Exhibit 1.01

Energy Recovery Inc.

Conflict Minerals Report

For The Calendar Year Ended December 31, 2016

Introduction

For the year ended December 31, 2016, Energy Recovery, Inc. (the “Company”, “Energy Recovery”, “our”, “us”, or “we”) in good faith, has conducted a reasonable country of origin inquiry (“RCOI”) of our suppliers using the Conflict-Free Sourcing Initiative’s (“CFSI”) Conflict Minerals Reporting Template (“CMRT”). The scope of the survey was to determine whether any of the conflict minerals as defined in Section 1502(c)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) originated in the Democratic Republic of the Congo (“DRC”) or an adjoining country (the “Covered Countries”) as defined by the Act. The conflict minerals include columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which are limited to tantalum, tin, and tungsten (“3TG metals”).

Based on the analysis of our products and suppliers, we concluded that some of our products contain one or more of the 3TG metals and that these metals are necessary to the product’s functionality or production. Consequently, the products we manufacture are subject to the reporting obligations of Rule 13p-1 of the Securities Exchange Act of 1934.

Company Overview:

Energy Recovery, Inc. (the “Company,” “Energy Recovery,” “our,” “us,” and “we”) is an energy solutions provider to industrial fluid flow markets worldwide. Our core competencies are fluid dynamics and advanced material science. Our products make industrial processes more operational and capital expenditure efficient. Our solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. Our solutions are marketed and sold in fluid flow markets, such as water desalination, oil & gas, and chemical processing, under the trademarks ERI^®, PX^®, Pressure Exchanger^®, PX Pressure Exchanger^®, AT^™, AquaBold^™, VorTeq^™, IsoBoost^®, and IsoGen^®. Our solutions are owned, manufactured, and/or developed, in whole or in part, in the United States of America (“U.S.”) and the Republic of Ireland.

Product Overview

Based on our analysis of our products, we concluded that adapters, spiral rings, nuts, pump bases, fittings, and connectors used in our AquaBold^™ pumps and other pumps and turbochargers contain hastelloy and/or welded carbon steel. These metals contain the 3TG metal tin. As part of the data collection process, our supply chain, via Company-Level CMRTs, claimed the use of all 3TG metals.

Our Conflict Minerals Policy

We are committed to complying with Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and plan to procure our products from conflict-free sources. We have considered the rule’s requirements along with related guidance from the Organization for Economic Cooperation and Development (the “OECD”), and we expect our suppliers to comply with the Code of Conduct of the Electronic Industry Citizen Coalition (“EICC”) and conduct their businesses in alignment with our expectations of supply chain responsibility.

In support of this policy, we: 

Reasonable Country of Origin Inquiry

With the assistance of a third party service provider, Assent Compliance (the “Vendor”), we conducted a good faith RCOI regarding the 3TG metals in materials, components, and finished goods supplied to us, including the steps discussed below.

Utilizing version 4.10 or higher of CFSI’s CMRT, we engaged 17 potential 3TG metal suppliers to collect information regarding the presence and sourcing of 3TG metals in their products.

We procure components from the following major types of suppliers:

The Vendor followed up with all unresponsive suppliers through a defined process via both automated email and one-to-one email, including offering assistance and further information to suppliers about the requirements of the Act and Energy Recovery’s program. If, after these outreach efforts a supplier still did not respond to the survey, a Company supply chain manager was asked to directly contact the supplier for a response.

The Energy Recovery program includes automated data validation on all submitted CMRTs via the Vendor’s software. The goal of data validation is to increase the accuracy of submissions and identify any contradictory answers in the CMRT. All submitted forms are accepted and classified as valid or invalid so that data is retained. Suppliers were contacted with regard to invalid forms and were encouraged to resubmit a valid form. As of the date of this filing, we had no invalid supplier submission.

For suppliers who responded that the materials or goods they supplied to Energy Recovery did not contain 3TG metals, a Company supply chain manager and the Vendor verified the responses, and only after such verification were these suppliers removed from the survey process.

