and thinking in those terms. Luckily, industry already has a way to talk about this and has been thinking about ways to make sustainability and questions that historically weren't part of their conceptions of what it meant to be profitable. They started to do that more, and really one of the first definitions was from the Bruntland Commission way back in 1987, and it was, you can read the quote up there, but what's nice about it is it applies equally whether we're talking about not overfishing our fisheries or not putting too much CO2 into the atmosphere or potentially selling dual use commodities where they shouldn't be going. It grew up in part because business started to recognize that things that they thought were immaterial, and I mean that in the financial sense of the word, things that weren't thought of as having an impact to investors, well it turns out there were, and sort of history is littered with all these cases of things that, oh well that doesn't really affect the bottom line, well it turns out sweatshop labor does matter, it turns out overfishing does matter, and there's been an increasing recognition that we need to start taking those into account, and by we, I mean industry, and this is the framework that industry has used, and framework is also important. I'll get to being able to talk about what's so cool about this is that you can actually kick the tires. It's not just a theoretical construct, it's actually something that really exists and there's an infrastructure to it. I should also note when we start that when I say corporate sustainability, there's a whole bunch of terms out there, and corporate social responsibility, corporate citizenship, environmental health, and safety, the triple bottom line of people, profit, and planet, they're all sort of in this same area, and there are some quibbles here and there on the margins, but by and large when I'm talking about sustainability, really I'm talking about all of them as synonyms. So what is sustainability? What are the sustainability issues that we care about? And it's really, it falls onto three legs. The environment, being able to take care of the planet, social, being able to take care of people, and economic, having a strong corporate character, and at the end of the day being profitable. And as you can see, there's a universe of issues, you know, within customer there are things like privacy that matters throughout the supply chain. There's, you know, it's important to have fair labor practices, respect for human rights. Certainly we've seen that recently with the fires in Bangladesh and China, and that matters all throughout the supply chain. One of the things that there's a thread, almost an invisible thread that runs through all these issues, there's a few characteristics that are similar, no matter whether we're talking about corporate governance or the environment or community. Traditionally, there are things that haven't been thought of as financial issues, things that wouldn't necessarily make it into your 10K report to shareholders, things that have a medium or a long-term horizon, not really gonna necessarily impact you in the here and now. They're not quantifiable in monetary terms. How do you quantify a vibrant local population if you're working overseas? Things that have a changing legal or regulatory framework, and also things that have a changing, or really an increasing public focus. Those are really just core elements of all these different sustainability issues. And when you sort of think through that list, well, non-proliferation fits right in there very well. I mean, from the economic angle, certainly firms who are being penalized for export control violations, that's not in your economic best interest. There's also the wider question, sort of one of the things that INPO was developed to combat was that an issue for one firm can be an issue for all firms. So if there's a three mile island, what does that do to the entire reactor industry? So the economic, the unsustainability of one firm within the supply chain may have knock-on effects for firms worldwide. Environmentally, obviously, if dual use goods are used towards the production of a nuclear weapon that's then used, or a chemical weapon, or a biological weapon, the environmental effects can be huge, and that really goes almost without saying. And then socially, non-proliferation is an expensive endeavor when we think about it and it incurs real costs on taxpayers. So if firms are eroding the defense, the diplomacy, the intelligence assets that we need to combat proliferation, that's a seriously unsustainable activity. So I keep sort of getting towards, alluding towards kicking the tires. And what's really cool is it's not just, okay, it's nice, we've got a mental construct, non-proliferation fits in, yeah, yeah, we get it. But what's great is that companies are already doing this and they're doing it in a real way. One of the things that the linchpin of sustainability is this notion that transparency will breed excellence, that if firms are transparent about what they're doing, you're not gonna wanna put out something that says, well, we're really terrible and it's gonna encourage you to go above and beyond. And actually, if you can show that you're better than somebody else who's reporting, well, pick me instead, because I'm better and I can prove it. It's right there in my transparent report. I mean, we've seen a growth in sustainability reports and primarily what I'll talk about here is voluntary reporting, but there is also some mandatory sustainability reporting which we can talk about in Q&A if people are interested. But there's been a vast growth in sustainability reporting. Firms are coming out on their own and saying, here's what I'm doing on all these different issues. Actually about 95% of the world's largest 250 firms issue a sustainability report. 71% of the firms in Europe do that. And what's nice about this reporting is it can be qualitative or quantitative. So you can have a statement from your CEO or you could have tons of CO2 emitted into the atmosphere. And then you can show trends over time that you've gotten better on that if that's a goal of yours. But at the same time as this has grown, one of the things that's become a problem is that you can't make comparisons between firms because if firm A is out there talking about their CO2 emissions in tons but firm B is talking about it in units of elephant, who's doing better? We don't know. In 1997, Siri's, which is a Boston-based group, co-founded the Global Reporting Initiative and you can see their logo up there and some of their guidelines. And GRI doesn't, it's agnostic on what good sustainability looks like. It doesn't care. The whole point of this framework is that it tells you if you're gonna report on it, here's how you should talk about it. So that way we can create apples to apples comparisons between firms. We talk about everyone's gonna be using the same units of elephants when they talk about it. And what's nice about that is you can start moving from the sustainability supply, all this information. Now, if you're starting to have transparent information that's actually comparable, you can start talking about people who have a demand for sustainability data. And the demand exists. There are people who, when they have that information, investors can say, well, I wanna preferentially invest in this firm over that firm, similarly with lenders, consumers who wanna make purchase decisions, even supply chain partners. If you're a big integrator, let's say in aerospace, well, you might be interested in working with the firm that can show that they're not gonna have an export control problem on your watch, because then it doesn't come out as a tiny little firm, it comes out as subsidiary of major firm, XYZ, had such and such violation. And frankly, even to your own employees, being able to say, yes, this is who we are as a firm, this is what we stand for. I guess one of the things that I really wanna hone in on is the role of investors, because this is, as we were going through the research, this was the most impressive point to us, was that people are putting their money where their mouth is, and people are actually putting lots and lots of money behind this in selecting firms and allocating their portfolios in a way that reflect those firms that do the best when it comes to sustainability. And actually, just as an indicator of that, there's Bloomberg terminals, which you can use to look at all your relevant financial data, and they've started incorporating sustainability data into that, so you can see PE ratio, and you can see carbon emissions. You can see the statement from the CEO. It's all in there as you're making your real-time investment decisions. That's the level of importance that it's gotten to when the investment community. This here is from the principles for responsible investment, which is a UN group. And there's six principles that financial industry firms sign on to, and they pretty much say that the firm will take sustainability into account as they make their portfolio allocations. And what's really incredible is that it's about $30 