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What You Need to Know Now About New Environmental Regulations

We have spent the past few weeks putting together material for a Webinar we're doing today entitled “The DCA New and Emerging Regulations Webinar: An Overview of What You Need to Know.”

What has been striking to me is that not all of the topics are regulatory and not all are directly environmental, but all require knowledge of environmental properties and materials that can have an impact on the product development and manufacturing process. And several, if not all, require knowledge and information that is not at everyone's fingertips.

For instance, the “conflict minerals” provision of the Dodd-Frank financial law passed this summer is more about politics, war, and brutality than it is about the environment, but it requires that information nobody has ever asked for — namely, where certain substances used in electronic components come from — be identified and transferred through the supply chain.

This entails several big problems. One involves knowing where these substances are even used, since none of them is typically specified by the manufacturers that are the target of the law. Another is identifying the source of the minerals from which the substances are extracted, presumably down to the mine. This again is information that has never traversed the supply chain. Still another is the validity of the information: How can we validate the information received, since there's not going to be any direct relationship between the mine and an OEM like HP, Apple, or Dell?

The rare earth metals topic is even more oblique; it's entirely driven by economics. My partner Tom Valliere says the United States was self-sufficient in these metals until China drove the prices down and environmental regulatory costs went so high that it became uneconomical to mine them in the US (and many other places). Now China's playing hardball. Again, where are these metals used? What is the source you're using? What are the risks of continuing to use these metals? What contingency plans do you have? What contingency plans does the industry have, and what contingency plans do the governments in the US and other countries have?

We are also seeing the worldwide spread of types of environmental regulations that began in the European Union. We're seeing RoHS-like and WEEE-like laws in places like Central and South America, India, and state-by-state in the US, among others. The fact that they are all just slightly different should raise flags about two things: first, the increasing complexity of access to markets around the world; and second, the fact that what starts in the EU does not stay in the EU.

This latter point indicates a trend — or a tsunami, as my other DCA partner Ken Stanvick characterizes it: If you look at regulations that apply to your products in the EU and think that, because you're compliant there you're compliant everywhere, then think again. Scopes, registration and reporting requirements, even regulated substances can be wildly different.

The bottom line of all of this is that what it takes to specify, design, and manufacture products is becoming increasingly challenging in an area where we, as an industry, have accumulated very little expertise throughout the supply chain. We do not have the depth of knowledge of materials in our products to be able to calmly and simply deal with all these new and upcoming requirements. Why don't we, and how do we get that? That will be a topic of a future blog entry here.

In the meantime, if you're interested in attending our Webinar on Wednesday, October 13, at 1:00 to 2:30 p.m. Eastern, you can read more about it here. It will be available in archive as well.

7 comments on “What You Need to Know Now About New Environmental Regulations

  1. SP
    October 13, 2010

    I look forward to webinar. I guess the archived one as its already late. Well I think introducing this environmental regualtion especially the new law is more towards making business perspective. It would be good amount of work for the comapnies who wants to get into the research for presence or absence of these minerals.

  2. bolaji ojo
    October 13, 2010

    These new environmental legislation Mike Kirschner discussed during the webinar go beyond the traditional areas. This is the first complication manufacturers are likely to face in an already complex environment. Perhaps the most difficult issue facing the industry, however, is how the regulations vary from one nation to another. Luckily, the EU has one set of rules, generally, but in North America alone, several U.S. states have distinct rules and requirements that are impacting the supply chain.

    What does this mean for many companies? It means they will either have to recruit in-house experts to monitor, compile and ensure compliance or pay external suppliers and consultants to help them stay compliant. In effect, this is going to cost them a bundle. But even this does not assure full compliance as these rules are being constantly reviewed and updated and new ones added. Mike, how can employers avoid compliance problems?

  3. Barbara Jorgensen
    October 14, 2010

    I attended this Webinar and I strongly recommend anyone in the supply chain take advantage of the Webcast on DCA's archives. DCA discussed a number of trends–including one on rare earth elements that I had never heard of. There are a number of “action items” you will want to consider after reviewing these trends.

