Preparing for the environmental challenges of the future
Companies need to be involved in the environmental legislation process if they are to fight the enactment of laws based on faulty or insufficient data, writes Keith Huckle, global product steward and risk manager, Dow Corning.
Environmentally conscious or "green" products now account for an increasing proportion of global sales in many markets and industry sectors. While viewed by some as more hype than substance, the markets have matured such that manufacturers of consumer electrical and electronic products, for example, employ sophisticated design approaches that systematically take into account a product's environmental impact during its entire lifecycle. Driven by regulations, new technologies and consumer pressure, the race is on to design and market environmentally preferred products. To remain competitive as a supplier to these markets, it is important to track the global environmental regulations and "substances of concern" that are being targeted for reduction or elimination. Calls for more effective chemicals legislation and increased transparency concerning harmful substances that may be present - even in trace quantities and especially in consumer products - have now become a major campaign for non-governmental organisations (NGOs).
Similar concerns, different approaches
Regulations have proved to be a significant driver for change. Although initially focused on manufacturing facilities and processes that generate pollutants, environmental laws are increasingly focused on products and minimising the pollution that may be generated during their lifecycle stages. For example, the European Commission is progressing an Integrated Product Policy (IPP) that includes various instruments - both voluntary and mandatory - to stimulate improved environmental performance at each of the lifecycle stages and by all of the stakeholders involved. Measures include economic instruments, substance bans, voluntary agreements, environmental labelling and product design guidelines. Let's take a closer look at some of these.
The concept of "producer responsibility" or "take-back" legislation has developed, in certain regions and market sectors, to the point where manufacturers have to actively design their products with a view to disposal and recycling at the end of the life of the product. Fundamental changes to the way in which chemicals are managed and regulated are underway. Most notable is the proposed European approach, designated REACH (Registration, Evaluation, Authorisation of Chemicals), which advocates the active substitution of high concern substances. At the same time, other new legislation - such as directives on Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) - requires European Union member states to implement strict mandates on electronic equipment waste and to ban the use of lead, mercury, cadmium and other hazardous materials in electronics manufacturing (Figure 1).
An increasing number of industrial customers are asking suppliers to eliminate certain materials and to provide specific environmental attributes. Suppliers to some manufacturing sectors are increasingly asked to meet independently verified environmental management standards, such as ISO 14001. Encouraged by a growing number of voluntary ecological-label (eco-label) schemes that positively promote certain environmentally conscious materials, the demand-pull for green products has never been stronger. As companies address the increasingly complex compliance task, many seek to position themselves in advance of potential future environmental challenges, on the one hand, hoping to turn such threats into potential marketing opportunities, while on the other, ensuring their visible commitment to corporate social responsibility. Many companies, especially in Europe and Asia, are beginning to require a questionnaire or checklist on the Environmental Management System (EMS) status of supplier companies - this is an attempt to identify and partner preferentially with those companies demonstrating environmental conformance.
Substances of concern
There are a number of lists of banned or restricted substances, often called "substances of concern". These substances include those prohibited from use as a result of regulation, legislative or environmental health worries, or for which customers or special interest groups (such as NGOs) have expressed concern. In addition, these substances can be problematic when seeking eco-labels in the various countries and regions. Marketing strategies are being developed based on the removal of "harmful" substances - witness the development of lead-free solders, especially in Japan.
The substances of concern are often separated into two distinct lists: banned substances; and alert substances. Banned substances are prohibited by regulations in one or more countries or have been banned by industrial customers. Alert substances are under review by government agencies or customers, or the substances have the characteristics of other banned or alert materials. Within the draft REACH regulation, for example, there is a particular focus on substances that are environmentally persistent (Figure 2). These include materials that have potentially sinister health hazards as well as those possessing properties that in some way may affect hormone systems.
Recent efforts have focused on standardising these lists. While there is still some way to go, this recognises the considerable burden placed on suppliers in responding efficiently to requests that are often disparate, all embracing or ambiguous. Applying a check-box mentality causes misunderstandings, approval delays and, ultimately, increased costs. Within some sectors, primarily electronics and automotive, mechanisms have been developed for exchanging environmental data between supplier and customer.
The International Materials Data System (IMDS) is the auto industry's response to the materials declaration demands of the End of Life Vehicle (ELV) directive and is the most established global system - its use is a condition of doing business with auto OEMs and their suppliers. The prospect is an increasingly rapid move to establish information management tools and verification capabilities that will enable suppliers to meet the developing or currently disparate supply chain requirements. Not only will this information be needed to effectively and safely dispose of products at end of life, it will be required by systems manufacturers and their suppliers to respond to the growing number of environmental enquiries related to their products, as well as requirements for improved transparency within upcoming legislative changes.
The dual challenges of increased information sharing along the supply chain - typically creating with it attendant intellectual property concerns - together with active targeting and deselection of listed materials will create strategic issues for all but the best-prepared companies. Along with information on the content of assemblies, components, materials and basic substances, it will be necessary to develop toxicological and environmental profiles for materials and processes used in various sectors, along with their alternatives. While REACH will drive this higher up the materials (chemicals) supply chain, to understand the complex decision and trade-off process used in eco-design, new life cycle assessment and evaluation tools will be required.
These environmental assessment tools will need to be integrated into the product development process and will need to consider both the suitability and viability of supplied raw materials and processes, mass balance and energy utilisation, as well as recycle strategies.
Recommendations
Many chemical suppliers have been slow to recognise the strategic importance of the upcoming legislative and customer-driven changes. While protesting that increased legislation is neither warranted nor just, nonetheless there is a requirement for effective defence. Lobbying legislators on substance or chemical-class exemptions is best done through consortia that perform value-added, science-based research. Want exemptions to be based on the science of risk-based, environmental life-cycle studies? Participate in one. Want those writing the regulations to be aware of the tradeoffs of a particular substance or technological alternative? Write a white paper, in layperson's terms, and have the data to back it up. Many new laws seem to be based on faulty or insufficient data.
Unlike many consumer goods manufacturers, who have successfully deployed vertical integration as a means to implement environmentally preferred technology into their products, chemical suppliers occupy a position typically at the start of the raw materials supply chain. This presents some unique challenges in respect of how to respond to the changing demands. The declaration requirements are onerous and appear to be cost-intensive and add little value, save for the fact that not doing so risks a barrier to sell in certain markets. It is best to address the reporting requirements in a consistent, co-ordinated and cost-efficient manner. Deploying environmental management systems will help with this.
Meanwhile, portfolio management has never before been more important. Knowing what you (can) sell and systematically reviewing raw materials that are purchased within a company has to be considered in light of proposed regulatory initiatives that inevitably will change the road map of chemicals supply globally.
So what strategies are best to adopt? First, fight denial. It has been commonplace for doubters to argue that some of these changes will never happen. Actively track them, influence them. Second, seek to protect existing substances and technologies through science-based and reasoned socio-economic arguments. To be effective, this requires a working balance between science and political advocacy. Believing that good science alone will win the day is as foolhardy as isolated, confrontational lobbying that is neither backed up by substantive data nor persuasive arguments. Third, know your customers' markets and the impacts that key environmental drivers will mean to them. This will require a degree of strategic insight and proactivity from chemicals suppliers and will draw on skill sets that previously have not been central to such activities. These are not always the easiest ideas to sell in a tough economy, but there will be a positive payoff down the road.
