The Two Sides of Cleaning Up E-Waste
The information superhighway is littered with the technology used to get on it. As the time between purchase and planned obsolescence becomes shorter and shorter, finding appropriate methods for dealing with the collection, recycling and recovery of all types of electrical goods is becoming increasingly important.
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Typically, the collection of e-waste, as it is called, is not the responsibility of the companies who manufacture the products, and to date, few policymakers have championed legislation that would force companies to appropriately dispose of their e-waste. With the passing of last month’s deadline for Restriction of Hazardous Substances (RoHS), however, manufacturers now face the very real possibility of lost or disrupted revenue when countries throughout the European Union (EU) begin enforcing RoHS and Waste Electrical and Electronic Equipment (WEEE) recycling laws. In addition, new data from Scott Webster, professor of supply chain management in the Whitman School of Management at Syracuse University, indicates there may be economic incentives for policymakers in the U.S. to begin more serious deliberation of legislation around the collection/disposal of e-waste.
“Relative to the option of no take-back laws, we found that the adoption of collective WEEE take-back legislation – that is, policies where the government coordinates the collection/disposal of returns and charges the manufacturers for the cost – can result in higher manufacturer and remanufacturer profits,” Webster says.
The RoHS deadline is seen as a catalyst that is sparking wide scale enforcement in the EU. WEEE is no longer just an EU issue. Many other countries and states are drafting, enacting or enforcing similar regulations. Japan, South Korea, China, and numerous countries in South America already have legislation in place. Some American states are currently considering e-waste legislation, and four states: California, Maine, Washington and Michigan, have enacted take-back laws which would require manufacturers to incur the costs of collection/disposal of e-waste. This does not mean that U.S. manufacturers are unaffected.
“Every electronics manufacturer that sells products directly or indirectly into Europe needs to be compliant now with the new WEEE laws. With more than an estimated six million tons of waste electronic equipment being dumped into EU landfills every year, we expect full enforcement of these new laws to start,” said Mike Battaion, vice president, technology development for M-Cubed. “For most electronics manufacturers, getting shut out of a particular European country for non-compliance can have a devastating financial impact. For the larger public companies, it can cause serious revenue unpredictability that will negatively impact stock price, and will require disclosure of risk to revenue under the Sarbanes-Oxley rules.”
“Even after most of the deadlines have run out, the RoHS and WEEE landscape is still developing and smaller U.S. companies need to develop practical, affordable approaches in order to stay legal and competitive at the same time,” advises Dr. Lothar Determann, partner at the international law firm of Baker & McKenzie, which has offices in 70 cities worldwide.
Webster’s study, forthcoming in the Journal of Operations Management, found that collective WEEE take-back is more economically advantageous than individual WEEE take-back, where the manufacturer instead of government has responsibility for the collection and disposal of its products.
“Policymakers interested in e-waste should consider that individual WEEE take-back carries the risk of the manufacturer forcing the remanufacturer out of business by charging the remanufacturer a high price for returned products,” Webster states. “In general, individual WEEE take-back is best suited only to industries where remanufacturing by a firm other that the OEM (Original Equipment Manufacturer) is not especially desired or valued.
“Individual WEEE take-back may reduce the role of government in disposing of e-waste, but ultimately, collective WEEE take-back, more so than individual, leads to increased manufacturer and remanfacturer profitability, simultaneously spurring remanufacturing activity and reducing the tax burden on society,” Webster continued, pointing out that in settings where remanufacturing is not profitable and no take-back law is in effect, the enactment of collective WEEE take-back laws will sometimes create a structural change in the industry that results in the introduction of remanufactured goods.
“With the enactment of collective WEEE take-back, the manufacturer benefits from lower collection/disposal costs as remanufacturing volume increases, so there is an incentive for the manufacturer to allow the remanufacturer to profitably enter the market,” Webster concludes.
The drawback of this approach is that, though there may be a reduced tax burden and the emergence of remanufacturing, where none existed before, manufacturer profit will likely decrease and new product prices increase.
In other electronics recycling news, Greenpeace has launched the Guide to Greener Electronics, ranking companies on their use of harmful chemicals and electronic waste recycling. The scorecards ranks the top 14 mobile and PC producers and is intended to create demand for toxic-free electronics which can be safely recycled, by informing consumers of company performance on these issues.
Currently, all 14 companies evaluated fail to earn a green ranking. Nokia and Dell share the top spot in the ranking. Both companies believe that as producers, they should bear individual responsibility for taking back and reusing or recycling their own-brand discarded products. Nokia leads the way on eliminating toxic chemicals, and since the end of 2005 all new models are free of polyvinyl chloride (PVC) and all new components are to be free of brominated flame retardants (BFRs) from the start of 2007. Dell has also set ambitions targets for eliminating these harmful substances from their products.
Other ranked companies include: HP (3rd), Sony Ericsson (4th), Samsung (5th), Sony (6th), LG Electronics (7th), Panasonic (8th), Toshiba (9th), Fujitsu Siemens Computers (10th), Apple (11th), Acer (12th), Motorola (13th) and Lenovo (13th).
“The scorecard will provide a dynamic tool to green the electronics sector by setting off a race to the top. By taking back their discarded products, companies will have incentives to eliminate harmful substances used in their products, since this is the only way they can ensure safe reuse and recycling of electronic waste,” said Iza Kruszewska, Greenpeace International toxics campaigner.
Earlier this month, Electronic Recyclers, an electronic recycling firm in Fresno, California, became the first U.S. firm to surpass $1 million of electronic waste in one month, according to Red Herring. In addition, ReCellular, a cell phone recycling company based in Dexter, Michigan, announced it recycled nearly 50 percent more phones in California in July than in June.
Red Herring reports that Michael Blumberg, chief executive of consultancy DF Blumberg Associates, forecasts the e-waste and e-recycling markets will grow to almost $21.8 billion this year and increase to more then $30 billion in 2008.
“It’s really incredible so many companies are jumping on the bandwagon,” Blumberg told Red Herring. “In the bigger market of reverse logistics, [companies] are now all building in, and routing around, this idea of being green and RoHS-compliant. Companies that don’t get that are going to be the ones that will have trouble and fall.”
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.