All Slides Copyright © 2013 ENVIRON International Corp. All Rights Reserved

How Environmental Performance Changes the Standards Landscape

Michael KirschnerPrincipal Consultant

Tel: 415.426.5019E-mail: mkirschner@environcorp.com

January 15, 2013

2

Agenda

ENVIRON Introduction

My Background

What Drives Environmental Requirements?

Environmental Performance & Sustainability Standards

Issues in Product Sustainability Standard Development

Case Study & Examples of Specific Issues and Approaches

Non-Traditional Stakeholders

Lessons Learned

Q&A

3

Established 1982 by former advisors to US President Carter

1,500 staff

87 offices

19 countries

5,000 client engagements per year

$240m revenue in 2011

Leading international Environmental and Life Sciences consultancy

•49 offices •North America

•25 offices •in Europe / •Russia

•9 offices •in China / •Asia Pacific

•3 offices •In South America

•1 office •in Africa

4

My Background

BSEE Worcester Polytechnic Institute – EE: Electrical Engineering

20 Years in Manufacturing Companies

12+ Years in Consultancies

Co-moderator of ANSI Chemicals Network

5

Why Am I Doing This Webinar?

Lots of Industry Experience

Lots of Product Environmental Experience

A Fair Amount of Standards Experience – Enough to see that there are issues

My Conclusion: This is a New Frontier for Standards

People with Deep Industry and Standards Expertise, and Organizations like ANSI, etc., Will Need to Grapple With It – And they may need help

6

“Article-Targeted” Environmental Requirements: A Short History

Aside from some specific, targeted substance restrictions…

1992: EnergyStar® for PCs

1994: European Packaging Directive

2000: EU End-of-Life Vehicles Directive

2003: EU RoHS & WEEE Directives

2007: REACH

2013: California Safer Consumer Products

7

Growth in Environmental Regulations

Copyright © Compliance & Risks 2012 • All Rights Reserved – Used By Permission

8

Today (Hopelessly out of date)

9

Major Drivers of Growth in Environmental Requirements

Government Demands – “End-of-pipe” and landfill approaches alone don’t work – Material Restrictions to limit potential for pollution – Producer Responsibility to limit waste quantity – Energy Use

Customer Demands – Compliance Reporting – RFQs include Environment

Brand Management – Risk of Damage

10

The Problems This Creates

Little Harmonization between Governments – Regulations with similar targets have differences

Historical lack of Environmental Performance requirements results in inadequate awareness and knowledge – Reflected in university systems, industry, and government

A Lack of Standards, and a lack of Coherence Between Standards

11

Some Example Product Environment-related Standards and Categories

• IPC 1752A – XML material data exchange standard for electronics • J-STD-020 – Moisture/Reflow Sensitivity Classification Technical Standards

• JIG-101 – Electronic Product Declarable & Restricted Substances •Recently replaced by IEC 62474 •Many other industries have their own similar standard…(e.g. GADSL)

•NSF/GCI 355: Greener Chemicals and Processes Information

Informational Standards

• IEEE-1680 series (“EPEAT”) – Computers, TVs, Imaging Equipment •BIFMA - e3 Furniture Sustainability Standard •UL 7001 - Sustainability Standard for Household Refrigeration Appliances •ANSI A138.1-2011 - Specifications for Sustainable Ceramic Tiles, Glass

Tiles, and Tile Installation Materials

Product Environmental Performance

(“Sustainability”)

12

These are “Leadership” Standards

“Leadership” Standard Characteristics – Not easy to achieve Enables meaningful differentiation between otherwise similar products

– Require investment by manufacturers to meet Design and Development Manufacturing Supply base Marketing

– Customer targeted Intended to influence customer purchases

Today’s Focus: Product Sustainability Standards

13

UL Environment Goes On a TEAR Creating Product Sustainability Standards

41 To Date: All Issued since 2011

All are “Edition No. 1”

Some are simply republications of

old (1990s) standards

See http://bit.ly/WrdDDq

14

Why?

“The notion of product safety as we know it is evolving and expanding. Increasingly, consumers are concerned about the lifecycle-based environmental impacts of the products they buy and use in their homes…,” said Sara Greenstein, president of UL Environment, a business unit of UL. – AHAM/UL/CSA Press Release, 6/7/2012 (regarding UL

7001)

Translation: Sustainability is Marketable

15

Historic Product Safety Scope

Product Safety from a manufacturer’s perspective

Product Safety from a sustainability perspective Human Health

Environment

Electrical

Mechanical

Physical

Thermal

Chemical

Radiation

16

Case Study: Environment Encroaches on Existing Product Safety Standards

IEC TC 108 – IEC 62368, 60065, and 60950 – classical safety standards for IT,

video, audio equipment: Not “Leadership” or “Sustainability”, but very effective for what it is

