MarketEye: The Evolution of Environmental Compliance Reporting

04.06.2009 // Posted by: Joel Russeau // Posted in: Articles, Supply Chain

Design Chain Associates, LLC in partnership with TTI, provides MarketEye readers with another in a series of timely posts regarding the electronics industry and the environment.

Directive and Legislative Driven Compliance Reporting

Compliance to the EU RoHS (Restriction of Hazardous Substances) directive and many other environmental compliance directives to date has been based on an "honor system." Electrical and Electronic Equipment Producers only needed to obtain Certificates of Compliance for the parts used in their products as evidence of conformance to acceptable levels of restricted substances in their products. Environmental legislation did not contain a requirement to report the actual amounts of hazardous substances contained in Electronics and Electronic Equipment (EEE) available to the public.

While environmental compliance enforcement authorities did not require quantitative evidence of compliance, they have always had the authority at any time to request proof of compliance.

Per the UK Dept. of Trade & Industry (now the Department for Business Enterprise & Regulatory Reform, BERR): “Producers must be able to demonstrate compliance by submitting technical documentation or other information to the enforcement authority on request and retain such documentation for a period of four years after the EEE is placed on the market.” Poor documentation of compliance may bring into question whether due diligence was exercised to prevent placing non-compliant products on the market. This statement by BERR raises the question of whether a collection of Certificates of Compliance constitutes due diligence for environmental compliance management.

Now, almost three years after the July 1, 2006 RoHS compliance deadline, a growing emphasis on quantifiable environmental compliance reporting is presenting a new challenge to electrical and electronic equipment producers. There are several primary drivers that will be discussed in detail below:

• REACH,
• Customer-specific reporting requirements, and
• RoHS Exemption withdrawls

We will then discuss a general process to deal with the ever-expanding universe of requirements.

REACH

The framework of the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) authorization process defines a chemical content reporting requirement for candidate Substances of Very High Concern (SVHC), of which 15 have been identified to date. Manufacturers and importers of articles are required to notify their customers of the presence of any candidate SVHCs in their products if present in those articles at or above a concentration of 0.1% weight by weight (of the article¹).

The REACH disclosure requirement for articles (as described in Article 33 of the regulation) is as follows:

• Paragraph 1: If you ship an article that includes an SVHC Candidate (>0.1% w/w) you must provide the recipient of the article with sufficient information, available to the supplier, to allow safe use of the article including, as a minimum, the name of that substance.
• Paragraph 2: Provide this information to anyone that asks for it within 45 days of the request (free of charge)

To meet this reporting requirement manufacturers and importers of articles need to maintain a quantifiable database of chemical content data for their products. The current SVHC candidate list of 15 substances is the first recommendation of substances subject to authorization. Further recommendations are expected to be made at least annually. Manufacturers and importers of articles will need to track this closely and update their product content disclosures to address new substances as they are added to the SVHC list.

¹“Article” is defined in the REACH regulation as “an object which during production is given a special shape, surface or design which determines its function to a greater degree than does its chemical composition”. Articles can include a SMT capacitor, a computer, or an entire rack of electronics equipment.

Customer Driven Compliance Reporting

Many companies selling their products worldwide have developed their own data formats and systems to help them cope with and track compliance with the ever-increasing number of environmental regulations in their markets, but that drives the challenge of filling out a wide variety of different forms for their customers. The tasks of data collection, assessment of chemical content, and correct form completion can be daunting. Some examples of customer-driven chemical content reporting formats are:

• IBM Product Content Declaration (PCD) form
• Several Japanese companies require the Japan Green Procurement Survey Standardization Initiative (JGPSSI) form
• JAMP-AIS: Japan Article Management Promotion Article Information Sheet
• HP REACH form
• NEC Examination Sheet on Compliance with RoHS Directive
• IBM WEEE form
• IPC-1752 Material Composition Declaration

EU RoHS Exemption Expiration Impact Assessment

The EU RoHS exemption reviews – the consultants’ final report for the first one was recently issued in March - may result in modification or expiration of exemptions that currently allow manufacturers to sell their products in the EU using parts and materials that use exemptions to achieve compliance. As RoHS exemptions are modified or withdrawn, manufacturers will need to review the chemical content of their products to determine the impact of these changes on their products and potentially identify replacement parts and materials that provide the same functionality without requiring an exemption to achieve RoHS compliance.