Of the suppliers who responded that 3TG metals are in materials, components, and finished goods supplied to Energy Recovery, many did not include the name of any verified smelter or refiner. Based on the responses received from the RCOI, which included thousands of alleged smelter or refiner names, a list was compiled of 310 verified, unique smelters or refiners, including information regarding associated countries of origin (the “unique smelter list”). Energy Recovery, via the Vendor, performed due diligence of the unique smelter list that were known or reasonably believed to have sourced from the DRC or that had unknown sourcing. In the event a supplier declared that 3TG metals present in their products were conflict free, we performed a file review to verify that the information represented included smelters and/or refiners found on the CFSI conflict-free smelter list.

Results of our RCOI

As of the date of this filing, based on our supplier responses to our survey and our analysis of such responses as they apply to the calendar year ended December 31, 2016, there is an indication of DRC sourcing by some of our suppliers but we cannot ascertain if that DRC source was used in our products. Accordingly, we have continued to proceed with additional due diligence procedures for the purpose of determining the status of our products as it pertains to the source and chain of custody of any such conflict minerals.

Exercise Due Diligence on the Source and Chain of Custody of Our Conflict Minerals

We are required to exercise due diligence on the source and chain of custody of conflict minerals and to follow a nationally or internationally recognized due diligence framework. Our due diligence measures have been designed to conform, in all material respects, with the framework in the 2^nd Edition of the OECD Due Diligence Guidance for Responsible Chains of Minerals from Conflict-Affected and High-Risk Areas (the “OECD Guidance”), which is an nationally or internationally recognized due diligence framework, and the related supplements for gold, tin, tantalum, and tungsten. We have adopted and communicated our conflict mineral policy to our suppliers and customers, as well as implemented RCOI to our new and existing suppliers. In addition, there are programs in place to encourage our suppliers to source from certified conflict-free smelters.

Consistent with the OECD Guidance, the design of our due diligence has the following features:

These features are discussed in more detail below.

Inherent Limitations on Due Diligence Measures

As a downstream purchaser of conflict minerals, our due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals. Our due diligence processes are based on the necessity of seeking data from our direct suppliers and those suppliers seeking similar information within their supply chains to identify the original sources of the necessary conflict minerals. Such sources of information may yield inaccurate or incomplete information and may be subject to fraud.

We also anticipate the need to rely, to a large extent, on information collected and provided by independent third party audit programs. Such sources of information may yield inaccurate or incomplete information and may be subject to fraud. 

Brief description of due diligence measures taken

1.0     Strong Company Management Systems:

Internal Team

We established a management system for complying with the applicable rules. Our management system includes the development of a Conflict Minerals Committee and an Executive Management Oversight Committee. The Conflict Minerals Committee is composed of our Director of Supply Management and Director of SEC Reporting. Our Executive Management Oversight Committee is composed of our Chief Financial Officer, Corporate Controller, and Vice President of Operations. Our Conflict Minerals Committee, supported by a team of subject matter experts from relevant functions such as purchasing, engineering, finance, and legal, is responsible for implementing our conflict mineral compliance policy and strategy. The Executive Management Oversight Committee is briefed about the results of our due diligence efforts periodically.

Control Systems

Controls include, but are not limited to, our Code of Business Conduct and Ethics, our Conflict Minerals Policy, regular monitoring of changes in applicable laws, regulations, and guidance, whistleblower mechanisms, regular training of key employee groups, and on-site visits and audits of our suppliers. Our Conflict Minerals Policy related to our sourcing of 3TGs is posted on our website at http://ir.energyrecovery.com/phoenix.zhtml?c=221013&p=irol-govhighlights within the “Investor” section under “Corporate Governance.”

We provide training to all compliance team members and have developed training materials for our suppliers to enable them to comply with the conflict minerals compliance and reporting process and also with our policies.

This year, we put a stronger emphasis on supplier education and training. To accomplish this, we utilized our third-party vendor’s learning management system and provided all in-scope suppliers access to their conflict minerals training course. This training is tracked and evaluated based on completion. All suppliers are encouraged to complete all modules within this course.

