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Are You Ready for Product Raw Materials Labeling?

Tylenol's label tells us what's in the tablets. Hawaiian Punch lists what's in the bottle. But knowing the fair labor practices of the businesses and whether workers who mine and manufacture materials were treated fairly could become an issue as consumers start to pay closer attention to the source of raw materials in products.

Risk management issues that electronics companies like {complink 379|Apple Inc.}, {complink 1544|Dell Inc.}, and {complink 1131|Cisco Systems Inc.} face should require some sort of tag on finished goods to help consumers understand the source of the raw materials, from chemicals to metals. Perhaps a written history of how the products I buy get manufactured would help, too.

Knowing the raw materials and chemicals that went into making products could determine whether consumers stay loyal to the brand. I'm not talking about only consumables, but non-consumables, too. Companies should also disclose manufacturing risks related to accessing precious metals. And they will need to do it while keeping supply prices down.

A list of the raw materials used and the processes required to manufacture the products will one day become just as important as knowing how printed circuit boards, printer cartridges, and batteries get recycled. It will require suppliers, manufacturers, and distributors to work together more closely to identify hazardous materials on the front end of the supply chain similar to the way companies do on the back end.

Actually, the chemicals used to strip metals from circuit boards continue to become just as critical an issue. Most of the small companies, especially in Asia, rely on cheap labor and toxic chemicals to remove and separate the materials from the boards. UN News Centre reports that by 2020 waste from electronics will increase 500 percent if a new way of recycling them is not found.

The idea originates from a conversation I had with Chi-Chao Chang, vice president and general manager of global search business at {complink 6518|Yahoo Inc.}. We were talking about how Yahoo has begun to audit sales relationships with top advertisers, digging into the data to find search marketing ad opportunities clients might have missed by identifying valuable keywords. The keywords are packaged to make it easier for agencies and brands to find “opportunities” in ad clicks that go unsold. The keywords in the package get presented to the advertiser, similar to “a nutritional label you might see on a product in the supermarket.”

Wouldn't it be nice to know the computer keyboard you are typing on was made with energy from a low carbon emission device? At a recent UN-backed summit in Mexico City, energy companies at the gathering agreed to work toward reaching 100 percent renewable energy production by 2050, while information and communication technology companies committed to curbing nearly eight gigatons of carbon emissions. Nice, but what if we had a label on the product that let us know?

12 comments on “Are You Ready for Product Raw Materials Labeling?

  1. bolaji ojo
    October 18, 2010

    Laurie, I have two questions on your post. I must admit first to never having looked at any electronic product and wondered what was inside, who made it for the OEM, how the components were generated or even inquired what kind of controversies surround any of the raw materials. So, I am curious if you know what regulations currently govern product and process disclosures for high-tech equipment and if companies already make this information available to customers. Also, do you believe the government might require this extensively in future and do you know how and whether electronic companies are preparing for this?

  2. Laurie Sullivan
    October 19, 2010

    Hello Bolaji:

    Well, I know companies must disclose manufacturing information related to consumable items. For example, labels need to alert the consumer in the label if the company makes the food product in a facility where they also process nuts because of allergy issues. The label also states if the product is hypoallergenic. I certainly don't see any reason why they can take it one more step and state the raw materials required to make the product. As to whether the government might require this in the future, I think consumers will ask for it before the government gets around to requiring it.

    To all those who work for an electronics manufacture, are you preparing to label the company's products to brand them green? 

    Laurie

  3. Barbara Jorgensen
    October 19, 2010

    Hi Laurie–while my professional side is all for this, my consumer side has to admit that even if these materials were listed, I wouldn't know any more about them than I know about the “mono-sodium-tricarbonate-glyceride-hydrite-hyperpreservative red dye No. 3” that is in most of the foods I buy. I obviously don't have a good solution for this, but I'm glad folks such as those you interviewed at Yahoo are thinking about this stuff.

  4. Anna Young
    October 19, 2010

    Barbara, I can't even begin to disagree with you. I've stopped reading labels on food items. Who has the time? I now operate on the basis of grandma's knowledge transferred to us years ago. I try to buy fresh produce, take them home and whip up food that does not come from a can. It's different with electronic products. The problems concerning how these equipment are made, where they are made, who makes them and under what circumstances will eventually impact all of us so we can't afford to close our eyes.

    The problem is that even if we have answers to all the questions raised in the article and have additional information to help us make up our minds, we would still most likely be influenced by other “selfish” thoughts. I want the iPhone, for example. That's it. I am not going to ask whose capacitor is on the printed circuit board in the phone and I am not going to ask how the components were made. Even if they tell me, what will it mean? That's why we have governments. The idea of citizen involvement is good but citizens are just that, citizens. A government that does not protect its citizens does not belong in office. We can help as industry and citizens but the government has to take the lead, not pass a law and pass the buck.

  5. Laurie Sullivan
    October 20, 2010

    Yea for Anna!