To prepare for proposed modification or expiration of RoHS exemptions some manufacturers are requesting their suppliers to identify products affected by these exemptions. Manufacturers are also asked to identify which of these products will be phased-out or re-engineered to replace parts and materials affected should the exemptions be withdrawn. How will a producer identify products, parts and materials affected by the modification or expiration of RoHS exemptions if their only environmental compliance documentation is a Certificate of Compliance?

An example of this situation is a request to identify and replace parts in your product claiming RoHS exemption 7c: ”Lead in electronic ceramic parts”. A database of the chemical content of the product is needed to identify the affected products and parts. Furthermore, to identify a suitable replacement that does not claim the 7c exemption requires access to essentially complete chemical content data for a new manufacturer’s part.

Implications and a Way Forward

Managing component source selection based on chemical content adds another level of complexity to design and manufacturing. The days of selecting a generic part are gone. Even hardware such as fasteners should have specific approved manufacturers added to the Approved Vendors List (AVL) to control chemical content. Listing distributors as approved sources is risky without a specific list of approved manufacturers to accept from the distributor.

As completely as possible, manufacturers of products need to know what chemical substances their products contain. Manufacturers that do not have quantifiable chemical content data should consider performing a Product Chemical Content Assessment (PCCA). A PCCA is a product level assessment based on a Bill of Materials-based audit that enables manufacturers to document the chemical content of their products. The PCCA provides a quantified listing of the chemical substances contained in their products, parts and materials that allows the OEM to validate compliance to global environmental compliance legislation as it changes or as new legislation is introduced. PCCA data not only provides the ability to identify products, parts and materials affected by substance restrictions and exemptions; it provides the necessary information required for completing various environmental compliance reporting forms.

Acquiring Quantifiable Chemical Content Data

Compliance with current and future reporting requirements for environmental directives and regulations like RoHS and REACH is difficult without a database of component level chemical content data. Acquiring this data is tedious and time-consuming. One method of obtaining chemical content data is to directly contact each manufacturer of each component and material that you use and request the information. This data collection activity involves web surfing, phone calls (often repeated calls for follow-up), and many emails. Some suppliers may take weeks or even months to respond.

We have found that this is ultimately not a clerical task. Chemical content data collection must be done by experienced personnel well versed in the technical aspects of the data that is to be obtained. Component and material manufacturer’s submit data in many different formats. The data received from each component or material manufacturer must then be reviewed for errors, omissions and accuracy. In fact, our data shows that up to 10% of data received is incorrect in one way or another. The data then must be saved in a format that facilitates uploading into a database. In addition to chemical content data, copies of the part and material manufacturer-provided material declaration source documents need to be obtained and stored for impact assessment of process change notification(s) received from manufacturers, as well as the due-diligence requirements mentioned above.

Most medium to small producers are not adequately staffed to assume the task of chemical content data collection and the ongoing task of maintaining, updating and managing chemical data. The tasks of data collection, assessment of chemical content, and correct disclosure and reporting form completion can be especially daunting. Outsourcing these tasks to a product-focused environmental consulting company in conjunction with a data management service provider will provide producers with data where needed and offload the tasks of analysis and form completion from them.

Conclusion

In order to comply with current and future regulatory compliance reporting requirements as well as customer-driven reporting requirements, manufacturers that do not have quantifiable chemical content data must begin the tasks of data collection, assessment of chemical content and preparation for reporting quantifiable environmental compliance data when requested.

A lack of quantifiable environmental compliance data is becoming a significant sales barrier that must be addressed to compete in the global marketplace. The days of “honor system” based environmental compliance reporting are over.

You can direct questions and suggestions to info@designchainassociates.com, or you can comment by using the comment link below.

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