trillion in assets under management. That's what all these thousand firms who have signed on to it represent, and $30 trillion, that's 20% of the world's capital. Serious money that we're talking about. That's not to say that every single penny of every single subsidiary is invested according to sustainability metrics, but it's a strong indicator that this is real and it's growing over time, leaps and bounds in almost orders of magnitude over a short period of time. So Gretchen's laid out the public policy problem. What's the threat? I've tried to talk a little bit about how the sustainability community might be a solution. And now we'd like to, to some degree, play matchmaker and say, all right, come, you know, meet each other. You might have something to talk about. And we've put together a set of metrics, but really what we think the best place to start is, is if we were interested, if we were investors, if we were other stakeholders, if we were public interest groups, what would be the first step? Sort of the minimum bar that we'd like. And I think the very minimum bar would be just a statement from firms within the supply chain. And the Carnegie principles are a good first step, an important first step, but they're narrow. It's just reactor manufacturers. It doesn't include enrichment and reprocessing. It doesn't include transshippers. It doesn't include all these other people who make up potentially the proliferation supply chain. So putting together a pledge that from those firms that say, we acknowledge proliferation is a threat and we're gonna work as hard as we can to make sure that it's not our commodities and it's not our services. And if it is, we're gonna work hard to make sure that it doesn't happen again and try to learn from that. This isn't a new approach. One of the bullets that was on Gretchen's slide about other sustainability mechanisms was the Cotton Pledge. And there's a group right now within the apparel industry that's having a problem with forced child labor cotton in Uzbekistan. And all these firms have gotten together and they've said, we're gonna sign the Cotton Pledge. We are not gonna source Uzbek cotton because it's just too risky. We don't wanna be a part of that. And there's no verification. It's really just a corporate statement. But it's getting traction. And firms are so proud of it that they're actually, they're putting it on their Facebook pages. They want consumers to know we've signed the Cotton Pledge. It matters. And you as consumers as potential buyers, you should feel comfortable working with us because we've signed it. And that's really sort of the minimum sufficient point is that you need to be able to say that yes, we recognize this is a threat, but where could you go from there? How could you be able to create potentially GRI standards that could say we will go above and beyond it? And not only that, I'm better than my competitor, so you should preferentially work with me. We've put together a notional set of seven metrics. These are just things that we think would be helpful. We've spoken industry a little bit about them, but really we'd like to road test them and hope that we can get into a conversation and make them better and really come up with the optimal set of metrics. So metric one would be an important thing for a company to say. Yes, we as a company care. Arriva is actually a great poster child of this and their values charter. No questions asked, that's clear. This is an absolute condition. Second one would be, could you go a little bit wider? Would you actually be willing to not just say it for yourself, but would you be willing to say it for your industry? Again, the Carnegie principles are a great first step and for those firms that are reactor manufacturers, that could be one way to say yes, we've hit this metric. Of course, if there was a supply chain wide and nonproliferation pledge, that could be another wider way to talk about it. Three, taking advantage of the Walmart effect. Those firms that are in a position to have market power in their buying, they should use it. How can they go above and beyond and say, we're gonna preferentially work with firms that care about nonproliferation just like we do. Again, there's the directed benefits to the firms that you don't really want your supplier to be the one splashed on the front page of the New York Times or the Wall Street Journal. It's good business. One of the things we see often in prosecutions is that procurement agents will go out and they'll try to get the exact same item from all the firms worldwide or a large subset of firms. Or not only that, they're gonna be looking throughout the supply chain. They're gonna almost have a Christmas shopping list of all the different items that they want. So one way to measure a firm that's working hard on nonproliferation would be, does that firm have a policy where when they get an order, do they send it on to the government, to the appropriate authorities? Do they let them know? Because it's great if you see an order that comes in, it smells a little funky. All right, just ball it up, throw it in the trash. That's good because that stops that instance of potential proliferation. But one better is to try to put the proliferator out of business. And maybe one best that we could also talk about a little bit more in Q and A is to create some sort of third party where all the firms within the industry say, hey, I got this suspicious order, Spamalert, nobody else fill this order because it's in no one's interest to do so. And maybe even if you'd really like that other guy, well, you'd love to see him get nailed with a violation. Well, if he's also part of the network, he might help you, you might help him today, but he might help you tomorrow. So the shoe can be on the other foot and we think that it's better for everyone to work together than for some to try to just push everyone else down the cliff. A simple metric, are you trying to make export control and nonproliferation better? Are you working with government? Are you trying to be an active partner? The US government primarily through the Bureau of Industry and Security has technical advisory committees with industry and also has a notice of inquiry process in the Federal Register to inquire about questions of proliferation to industry. The European Union similarly had a green paper process recently that asked questions, not just of industry, but all of civil society. And I believe they've just finished that up fairly recently. Obviously a firm, one important aspect is are you training your employees? Is this one person sitting at the export control desk and you're just crossing your fingers hoping somebody remembers that guy's email address or are you really getting this information out there to all your frontline sales agents, to the shipping and receiving department everywhere? The metric could be qualitative, quantitative. What are the things that you're actually talking about when you're looking at nonproliferation training? Are you looking at the regulations, maybe case studies of what not to do? BIS actually has this great don't let this happen to you brochure. They could also be quantitative. How many hours of training do you require for employees per year? And also what percentage of your employees actually complete that training because it's important to not just have the rules on the books but actually get it out there. Then lastly, mistakes do happen and it's important when they do happen to recognize them and to try to learn from them. This metric is actually patterned off of something that's already in the global reporting initiative framework and it's a simple one in the GRI or it has, it just says, report any significant noncompliance with regulations. But what's interesting is GRI also has one for environmental law, specifically called out. So there's actually three, there's that and then there's also product safety. So our question is, could we create another metric for nonproliferation? That seems to be of a similar scale, of a similar significance to product safety to environmental law. And it would just be a simple yes-no question. It could be worded in such a way that even if there's a judgment without the finding of guilt, which is how some of the prosecution, deferred prosecution agreements are done, that could be worked in the details of how that's reported or voluntary self-disclosures as well. So those would be the seven metrics and if a firm is able to show, yes, I'm doing really well and those are potentially even better than my competition, those are all reasons that companies could transparently say that they can do better and they ought to be selectively rewarded. So then I'll turn it back to Gretchen to talk a little bit about next steps. Great, thank you, sir. Thank you, Andrew. So just have two more slides and wanted to basically say, okay, what are you guys up to next? Well, it's really these few things. So we're gonna continue to work with a supply chain. As you now know, it's really all these different players and they're all really important to work with. And I wanted to give you a couple of quotes because you could say to