Supplier Engagement

With respect to the OECD requirement to strengthen engagement with suppliers, we have utilized the CMRT version 4.10 or higher and a third-party vendor’s software reporting tool for collecting the applicable information from our supply base. The use of these tools has allowed us to assist our suppliers in understanding our expectations and requirements and increase the rate of responses we have received from our suppliers to our survey requests.

We have also communicated with suppliers potentially affected by our Conflict Minerals Policy and compliance efforts as identified through our RCOI process our expectation that they assist us in complying with our efforts related to our Conflict Minerals Program. This includes obtaining information to support the chain of custody of the 3TG identified in our products. We have provided suppliers access to our Conflict Minerals Policy through the website above or upon request.

Grievance Mechanism

We maintain several methods in which employees or third parties may notify us of potential issues with our Conflict Minerals Program, including an anonymous employee hotline, email resources both internally and on our website, direct phone numbers, and our open door policy.

Maintain records

We maintain Company-wide document retention policies. These policies extend to the documentation accumulated in performing our 3TG due diligence procedures and requires that documentation be retained for a period of five (5) years.

2.0     Identification and Assessment of Risks in the Supply Chain:

We made reasonable efforts to identify suppliers that provide products that may potentially contain conflict minerals by conducting a supply chain survey through the CFSI CMRT. By way of the CMRT, we requested suppliers to identify smelters and refiners and country of origin of the conflict minerals in products that they supply to us. We followed up with suppliers that did not respond to CMRT by requesting their responses again and again. We then compared any smelters or refiners identified by the supply chain survey against the list of facilities that have received a “conflict free” designation from the CFSI Program. We also reviewed the responses to identify red flags for further follow-up and to identify any key risks to our supply chain.

It is important to note that Energy Recovery has relied on supplier responses to provide us with the information about the source of 3TGs contained in the parts and components they supply to us. Similarly, our direct suppliers also rely on information provided by their suppliers. This chain of information creates a level of uncertainty and risk related to the accuracy of the information. We will continue to monitor, adapt, and modify our due diligence practices to conform to the recognized industry best practices.

In accordance with OECD Guidelines, it is important to understand risk levels associated with conflict minerals in the supply chain. Each facility that meets the CFSI definition of a smelter or refiner of a 3TG mineral is assigned a risk of high, medium, or low based on 3 scoring criteria:

Based on these criteria, the following facilities have been identified as being of highest concern to the supply chain:

If these facilities were reported on a CMRT by one of the suppliers surveyed, risk mitigation activities are initiated. Through our third-party vendor, Assent Compliance, submissions that include any of the above facilities immediately produce a receipt instructing the supplier to take their own risk mitigation actions, including submission of a product specific CMRT to better identify the connection to products that they supply to Energy Recovery, and escalating up to removal of these high risk smelters from our supply chain.

As per the OECD Due Diligence Guidance, risk mitigation will depend on the supplier’s specific context. If necessary, suppliers are given clear performance objectives within reasonable timeframes with the ultimate goal of progressive elimination of these risks from the supply chain.

In addition, suppliers are guided to the Assent University learning platform to engage in educational materials on mitigating the risk of smelters or refiners on the supply chain.

We also calculate supplier risk based on the chances that the supplier provides 3TG that may originate from non-conflict free sources. The value of this risk is calculated based on the risk ratings of the smelters declared by that supplier on their CMRT.

Additionally, suppliers are evaluated on program strength (further assisting in identifying risk in the supply chain). Many companies continue to be in the middle of the process and still have “unknown” as some of the answers. It has been decided that penalizing or failing them for working through the process is likely not the best approach and it does not meet the goals or spirit of the Rule. However, evaluating and tracking the strength of the program does meet the OECD Due Diligence Guidelines and can assist in making key risk mitigation decisions as the program progresses. The criteria used to evaluate the strength of the program are the following items from the CMRT:

A.     Do you have a policy in place that includes DRC conflict-free sourcing?

E.     Have you implemented due diligence measures for conflict-free sourcing?

H.      Do you verify due diligence information received from your suppliers?

I.     Does your verification process include corrective action management?

When suppliers meet or exceed the above criteria, by answering yes to all four questions, they are deemed to have a strong program. When suppliers do not meet those criteria, they are deemed to have a weak program. We store all of this information and will continue to assess our suppliers’ program strength and monitor any improvements or changes.