  4. mike_at_DCA
    October 14, 2010

    Bolaji, simply tracking these regulations, issues and requirements won't help manufacturers avoid problems; it will help them react and that, at least, is a step in the right direction.

    What will really help them is to be prepared to make decisions during product specification and design – and in this case that means knowing a lot more about what comprises their product and how their product comes to be what it is. This means understanding all the substances and materials that comprise the product, where and why those substances and materials are chosen and by whom, and what purpose they serve.

    This is a tall order; OEMs have historically specified the “what” (e.g. functional, cost, availability, quality, reliability, etc.) requirements to our suppliers and haven't really been concerned about the “how” or the “why” (except in certain special cases). So the further downstream we get in the electronics industry (or any other article manufacturing industry, for that matter), the less basic chemistry, toxicology, and material science expertise we have, not to mention social and political expertise.

    Current methodologies and tools for supply base management need to be expanded to account for specification and control/management of substances and materials; expertise needs to be expanded in order to properly manage and make decisions regarding a broader range of concerns that extend past environmental risks to social and political risks. Individual companies need to address this, but so do industry associations. We're not going to stop the onslaught of these issues so our industry, preferably along with all other article manufacturing industries, must define and implement a roadmap for how to address this Brave New World.

  5. bolaji ojo
    October 15, 2010

    Mike, Thanks for the further explanation. I appreciate it although your post sparked a bunch of other questions in my head. Is there, for instance, an industry organization that is monitoring all these rules and regulations or are companies doing this on their own? Also, you correctly noted that it's not enough to track the new rules but that it's more important to implement them in the design stage. I agree. However, I know you are very aware of the impact outsourcing has had on the industry with so many of the different stages of production now handled by bodies outside OEMs. How are OEMs going to ensure compliance, after all, they are ultimately responsible for what ends up in their products and the impact on the environment? Would they have to use outside organizations or can they do all these internally?

    The other issue that has not been explored, and which I am hoping you will address in a future column, is that of compliance monitoring and enforcement. Have all these countries and regions set up compliance enforcement agencies and how effective are they? I ask because often the cart goes before the horse in this kind of situation; laws are enacted before the mechanism for enforcement are created.

  6. papri1
    October 18, 2010

    In Industries nowadays lots of metals and elements are used which are creating pollution and hence the eco system is disbalanced. Specially 'lead' as we are quite well known about it. It is not only non-recyclable but also creates a havoc disaster in diseases. Also the coating used in cookware items are not only poisonous to intestines but also a concern for the western development.E-waste should be thought to be collected and destroy according to the international laws for food security and environment.

  7. mike_at_DCA
    October 20, 2010

    Bolaji, to answer your questions, yes there are some industry associations that are tracking SOME of the regulations for their members, but the problem with that is that each manufacturer will be subject to different regulations – or different aspects of the same regulations – based on their markets, their products, and in some cases how they sell those products. So the best the IA can do is provide some general guidance. Each manufacturers must be responsible for knowing the regulatory environment of each of their markets and how it impacts their specific products. Some do this internally, others hire consulting firms like ours to do it.

    And as for how, in an outsourced environment, can manufacturers (OK, brand owners), be sure their products comply when they don't do all the design and manufacturing from the ground up? The same way they do for quality, price and availability. They need to OWN it and make sure their supplier and component selection and management business processes ensure that they select suppliers capable of understanding and following environmental requirements, and components that meet these requirements. We can audit anyone for quality compliance; why can't we audit for environmental compliance too? It's the same thing: “here are a set of requirements; prove to me that you have systems in place that enable you to meet them and that you do, in fact, meet them.” Whether a company uses internal quality auditors or external services doesn't matter; Existing quality auditors can do it if they have the right additional education and information to audit by.

    Finally, enforcement – in the EU much of the enforcement is done under the radar; we occasionally see stories and hear reports of RoHS and WEEE enforcement. We see NGOs enforcing the REACH article 33 disclosure requirements, too. We talk to enforcement here in the US about state WEEE laws, and some say they have a plan, others say it's not in budget. It's spotty. Not much to say besides why pass a law you're not going to enforce?

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