me, so you've already done some interviews, Gretchen, what have you heard? And here's some quotes that I think are pretty interesting. As far as sustainability is important because we all wanna make money, but at what cost? Further, while government officials can help, they don't really have the same data resolution that we do as a company and they're not really interacting directly with the buyer. So this was a case where the company was saying, we really are on the front line and we're really the best place to get this kind of stuff done. Another thing we heard is companies have their own culture and a pledge could really rally their employees. So these are some of these things that we think would be really good. Another thing we heard is we don't wanna be anywhere near that line. And you know what they mean by that line, where they're gonna go over the line and do something they shouldn't do. So that was an interesting quote that we heard from folks. So we wanna continue to do a lot of these interviews with not only the manufacturers, but we do wanna get out with the financiers as well and talk to them and really understand what are there any, again, of these carrots that we can offer up to them. And kind of the three things we ask companies when we get them on the phone are we have this list of incentives. That's the next little paper that we might be putting out for industry to really wanna participate. What do you think of the incentives list? Or they're more that you'd wanna add to that list. What kind of interest do you have in this third-party concept that Andrew's just described to you? Both sharing best practices as well as those elicit requests. And then, you know, validating the metrics. Do these seven make sense? Or would you add two or get rid of two or change them somehow? So those are the kinds of things that we wanna get through as far as talking to these folks. As far as engaging kind of a policy community, as I said, I've been really lucky to participate with the Nuclear Suppliers Group. And I'd like to continue that and hopefully look at ways to help participating governments, which is the lingo in the NSG, to how to reach out better and more proactively to their companies. So that's exciting. I've also been really fortunate to present with the Alpha Group. The Alpha Group is kind of the equivalent to us in some ways. They're part of King's College in London. So they've been working very, very closely with their entities and as far as their government entities within the UK. That's been pretty exciting work. And then finally, in the United States, I mean, Department of Commerce, I mean, it's pretty obvious. They're such an important player here. And we really wanna work with them and brainstorm about these incentives and what can be done more. And I'm been fortunate enough to be invited to give a presentation to one of these technical advisory groups coming up this summer. So anyway, those are some of the things that are near term that we hope to be participating in. And this is just the last slide as far as conclusions. And hopefully by now it's really obvious that this isn't just about money. Reputation really does matter to people because reputation eventually equates into dollars. People aren't just gonna buy your goods if in fact they think that you're trying to skirt and get around to some of these regs. And that these suppliers manufacturers are really important, the major manufacturers. But at the end of the day, the folks that are hardest to get your arms around because there's so many different industries are the dual use industries and all the different players within them. And we've really tried to, if you will, sort through that whole big list and looked at the companies. But this can't be just the United States. It has to be much broader than that for this to really pull off. And hopefully this is one attempt of looking at a corporate sustainability model that we're thinking really could help companies that are invested in doing something like this to adopt it to have basically a competitive position over their obviously their competition. If they take these things on to heart and really try to measure them in a transparent way that everybody can read these reports and know about it, be really fun five years from now to be in this room and say, hey, did this work? Did this make this a safer planet? Unfortunately, we can't really test the opposite set. If you didn't do it, what's gonna happen? But anyway, we think it's a fun challenge and hopefully you do too. And we're really excited to hear what your questions might be over the next period. But I'm turning it over to Sharon at this point. That makes me excited about corporate sustainability. I know I guess on the agenda we have a sort of discussion panel here, but I'm sure there are a lot of questions out there. But I'm gonna take the prerogative of the chair and raise a couple points. Non-proliferation. So the average person asked me, what do you do? And I said, well, you know, nuclear non-proliferation and they look at me and there's a polite smile where they're, and then they say, oh, you mean like North Korea and Iran? I'm like, yeah, yeah, yeah, that's it. So two questions. One is how much more, you know, the examples you gave, diamonds, chemicals, even the nuclear power plant, those are kind of like, you know, discrete industries. How much harder is it for dual use? A lot harder. Okay. Well, you have to say more than that. I know, I will. Into the microphone. But the other question I had was the size of the market. I have a sense of what the nuclear energy market is. And although it's huge politically, I think the sort of sales, the size of the market is smaller than what we spend in pretzels globally, right? So, I mean, there are a lot of industries that are a whole lot bigger. I don't know what the case is in the dual use end of it, but does that diminish the appetite sort of? So on the one hand, you know, there are these, you know, the widgets. We technical geeks love to talk about, you know, carbon fiber and miraging steel and all the rest of it. But how do you capture the public's imagination? Like me as an investor, I understand, you know, I don't want to buy diamonds, I don't really buy diamonds, but you know, dirty diamonds, you know, I care about the environment. What's the grab for at least nuclear? But you can talk about the other WMD fields also. So I think that's a great point and a really great question because it's so much harder than nuclear. You know, it would almost be easier if reactors fell off the back of trucks because hey, don't let that reactor fall off the back of a truck. That's simple, right? We can all, you can fit that on a bumper sticker. But the dual use market is huge and it's almost too big to get your arms around. So I've sort of taken some back of the envelope stabs at it. One is there are 68 types of commodities, different things. It's a vacuum pump or it's a certain type of steel and it's all these things that can be used one way or another to contribute to the development of a nuclear weapon. All these different commodities, there's 68 different kinds of them. All right, so if there's at least 68 types of commodities, well there's probably a couple of companies in each. All right, multiply that one out. For chemical and biological commodities that have weapons of mass destruction uses, there's about 230 of them and that's based on the Australia group control list. So, you know, there's a little quibble here and there. What isn't on the list? What should be on the list? But order of magnitude. And then for missiles, there's I think 79 dual use commodities that if you use them one way or another, you can use them to create missiles and that's aren't things like, hey, it's a full rocket. There are things that are smaller than that, like certain machine tools that are really specific so you can build exactly the types of nozzles that you wanna build. So there's all those commodities and then that's just the manufacturers. So that's okay, one part of it. There's all the other types of industries that have a role. So to get a sense of that, I looked at the North American industry classification system. Nikes, I think, I don't know, I think that's the acronym for it. And at the very top level, there's 19 different industries in North America. I mean, they're very, very broad. Things like wholesale trade, retail trade, professional and scientific services. I mean, just very pie in the sky type things but of those 19, 11, you could say, yeah, they could either be creating a good or a service that has a relationship to one or more dual use commodities. That's not to say that every single firm within that industry classification has that but this is the size of the industry that we're talking about. So it's hard because it's sort of reaching for sand because it's everyone but it's also to some degree no one. So I think the best thing that we can try to say our bumper sticker is stopping the spread of the world's most dangerous weapons is everybody's business. Everyone has a role to play. Whether or not you're in the financial industry, whether or not you're