    Unfortunately you are correct. Our selfish nature will likely get the best of us, but I hope for all our sakes and the environment that's not the case. We cannot rely on the government to police or watch what's in our electronic devices similar to the way we can't depend on doctors to keep an eye on our health. We, each one of us, must do it ourselves.

    Laurie

  6. mike_at_DCA
    October 20, 2010

    Ah but the food label certainly HAS had an effect, and it continues to have an effect. It's a less-than-optimal solution since it does require consumers to have a bit of a clue about what the different ingredients and data actually means (e.g., trans-fats vs. saturated fats vs. unsaturated fats). Those who want to know now have the information they need to do the research and those that don't, well, they can just ignore it. But it enables the ability to compare one product with another at a level that is a little deeper than simply looking at the price of one kind of sour cream vs. another. When you can see that one has one ingredient and the next has 15, that tells you something. What you make of it depends on what you know and what you perceive about the ingredients.

    So we did an exercise here at DCA to try to come up with a similar label for electronics, but focused on environmental performance. You can view it here: http://www.designchainassociates.com/images/efactsbig.gif. It's entirely imaginary but think about how it might represent a laptop computer. Given this sort of information, would consumers be more likely to start using environmental information as a real criterion when selecting products? Just how do we drive consumers to understand and use manufacturing and environmental criteria in addition to price and (perceived) performance when selecting product?

  7. Barbara Jorgensen
    October 20, 2010

    Hi Anna,

    I asked myself the same question–how much faith are we putting in the regulators–i.e. the government–to do the right thing? I dodged that issue because I am not sure how I really feel. On one hand, do we need a “nanny state” that decides what is good for us and what is bad for us? On the other, how responsible are we being as consumers in educating ourself so we can make the choice? You swayed me. It is our responsibility as voters to choose the person who most represents our views and trust their judgement. I forgot who said this, but it's along the lines of “we get the government we deserve.”

    Thanks for your thoughts!

  8. Barbara Jorgensen
    October 20, 2010

    Hi Michael,

    Thanks for referring us to the DCA model. You are right–an “informed” decision has to have a baseline. Kudos to DCA for taking a stab at it even in the abstract. Someone has to get the ball rolling.

  9. Laurie Sullivan
    October 21, 2010

    Michael, 

    Thank you for including the chart. I found it very interesting. Yes, as Barbara notes, Kudos for taking a stab at it even in the abstract.  

    Laurie

  10. Anna Young
    October 21, 2010

    Mike, I would like to know if your company has done any survey of consumers to determine whether they are interested in knowing the source of components in their products. One reason why being “Green” has become a popular position is not just because companies pushed it but because consumers embraced the concept. Will labeling products help me claim to be “Green” and so hip or will it crimp my life? Even for those who want to save the planet there's always a selfish aside that nobody may be aware of. I would like to see the results of a survey on this and why people think it is a good movement. Once consumers start telling companies they want a “Green” label, the fad will catch on and spread.

  11. mike_at_DCA
    October 21, 2010

    Anna, we have not done such a survey, though there are many out there that have been done for various products about “greenness”, maybe not about sources of materials or components. The problem is defining what “green” means. We in the industry can't even agree. Lots of companies that have EU RoHS-compliant products consider their products to be “green” based on that. Are they? Can they prove it? Are their products “greener” than their competitors? How do they know? By how much? Can they demonstrate it? And when it comes to sources of components and materials it becomes even more oblique because the supply chains haven't been competing on that so nobody can differentiate at this point. Maybe, once we can prove we can trace and control and have metrics to say which source is better than which other source and why we can then measure and compare product sourcing. But not today.

    Until we have metrics we can't have “green” or “greener”. We have a long way to go, in my opinion.

  12. DataCrunch
    October 23, 2010

    I posted something similar on the message board discussion “Paying for green” and thought it may be relevant to this discussion on labeling, specifically on CO2 emissions.

     

    Think about it, if you saw this kind of label on products at the store and even saw the same label used by competing companies and brands in the similar price range, would you buy the product from the company with the lower Carbon Footprint?  Now answer this, would you pay more for the brand with the lowest Carbon Footprint displayed on the label (similar to Organic)?  

    With that said, I would like to bring your attention to an  interesting not-for-profit organization in the UK called the Carbon Trust that introduced The Carbon Reduction Label, in which it is attempting to become the standard that companies post the amount of CO2 used in producing a product, similar to the ingredients/nutrition label. 

    See image courtesy of The Carbon Trust (http://www.carbontrust.co.uk ) and (http://www.carbon-label.com/the-label )

     The carbon Reduction Label is featured on all Tesco own brand orange juice

    Whether or not labels such as these will become mandatory through government regulations is yet to be seen.  But I would guess to venture that companies in the near future will use label like these as a way of marketing their eco and social responsibility.  People may have no idea what is or is not a reasonable amount of CO2 produced for a particular product, but it could be the differentiator for a company to tout their “green-ness” or efforts to be more “green”, hence winning a consumer sale, which is their ultimate goal. 

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