3.0      Strategic Response to Identified Risks:

We have implemented a risk mitigation response plan to monitor and track suppliers, smelters, and refiners identified as not meeting the requirements set forth in our Conflict Minerals Sourcing Policy or contractual requirements to determine their progress in meeting those requirements. We continuously make every reasonable effort to encourage suppliers who are sourcing from non-Conflict-Free Smelters to move towards using Conflict-Free smelters. If a supplier fails to remedy the risks identified by our compliance risk assessment, the Conflict Minerals Committee escalate the risk to the Executive Management Oversight Committee to determine whether to approve or reject the supplier based on the following factors: a cost and benefit analysis; potential risk factors; any existing competitive bids; and whether the supplier is the Company’s single source of supply. If the Executive Management Oversight Committee decides to continue the business relationship due to inherent limitations of the supply chain, we use reasonable efforts to follow up with the supplier for its corrective plan and encourage the supplier to work with CFSI-certified smelters. We also provide periodic compliance updates or reports to the Executive Management Oversight Committee with oversight of the Conflict Minerals Committee summarizing our risk mitigation efforts.

4.0     Independent Third Party Audit of Smelter/Refiner’s Due Diligence Practices:

We do not have a direct relationship with 3TG metal smelters and refiners, and therefore we are not able to perform direct audits of those entities that provide the 3TG metals to our supply chain. We do, however, rely upon industry efforts, including the CFSI, to influence smelters and refiners to become audited and certified through CFSI’s program. We rely upon the summary audit reports for the compliance status of smelters generated by the CFSI program to validate the responses received from our suppliers to our RCOI process and to address red flags identified in Step 2 above. We believe our efforts adequately address this requirement in the OECD Guidance.

5.0     Annual Report on Supply Chain Due Diligence:

In addition to this report, our Conflict Minerals Sourcing Policy is posted on our Company website at http://ir.energyrecovery.com/phoenix.zhtml?c=221013&p=irol-govhighlights

Results of due diligence measures taken

Due to the level of complexity of our products and the respective supply chain, it will take additional time and resources for a number of our suppliers to verify, specifically for our products, the source mines and country of origin of all of the minerals used by their smelters. We are committed to continuing the use of our supply chain due diligence processes, leveraging the industry standard CFSI program, and the ongoing update of our supplier RCOI information as we continue to develop additional transparency into our supply chain. As of the date of this filing, however, based on the performance of our due diligence procedures noted above for the calendar year ended December 31, 2016, we are not able to accurately trace and identify the source mine, country of origin, and chain of custody of the 3TG metals, which are necessary to the functionality or production of our products, or determine whether such 3TG metals are sourced from conflict-free sources for all of our products.

Efforts to Determine the Mine or Location of Origin of the Conflict Minerals in our Products

Tracing materials back to their mine and source country of origin is a complex endeavor, but an important aspect of responsible sourcing. To help establish our supply chain sourcing programs, we have followed currently established industry guidelines, such as those specified by the CFSI program that will enable companies to source minerals from conflict-free sources.

After a review and analysis of all of our products and suppliers, with the assistance of the Vendor, 310 smelters or refiners were identified and verified. See Appendix A for the smelter list. Of the 310 verified smelters, 247 are certified conflict-free by the CFSI.

Steps to Mitigate Risk

We are committed to complying with the provisions of the Rule and Form SD and expect to continue our efforts to improve our Conflict Minerals Program and related due diligence. As we further develop our program and procedures, we intend to take the following steps to mitigate the risk that any of the 3TGs contained in our products could benefit armed groups in the Covered Countries. These may include, but are not limited to the following:

Conflict Minerals Report

The Conflict Minerals Report for the calendar year ended December 31, 2016, filed herewith as Exhibit 1.01, is available on our Company website at http://ir.energyrecovery.com/phoenix.zhtml?c=221013&p=irol-govhighlights .  

Appendix A