a shipper, whether you're a manufacturer, whether or not you make medical instruments, all these different things in one way or another can contribute to the problem and those are all industries that need to work together to stop it. Thanks, Andrew. I mean the only thing I'd add is to Sharon's point, it is really hard and I think you have to think about if you're, because we have interviewed these mom and pop shops and a lot of them are in my backyard because we happen to be in the town where Boeing lives, right? So there's so many little small companies that are right there in South Seattle that are making widgets that are definitely dual use widgets. And I guess the challenge to them is something like, do you want to find your company on the front page of the paper tomorrow that you've got helicopters circling and they're coming through your door, the ICE agents, and they're coming to hallway, your computers and all your files. I mean, do you want that to be you? Generally no, that's not really what somebody wants and that actually has happened. So it's the what ifs and you have to make those what ifs strong enough and maybe terrifying enough to these companies so that they do kind of get religion, if you will, and say, wow, I don't want that to be me. But unlike some of these examples with like Bhopal with responsible care in the chemical industry where it was just so obvious, another one that wasn't on the list is the fertilizer industry after Oklahoma bombing. It's just so easy to get your, well, not easy, but easier to get your arms around people who make fertilizer, but this is so diverse and so tough. And frankly, that's why I've gotten really gray and I've been at it for eight years and who knows how many more years we'll have to go, but all of you in the room are gonna have to help. Okay, now that you got it. But it's a really, it's a great question. I'm still, sorry. Oh, that's the wrong button. Sorry. Sorry. Yeah, I'm intervening. Have you, in your conversations with companies, have you been able to characterize or clearly smaller companies may be motivated by different incentives or they fear different penalties. Nobody wants to be on the front page of the New York Times or have helicopters circling their office space. But when I think back to it, I mean, we have a pretty sophisticated audience here. How many of you can name the companies that sold equipment to Iraq before 1991? Look at the age of these people. Okay, Cory. Cory, yeah. All right, Matrix Churchill. I remember Matrix Churchill, Machine Tools, but I was working on it then, right? So, you know, what are the, are the penalties strong enough really for, I can understand for the smaller companies, but for the bigger ones, do they go out of business? Do they really suffer? So I'm just thinking there's a range of different things that they care about. In your interviews, have you been able to sort of become more nuanced about who cares about what? I think it's, in the interviews that we've had, it's a matter of corporate culture and corporate history. One of the things that we've heard from Robert Shaw, who's actually now at Monterey Institute, but he was at Toshiba for a long time, a story he tells is that, it's the very first thing that they teach you when you get to Toshiba, and there's a very specific reason for that. In the late 1980s, Toshiba subsidiary, getting back to the point of your supply chain, Toshiba subsidiary sold Machine Tools to the Soviet Union that were then used to lower the, or to quiet the propellers of the submarines, so that US listening devices couldn't pick up when one of the subs were anymore. But it wasn't this subsidiary that was very bad is there was a huge backlash against Toshiba. And Toshiba, there was actually a threat to remove Toshiba products from the US or to Blacklist Toshiba. People were smashing, there's a great old clip from the time of people on the front steps of the capitol smashing Toshiba products. I actually know one Submariner who still won't buy Toshiba products to this day because of that, and he remembers the subs going silent back then. So Toshiba today cares greatly about it because they've had this near-death experience. So the goal isn't, can we give every company a near-death experience? But it's, how, that's, yeah. Can you get Toshiba to talk more about this? Yeah, and that's a good question. And can Toshiba talk more about it and can Toshiba use its buying power throughout its supply chain to then go forward and say, well, if you're gonna work with us, you're gonna care too because that's just how we do business. And how can we start finding those critical nodes so that, hey, it really is gonna matter to you? And maybe some of it is the big integrators that if you're gonna be selling to the Department of Defense, well, it's easy, luckily, as government, we can work with government hopefully to say, maybe that's a condition of procurement. We're going to try to raise the bar here and we want you as a major integrator to then start trying to propagate that through your supply chain. That's one thing we've heard is that small firms will do anything to keep their big certifications. But the other half of it is it can't just be a scared straight program. For those smaller companies, we've heard that it's not easy. You've got this piece of order software over here that captures all your orders coming in and that flows nicely to your shipping department, but you've also got your compliant software over here and they invariably don't talk to each other because that's just, that would be too easy, right? So they've got to create custom solutions and they've got to go out and pay for that and that's not cheap. So how can the government, whether that's BIS or local export assistance centers, help the mom and pop shops that want to get better and want to go beyond compliance, do what's necessary to get there? That's great, I don't have anything to ask. Terrific, let's open the floor to your questions. So I see Sandy in the back first. And then... Very fascinating presentation. It seems like in some parts of the supply chain, if you will. That's Sandy Spector from the Monterey Institute. I was gonna say some of the, some industries I'm thinking specifically of banking right now, they are sort of in this mode. They now under the financial action task force rules have to start screening all transactions not only for money laundering issues and terrorism financing, but also for proliferation financing. Some of the penalties that are being needed out for assisting Iran in one way or another are humongous. They're hundreds of millions of dollars. And in fact, HSBC has hired Stuart Levy who was the chief enforcer to become their compliance officer. So I think that's in a sense one wants to replicate. And I think if you sort of next to your 68 bins of industry in the dual use area, you might find that there are already some specialized penalties that may apply maybe in the transportation area or certainly banking so that the job is being, your job of interesting industry is to some degree being facilitated by some very powerful sanctions that are coming into play. Thanks, Sandy. You're absolutely right. Andrew and I went to the OFAC meeting here in DC six months ago, I'm terrible at knowing dates. And it was interesting to stick around afterwards and talk to some of the folks and about this concept of what we'd like to promote. And I know I've talked to certain banks and they were like, it's really hard. I mean, we feel like every day there's new companies that are put on the entity list and trying to, I mean, this was an enormous ballroom packed with mainly a lot of lawyers and folks that work for these banks to try to help them have a clean house, if you will. But yet, you know, the sanctions, it was interesting. You know, when I, this JP Morgan case, it was 88 million, 88 point something million and which to me is a really big number. But it wasn't amazing to find out that what they have set aside is this 4.6 billion, you know, a year to kind of try to, you know, fight these cases. Having said that, I mean, again, banks don't want to necessarily do the wrong thing because they're these transactions are coming through all the time. This one gentleman that Andrew and I spoke with said, if it gets really tough, it gets bumped upstairs and he gets that actual request and you know, they're trying to make decisions like this and let money flow. And so what's, you know, what's important enough to make it upstairs to him? And that's when it does get, you know, pretty difficult. So I think the banking industry is important but I don't think they're out of the woods yet. I think they still have, you know, it's still going to be even challenging for them to get this figured out. Yeah. I agree. The only other point I'd add is there's another glimmer of hope from the banking industry which is for the largest firms that do the vast majority of international finance, they've come together in something called the Wolfsburg Group which is their own bit of industry self-regulation and they come up with best practices for a whole bunch of areas. And one is trade finance. And in