Infosys-Oracle Blog

1. There have been four major environmental legislative developments in Europe which impact the Electronics industry and all its stakeholders:

a. The Directive on the Restriction of Certain Hazardous Substances (RoHS) [March 2003]

b. The Directive on Waste from Electrical & Electronic Equipment (WEEE) Directive [March 2003]

c. The proposed Directive on Eco Design and Energy Using Products (EuP) [2005]

d. The proposed Directive on Registration, Evaluation and Authorization of Chemicals (REACH).

Developments in Japan:

a. Fundamental Law for Establishing a Sound Material-Cycle Society [2001]

b. Law for the Promotion of Effective Utilization of Resources (LPEUR) [2001]

c. Home Appliances Recycling Law (HARL) [2001]

d. Green Purchasing Law (GPL) was passed [2001]

e. Waste Management Law [2003]

f. Japanese RoHS [2006].

Developments in US:

As of January 1, 2007, California has implemented RoHS Law that bans sale of electronic items that contain certain hazardous substances modeled after the European Union's (EU) RoHS Directive 2002/95/EC.
Based on these regulations Hi-Tech companies and their suppliers are required to strictly comply with these regulations. The costs of non-compliance are high. Some of the non-compliance effects are:
Penalties :
EU Countries: Penalties for non-compliance with the WEEE Directive differ across European countries and come under two headings: failure to register and non-compliance. Those failing to register need to pay 100,000 in Italy and a staggering 1.5 million fine and two years in prison for Estonia. France imposes 7500 and Spain 1.2 million for non-compliance. Germany and Ireland ensure that non-compliant products are either blocked or taken off the market. EU authorities will conduct spot-checking of electronic imports for compliance and any RoHS failures will result in producers having to pay fines. Typically, non-compliant goods have to be shipped back to the country of origin. In such situations, the producer can divert the product to another country, which could possibly accept it. Or else, it has to dismantle the product to remove hazardous substances and rebuild it. Whatever the case may be, this could ultimately translate into higher costs.
Marginalization of smaller suppliers:
Suppliers failing to meet compliance requirements risk being marginalized. Smaller suppliers not closely associated with the OEMs are more vulnerable than others. The problem is further aggravated for smaller suppliers by the prevalence of a multitude of requirements, lack of transparency in communicating these requirements, and, short deadlines for meeting them.
Failure to comply by smaller suppliers will result in loss of international sales and possibly a portion of domestic sales. Besides, non-compliance would imply huge penalty costs and/or take back of product, leading to higher operational cost of higher inventory as well as redirecting the item to other acceptable destinations. All this would imply significant cost escalation with negative impacts on overall business operations.
Socio-economic impacts:
Under some circumstances of non-compliance, rising costs or loss of business, Hi-Tech units may close down or downsize operations. In either case, there will be loss of jobs and income generation opportunities.
What can be done by the Hi-Tech Industry?
1. Understanding and tracking all relevant legislations and their implications
2. Integrating eco-design and green procurement into organizational processes
3.Creating technical infrastructure and support systems (for eco-design, recycling,   e-waste collection, treatment and disposal, etc.)
4. Modifications in the existing ERPs and enterprise applications within organization and across its supply chain partners
5. Development of solutions to address the IT and business process requirements  for environmental regulatory compliance banned substances-free manufacturing