their trade finance document that they all adhere to and it's some of, it's the big banks that you've all heard on Wall Street. A big element of their trade finance documents is looking directly at the question of compliance with UN Security Council resolutions and proliferation finance. Gretchen's point is a good one that there's more they can do. How can they make that, how can they go from the left end of the self-regulation spectrum further to the right and potentially put some type of third party monitoring and show that they're really going above, above, above compliance? Okay, Professor Wayne Glass from the University of Southern California. A long time ago, I used to work in the Pentagon. I have a confession to make and I worked in the undersecretary for acquisitions office and I ran into a thing called the FAR, the Federal Acquisition Regulations and those days the DEFAR, the Defense Federal Acquisition Regulations. My question is I've been out to pasture for a while outside the Beltway. Is any of this non-proliferation guidelines built into the FAR or DEFAR into defense contracting these days in explicit ways so that when proposals are submitted and reviewed past performance, for example, might be evaluated on the basis of their performance and with respect to our concerns about non-proliferation? The short answer is I don't know. That's a really good point and it's something we're going to follow up on. I do know in the Department of Energy as in international labs because we can be potentially exporters usually of knowledge more than commodities. So we have an export control office and it's important to us and I believe it's one of the things that Department of Energy can rate us on and it may be part of our contract. So if it works in DOE it may work in DOD as well. Yeah, I don't, same with Andrew because we don't do much with DOD. I don't know the answer but just kind of going off of that point, we as a lab put out basically a sustainability report and there's my commercial for the day for 2012 sustainability report for PNNL and but what's missing is something directly around this concept and there's a page in here called Walk the Talk and so we've started conversations with our export control office as a laboratory and trying to get them to say one of the little items here in the diamond is basically being able to sell technologies that are going to make this a better planet. Well I'm like, well let's sell technology, let's make sure that we're not selling but promoting and getting technology out there let's make sure that's done in a secure and safe way. So it's just a nuance but an important nuance. So I think as a national lab, it's upon us to not just go out and talk about this for companies to do but we need to do this ourselves too. Dan is. Yeah, from arms control today and a couple questions about the incentives and the third party monitoring. First, I'm not advocating this but I'm wondering if any of the industry people you've talked to have indicated interest and is an incentive and relaxing of the regulations if the industry group can prove that it's doing an effective job of self regulating because I'm wondering if that's come up at all. And then on your list of the different third party groups it seems like a very different types of things and they're like in-po doesn't give a good housekeeping seal to approval, it's industry evaluation but it's completely confidential so no one knows who's doing well and who isn't as opposed to some of the other things like fair trade or something like that where they meet a standard and they get some kind of public visible acknowledgement of that so is there a trade off among those different things or how do you work that out? Thanks. Yeah, I'll start with the second one. As far as there are very different examples that we gave and one of the comments that we sometimes get is do you have to have some disaster happen before somebody's willing to have one of these kinds of third party entities started up? You know, I could throw in my Island or a Bhopal and unfortunately it's kind of the case on most of those. One of the exceptions is the cement industry and nobody came to the cement industry and said hey, what are you gonna do about being the second worst polluter of CO2 as far as a manufacturer in the world? They just decided on themselves to go and do this so I don't think you have to have it be that way. As far as it being confidential or not, I think we're really interested in working with industry to let them decide what works best for them and what they think could. The space data acquisition that I mentioned, I mean to me that was a really interesting case where they don't again want to just those coordinates and trying to share that information. It became, if you will, no one knew who was where, we just knew somebody was there and we don't want to run into them. So there is kind of a shield between that data and knowing who's who. I think similarly the way we're envisioning this third party concept is that if you have an illicit request that again, something doesn't really smell right, you would submit it to this third party entity and they would basically post it and say someone, not who, someone got this request and basically put out a notice so that no one fills that order. And as far as an incentive to other companies for this, this can be really expensive trying to vet these entities on a list. And if there's this way to do that very easily where you could one stop shop, know that something isn't right and check and say, God, did someone else get the same thing can I go on that list and see? Again, with no names associated with it, I think it's possible. And we have a report Dan, I'd be happy to share with you that goes into great detail about the third party concept and a lot of the kind of legal challenges that have come that at least you could raise, like the antitrust and things. And for the most part, we haven't found one that's really a showstopper. I think this is something that really could be stood up. Okay, now I've forgotten the first question you asked. Relaxation of regulations. Oh, you know, no one's really asked that of us because we've gone in and said, our job is not to try to undermine the regulatory infrastructure that's already in place. We're not advocating that and we really haven't heard that to a great degree. We have heard that sometimes it's really confusing that as far as companies, particularly these small modern pop shops, they don't always quite get how all of this works as far as this export control stuff. So there is some confusion and wouldn't it be easier if it was just a little clearer? So that is something we've heard, but I can't remember anyone who's come right out and said, hey, you shouldn't make me do blah, blah, blah. That hasn't been something that we've heard. Samira, did you have your hand up before? So let's take these three questions in a row and then we'll come back to the side of the room. I'm Samira Daniels. I, what you're pointing to is something that I've been seeing in other arenas. And recently I went to a thing on the wicked problem phenomena, which is about agencies and private industry, sort of horizontal communication. And I think that the thing with this, which for the last seven, eight years has really been annoying, is that dealing with this whole issue of the knowledge, the knowledge acquisition, I mean, or the sources for particular policies that no one seems to have access to the same. It's all, it's very stovepipe. And I think that if you, unless that, that is settled in some sense. And there is access among all parties to relatively the same quality of information. I think you're going to, even if you pursue, go down this road, you're still not going to get really good results, I don't think, no matter how you try, that's fine. Sorry, which is, okay. Hello, I'm Shristi. I'm from the Tartine Institute of Social Sciences in Mumbai. Just a curiosity more than a question, actually. The concept of non-proliferation and talking of the specific location of South Asia and the probable regional disadvantages and the geopolitical conflict between India and Pakistan. Just wondering if the corporate sustainability would, in fact, be sort of determined or applied extensively over there, given the usage and the misusage, which might occur, given the example of Bhopal that you'd mentioned earlier. Just your opinion on putting more restrictions or regulations in certain mandates for that particular region, which we know of as, I mean, not entirely the entire region, but fragile states, which do happen to be in that particular region. Would you consider giving more mandates or regulations for that particular territory? Thank you. My question, I'm Erin Harbaugh from State. My question actually pertains to the proliferation security initiative and the global initiative combat nuclear terrorism, as you may or may not know. I know Sharon knows that we just had our 10th anniversary PSI high-level meeting in Poland. And so it's been on my mind in a lot of people's minds. I've been around long enough to have seen the whole evolution of PSI and some of these similar efforts, I think also 1540, could kind of be lumped in there because it all kind of came about by the same circumstances at the same time, responding to AQCon network and so forth. When these efforts were initially launched, they envisioned a role for private industry. And that has gotten lost over the years. And my question for you is, is that something that you have looked at? And what are the opportunities that you see through these particular efforts to create some kind of engagement? And thank you for your efforts. I think this is a really tough nut to crack and you guys have started a good crack in it. I think we're just chipping away, but thank you. Thank you for your comment. The first one as far as quality of information and data, and Andrew, obviously jump in whenever you want. One of our incentives that we've looked at is, what if there was some way to take those lists of the data of kind of the bad guys, as far as those lists and try to make that more open to everybody? This is something that the Alpha Group has looked at. Maybe they'd have kind of advertising on the side in order to make it make sense, but they've looked at the idea of pulling together all these different lists of entities that basically are found out that we shouldn't be trading with, and get all that information and make it transparent, put it on a website. So I agree that it seems tough to have these small-bombed pops that are having to spend money that we've looked at incentives that maybe that would be something, they'd get a complete tax write-off or it would be something they wouldn't have to pay for. So we've looked at creative ideas on that quality of information, if that's the information that you're talking about, as far as so that everybody has the same data set to know whether or not somebody's a good guy or a bad guy. Okay. Okay. The second question, as far as Southeast Asia, it's a great question about whether or not we can have corporate social responsibility working there on the ground. Dear friend of mine in the audience, Francis Lakey from APS, Applied Physics Lab, we've talked about this idea of science diplomacy. So maybe this is an opportunity where in some of these states, instead of just coming in at the government level, you try to work through these mechanisms like science diplomacy of working with entities on the ground to see if they could get interested, also trade the equivalent of some kind of trade unions and get them exposed to the concepts so that they see the benefit and how this is only gonna help them sell their goods to a broader set of folks. There's an article that was written in the same bulletin with us, by Stephen Maurer and his co-author from Germany, and it was really interesting. I don't know if anybody looked at it, but he's been calling this up because we had similar stuff, and he was looking at DNA and basically, how do you engineer DNA and the fear of people of basically getting a request that could be used for anthrax or something horrible? And what's been amazing is that they've created this kind of third-party entity equivalent and had the Chinese want to buy into this and really excited about it because at the end of the day, when they want to be able to sell their stuff, and so maybe equivalent, something like this could happen that Southeast Asia, they could see the benefit to them from the standpoint from sales. But I think this science diplomacy is a really interesting idea that I haven't spent enough time thinking about, but we're just getting started on. Do you have anything you want to add to those two questions before I jump in? No, no, go ahead. And in the third one, as far as your question about PSI and 1540, I've been fortunate to stick my big toe into the 1540 world and been given a few talks here and there, so I can't help but completely, violently agree with you that industry, there is a role for industry, but I think it needs to happen. I haven't, as you probably, I haven't heard enough of it happening at the top, like within the equivalent of state departments within these countries. And so I think, again, back to this, if we can get it started within industry itself, so they want to come to the table for these reasons because they see an investment reason that it's actually gonna make them look better than their competition. And then maybe, again, work with the science diplomacy kinds of outfits that are in these countries for them to say, wow, I want to be part of that cool club. I mean, that's what at the end of the day, I think, we all want this to be kind of a cool club that everybody gets to participate in. Just to add something, when PSI and Global Initiative were launched, obviously you have a statement of principles and so it's kind of a government code of conduct, so to speak. And I know that there was actually a full-time paid position at state and somebody specifically to sign up industry to a statement of principles made for industry that kind of got lost over the years and I don't think, at least at that particular time, that approach was effective. But what do you think about that and how do you really, I mean, it's easy to sign up to a code, it sounds good, but how do you get them to really implement? Yeah, I think it's a good question and I guess trying to look at it through industry's eyes is if you were approached by State Department to sign the code of conduct, what was in it for you? It's just a straight question. And there is, in the same things that we hope will appeal to a lot of firms about corporate sustainability, it's the right thing to do. Signing up for PSI, it's the right thing to do. And that's good, but that only takes you so far and you could say that about all of sustainability. So it's how can we use that in leveraged government and maybe there's an element of free trade deals, how does that work and how does the ports get integrated into it because it's not just the shippers, it's the ports, all of the brokering and transit. How can that all come together to say that if you want to be part of this group and you do want to be best practice here, we can make it in your interest at the end of the day? Yeah, one of the carrots we looked at was, what if you got to be, get first of the line, right? You're trying to get your exports out or your imports in, because again, this isn't all about exports. It's also about a company that's importing goods in order to manufacture a widget and then get it out. So maybe you go well beyond and you're incredibly transparent and you do all these things and you get to be front of the line. So they're all different kinds of. Do you just have something? It's the green lane, yeah. And so, but this hasn't been, but it could go further. So the idea is almost like the trusted traveler, right? If you go in and you have, you know, given blood samples, then you get to bypass customs, right? I love it. It's the best hundred bucks I ever paid. We're gonna move to this side of the room and I saw Scott's hand and then Tom Moore and then Francis in the back and then we'll take another round of questions. Davis, also State Department. Most of the examples you've given are from nuclear industry. One of the differences with bio is that a lot of the entities or much larger portion of the entities of concern are either individual scientists or small laboratories. The phrase in this realm that gets used a lot is code of conduct, which we've been using in the last part of the conversation. You focus more on corporate sustainability, presumably meaning larger or medium size entities, but codes of conduct is something that's widely discussed in the bio world. And often, as I understand it, scientists who are confronted with this notion react in a rather prickly manner. Who are you to tell me I'm not responsible? Who are you to tell me why are you implying or saying outright that I'm not sufficiently capable of being responsible to securely use pathogens in my research and the related equipment? So I'm wondering maybe two parts. One is to what extent have you talked to either the bio industry, biotech, life sciences, or individual scientists, and whoever you've talked to, to what extent you've gotten this prickly type of reaction? I'm Tom Moore. I used to work for the Foreign Relations Committee, so I did export control 60 to 70% of the time, willingly or unwillingly. And since you've aptly chosen a title beyond the compliance, and I'm very interested in what that meant, I think I better understand now, it means not just the normal paperwork and submitting export licenses and participating in the regulatory regime, but something in addition to the things you would normally do through your compliance office. And what I gather it means generally is saying we care about nonproliferation. What I guess I didn't hear enough of, or I hadn't read the paper in your defense either, I'm trying to drill down a little bit more on so what are the things I would do if I was a corporate compliance officer in addition to those things that I would be normally doing to comply with state department and commerce regulations? Am I going to, next to my beta rating and my PE, voluntarily get a little beta rating risk on investing in me because I'm low risk for proliferation? How does that really work? And who gives me this seal of approval? I give it to myself, and then what? And as a result of that, am I obligated to provide this third party site things that I do every week, the number of chats I have with my employees that I wouldn't otherwise have had? Is it actually about saying no if I get an irregular request in? My licensing office says we've got a particular entity in a country that is asking for more of this than we think they need. And how do I work that in tandem with things like voluntary disclosures, which I would have to make through legal requirement? You said you did a longer paper on that. I'd be interested to read it. But I guess I'm just trying to drill down if I am putting myself in the shoes of a compliance officer, in addition to the things that I do as a result of law and regulation, what are you giving me to do? What do I have to do to get it? And then who gives me the gold star? Francis Slakey with APS. So Andrew, you mentioned the 68 bins. So is there a way to narrow the problem? So are there just a few of those bins that are essential to proliferators? Things they can't do without. And then you start by focusing on those. You guys are so easy, I'm kidding. These are great questions. The first one on bio, actually there's a colleague of mine in the room I'm looking at her and she's waving. She's our bio queen. And so Scott, I'll put you in touch with Heidi to drill down, but bottom line is I haven't personally done it, but Heidi has. This paper, you're absolutely right. I mean, you know, I come at this from really more of a nuclear background than the bio. We did do rad, the rad sources which is pretty interesting as well. But the chem in the bio, it just makes sense to us. But to be honest, other than being able to cite, you know, Bhopal and other cases. I mean, I haven't drilled into it, but you're absolutely right. What I've heard from Heidi, and again I'm happy to connect you to, is that they do get prickly. And they, it is kind of, but look, I'm the Stanford PhD scientist. How dare you think I'm doing something that could go the wrong direction? Did you get to mention that from industry or others at the time? No. No, I didn't. Scientists. Can I add? Yeah. I just want to add one thing. We've been, I've been talking to various industry reps about a bunch of different things. And one of them is uranium mining. No controls, or you know, very few controls, very few regulations. We had a workshop yesterday. And you know, this is like the Wild West, right? I mean, and they look at you and say, it's rock, it's, you know, we're digging stuff up at it. Why should anybody, you know, why should we keep records? Why should we do any of this? So it's not just, it's not just scientists. And I would imagine that in the shipping industry, certain elements, right? Or there's a culture of whatever you want to call it, independence. You know, we don't have to do a lot of reporting. And so that would be really interesting to look across those different sectors and see how you can leverage the culture, if you want to call it a corporate culture or you know, industry culture to help, you know, provide some kind of incentive. Second question, Tom, tough one. But we do have, I'm going to let Andrew answer the specifics about how you drill down. But I want to leave you with one thought before I put him on the spot. He's used to this. And that is, one thing we really do want to look at is that concept of, you know, is my ICP, my internal compliance program, really that good or am I just damn lucky? And I think that's a really good and important question. And I think if we can come up with some interesting metrics and ways to get our arms around that, to help industry, again, back to carrots, that's kind of an exciting thing to try and take on. Again, I'm not trying to do anybody's job for them, but I'm just trying to think creatively because there are these small shops where, you know, they're just kind of going through their day like this, I think. I mean, you get the sense that they just, you know, kind of duck and hope, please let not something happen to me. And if we can help them really be as good as they can be and better than they really necessarily have to be, that's a pretty good thing to be doing. But I do think we're getting people to try to go beyond. But in a perfect world, if some internal, we've talked to a lot of companies that have fabulous ICPs and, frankly, they don't want to share them because they see them as proprietary. I have the best in the world in what I'm doing. Why would I ever want to share any of that? So that is a whole different challenge. So now I'm putting you on the spot. Yeah, thank you. There's sort of two tiers to the metrics that we've put forward. And the first one is be excellent at compliance. It's not even beyond compliance. But can you show that you are meeting regulations fully, effectively, and are you just lucky or are you really good? So how can you show and prove to yourself really that you are that good? And then I think there's really two big asks that are beyond compliance that are things that aren't currently required by any regulations. And that's one is to share. That could be share with government, or that could be share with industry. Towards the third party question, we've talked a little bit about it, but we think there could be some real benefits. There are a lot of industries that have found that it's better for everyone to work together than for one person to defect and go it alone. And two, to selectively work with others that are good, to use your market power, because each firm has a choice in who they do business with. So use your bit of market power to push the ball forward and encourage non-compliance. I'd say those are the two big non-compliance asks that, and those actually by and large are, I guess the sharing one, that would happen from the export control department. It could happen from the export control department, but really the be excellent in compliance and go above and beyond to selectively work with others. Those are really almost CEO level questions, and that's something that becomes as part of your corporate cultures. This is who we are. It's not just what does one little unit of our business do. I know you had about a hundred other sub-questions in there which were all excellent ones that we've tied ourselves in fits for, and we can keep talking about those. Slick, to your question, what are the essential bins? It's a really good question. We actually have a couple of real commodity experts in the room who, if they've got something to add, we'd definitely welcome their thoughts as well. But I guess as I was thinking about it, it's a dynamic question because it depends on the threat because what you need to procure at a given stage for a certain technology is gonna vary as you move through the life stages. Are you in a pilot program? Are you now doing full-scale industrial activities? So it's not something to say that vacuum pumps, that's the one thing that more than anything else we need to stop vacuum pumps or any other particular given commodity. And that's another one of the things that whether it's government-led information or industry-led information, but trying to get a sense of the trend analysis of what's going on, how are programs changing? So to some degree, if you could be aware that, hey, they're coming for me next, that could be really valuable. The market structures are also an important element when we look at what are the key elements to target. Everyone makes aluminum in the world. I mean, it's just, it's huge. It's incredibly diversified. But we've talked to the filament winding industry and they make these products that are really almost big looms to some degree. What it does is you can spin carbon fiber around them. These are great. You can use them for things like golf clubs or propane tanks. Every little carbon fiber golf club, you have a mandrel, a little tube and then you wrap carbon fiber around it. Well, that's also good for missile casings or for centrifuges. Uranium centrifuges, both of which, we don't want selling at the same rate of golf clubs, right? So that industry is actually, it's a pretty small industry. There are three or four firms in the United States that make that and there are only a few other firms worldwide. So when we think about how do you pick the bins and how do you prioritize the bins? Well, you may have to just cry uncle with aluminum but there may be other elements that you can more effectively control. And then, I guess the last point is that for any given proliferation application, there's sort of some degree of good, better, best. If the best thing I can get is carbon fiber but it's pretty good for me to get maraging steel and I can sort of work with aluminum. That plays a role too. Where do we sort of put our priorities? I think those are all elements that go in. I'm not sure how you do the calculus at the end of the day to say, that's the one but I guess those would be some of the factors I'd think about. Just one thing to add and that is NSG is gonna be meeting next week in Prague and I know that there are gonna be brand new technology categories that are gonna come out next week that I can't talk about yet because they haven't come out yet but I happen to know they're coming out. So one challenge for us could be really exciting and that is to try to reach out to these industries that don't even know that they're gonna have a bullseye on their forehead in a week and basically try to bring them into the fold and say, you probably haven't heard about this NSG thing. Let's try to get you up to speed about it and now you're gonna be on this part B and this is what it means and this is what you're gonna need to do. So kind of almost the new entrance, kind of like Sharon specialty or making sure people are really good nuclear suppliers. Here's little components that are brand new entrants that don't know that they're gonna all of a sudden be part of the, in that fold. So that's another group that'll be really small initially but might be kind of fun to try and reach out to. Okay, let's take one last round of questions and I see three hands, four. Can you, all four of you be super brief? So let's start with this gentleman back here. Tom Chickoterry, Sandia National Laboratories. Recently a couple Indian companies told an industry forum what the business case was that motivated them to go through the time and trouble and pain of gaining government certified authorized economic operator status in India. Are you hearing from industry that there's enough motivation there either through the CTPAT program or the AEO program internationally to get this external certification? Okay, second question was up front. Thank you, my name is Matt Wu and I'm from USC. I'll keep my question really short. How do you deal with the transfer of knowledge of these systems to use an example during the Pakistani nuclear program they're able to basically send scientists to Italy and that would give them crucial knowledge about how to use their enrichment and yeah, just basically how do you deal with that threat? Thank you, I'm Jennifer McBee. I used to work on biological weapons convention so I was thinking about some years ago the chairman of the committee got all the countries to submit laws that dealt with compliance with biological weapons convention so you might think about a similar kind of effort regarding nuclear, I don't know if it exists or not even under 1540 and related to the PSI is also the Container Security Initiative where they do have a fast lane regarding companies and Toyota can go without inspections but others might not, for example. And finally, regarding prickly scientists, I mean, don't we know that they can lead to problems as well and don't you think that vetting of individual scientists would be a good thing? Thank you. I'm Brian Rzyski, a worker at Carnegie Endowment. I worked on our principles of conduct. My question was whether you thought about places where the kind of conventional CSR framework is that tension with the corporate and political cultures of some of the places these companies may be in. For example, we tried to get the reactor vendors to say, if your customer is building a funny little room on the way to the spent fuel pond, maybe you want to tell your government and the Russians told us, you have a fundamentally different relationship with your government than we do. We grew up in the Soviet era, we talked to our government and we end up in prison too even if we're talking about the guy breaking a window across the street or if you're a Chinese state on enterprising and you sell widgets and some of them up in North Korea, maybe you feel pressure from the state to produce. So how do you reconcile a framework that's very well developed in the West but maybe less developed in the places where these companies are based? You guys are a tough crowd. These are really tough. Tom, to your question about, I mean, you guys are definitely the pros. I know what the work you're doing as far as are we hearing about this from companies. I would say we're kind of a nursery school here. I mean, we've done dozens of interviews. We have so many more to do. Thank God that we've got the Alpha Group in the UK that's doing similar interviews. So the short answer is I don't feel that I have enough data yet to be able to give you a category, an answer, yes. Would I like to get there? Absolutely. Can everybody in this room help us get there? I hope so. But we definitely do hear at the end of the day that companies would like to see incentives for them to take this stuff on. As Andrew's drafted this incentives paper, and as I mentioned, that's something we're hoping to get out fairly soon that I'd be happy to share with you on that front. Anything you want to add to that one? Yeah, I guess it would be, and at the same point sort of goes towards the container shipping, the security initiative, is looking at upbound cargo as opposed to inbound cargo. And I'm not sure there's the same discussion we're talking about CTPAT, for giving you a fast lane to come into the States. I don't think that conversation has worked in reverse as clearly. I'd be very interested to hear what the Indians thought their logic was, or what the logic was for them to buy into the AO over there. So to your question about scientists, that hasn't been an area that we've worked hugely into beyond it, but it's a fabulous one. This is a topic that the Alpha Group, so I would recommend getting on their website. Ian Stewart is the lead for that program. He's devoted a fair amount of time looking at the engagement of scientists and how to make sure that you're not having basically technology know-how transferred. It's a major area for him. So the degree to which I'm not duplicating I think is a good thing because this is a big enough pool to be swimming in that if I could point you to the right person, that's who I would probably point you to as far as looking at his work. Anything you want to add to that? So the third one, Jennifer, you asked really difficult ones. Fabulous to hear your background, that's great. And I put you in touch with my colleague Heidi as well. I think your concept of looking at the Container Security Initiative is an important one. And dealing, you know, this whole idea about how to vet scientists. I know there's been a lot written on this and they do get very, you know, their hackles up. And I'm just, to be honest, it's just not an area that I've worked in, but I think it's an interesting idea and someone should write and they probably have articles on this to see what interest there is out there on the part. I know that Francis Leakey can tell you a story about chatting and up with folks and hearing the story secondhand. In Pakistan, I think this was Sig Hecker who said, you know, meeting somebody and the comment came out, you know, so how's Michigan football doing? You know, well, obviously this kind had been trained in University of Michigan and now, you know, he was developing this program. So, you know, those things happen. And so anyway, it's a real challenge and I'm not sure how best to get our arms around it. Well, yeah, why don't you take the last one? I've talked too much. Yeah, I don't know. Everyone loves your voice. Oh, stop. It's a really good question and it's one that I'm not sure we have all the answers to, but, you know, at the same time that you raised the point about China and Russia, I think they also, at the end of the day, by Hooker, by Crook did join the Carnegie Principles and not China, excuse me, but the Russians did, I think. They did. And, you know, some of it may be that there's, whether it's, you know, network effects or peer pressure, however you characterize it, if you can get enough critical momentum and there's a good feedback loop for it, if investors are saying, yeah, we want that information, we value that information, nobody wants to be the odd man out because that's the hope that, you know, whether it's directly, oh, this is something that we do as a matter of corporate responsibility or this is something that we do because we see, you know, even though we may be closer to our government, it's something we wanna do or we need to do to be competitive, that's what we're tapping into as the competitive forces of the market and I think that applies pretty equally. Yeah, just to take my example from my cement days, some of those firms that signed onto the cement initiative probably didn't have a huge interest in this whole corporate social responsibility stuff, but they were damn interested in knowing what their competition was doing and they knew if they joined that they were gonna have front access to that information to know what that bar was that was being set. So as Andrew just said, I think, you know, I've seen it firsthand happen in that industry at least, so that would be my suggestion. So we've gone over our time, but it was a fascinating, no, that's not your fault at all, it was a fascinating discussion. I'm so glad that so many of you could join us and I really enjoyed your talks and all the questions. So please join me in thanking Gretchen and Andrew and we hope to have you back.