– Reference use of a toxic substance to test mark permanency (hexane) – Challenged to trade-off perceived product safety requirement for TVs

against safety of flame retardant (FR) chemicals needed to meet requirement Candle ignition of flat panel TVs Driven by FR manufacturing industry Needed external and NGO assistance to resolve

Lesson: Existing Product Safety Standards need to consider environmental and human health issues

17

Environmental Performance and Sustainability: Definitions

• (Relative) Impact of a product on human health and the environment

• Parametric

Environmental Performance

•Meeting the needs of the present without compromising the ability of future generations to meet their own needs – Brundtland Commission

Sustainability

Sustainability of Products should be measured in terms of Environmental Performance Parameters

18

The Opportunity and The Challenge

Competing on classical product safety is fairly limited, but we are in a period of time where companies WANT to, and can, compete on environmental performance and sustainability

But in order to do that we need standards that are

Credible

• Who created it? Why? Who was involved?

• Who certifies to it?

Meaningful

• Allows True Differentiation

• Maintained to reflect technical progress

Impactful

• Environmental Performance actually improves

Achievable

• Products can Actually Meet the Standard … Over Time, perhaps

19

Areas of Environmental Performance (EP) Product “Sustainability” Standards Address

StandardTitle

Lifecycle Phase

Functionality

Substances to Avoid

Substances to Use

Material Inventory

Material Reduction

Take-Back

Recyclability

PCR Content

Biodegradability

Bio-based Content

Energy-Use

Product (Scope III) GHGLCA

Packaging

Manufacturing

Corporate

UL 2762 Adhesives Use No Yes No N/A No N/A N/A No No No No No No No No No

UL 110Mobile Phones

Use, Post-Use No Yes Guidance No No Yes Plastics Yes No Yes

Use Phase No Yes Yes Yes Yes

UL 2795Carpet/Upholstery Care Products Use Yes Yes

Yes & Guidance N/A No N/A N/A No No No No No No No No No

UL 2767Paint & Varnish Remover

Use, Post-Use Yes Yes

Yes & Guidance N/A No N/A N/A No Yes No No No No No No No

UL 7001Refrigeration Appliances

Mfg Use, Post-Use Yes Yes Guidance Yes Yes Yes Yes No No No

Use Phase No No No Yes Yes

UL 2759Hard Surface Cleaners Use Yes Yes Guidance N/A No

Bulk packaging N/A No Yes No No No No Yes No No

UL 172 Toys Mfg, Use No Yes Guidance No No No No No No No No No No No Yes Yes

IEEE-1680.2Imaging

Mfg, Use, Post-Use No Yes No Partial No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes

NSF/GCI 355 Chemicals Mfg No No Guidance Yes Yes N/A N/A Yes Yes Yes Yes Yes No No Yes No

20

So What EP Aspects SHOULD a Product Sustainability Standard Cover?

This is a $64,000 Question!

Answer: It Depends… – On the product being addressed – On the market and its concerns

For Instance – Should products sold with packaging include packaging

sustainability items? – When is knowing the Material Inventory relevant to formulated

chemicals, since formulators already know the formula?

Option: Start with the ISO 14020 series on Environmental Labeling – Describes principles and provides guidance to making verifiable

claims

21

Issues in Product Sustainability Standard Development

Marketplace Credibility can be impacted when the Standard is – Non-consensus-based – Developed by a narrow set of stakeholders – Not certified via an independent entity

And intended to address a purchased product

If Retailers or End-User groups are not involved in developing the standard, why will it have credibility with them?

22

Issues in Product Sustainability Standard Development

Meaningful: Is the Standard’s goal to drive Leadership and ongoing Environmental Performance improvement?

The point of a Product Sustainability Standard should be to enable Differentiation – Upon Release of the standard and Over Time

How will it be maintained such that it continues to be meaningful? – If unmaintained, so many covered products will comply that its

meaning and value as a differentiator could diminish – Rate of change in this space is very fast vs. typical standard

development time Maintenance should be actively planned for

23

Issues in Product Sustainability Standard Development

Impactful – Are the requirements based on scientific and engineering fact and

experience? – Do they result in measurable EP improvement?

What building blocks are missing that are needed to establish the scientific or data baseline and trajectory? – Start by identifying, defining and implementing these standards first,

or concurrently, e.g. NSF/GCI 355 – Fundamental environmental and tox data on individual chemical substances IPC 1752A – XML method for data transfer IEC 62474 – List of restricted and reportable substances

24

Issues in Product Sustainability Standard Development

Achievable – The standard must be achievable in a reasonable

timeframe – Strike a balance between achievability and leadership Manufacturers must have incentive to invest in meeting a standard’s requirements

– Balanced achievability results in value to the marketplace

25

EXAMPLE CASE STUDY AND ISSUES

26

Issued in July 2006 after 2 years of effort – a project driven by the US EPA

3 Levels: – Bronze: all 23 Required Criteria – Silver: Required + 50% Optional Criteria – Gold: Required + 75% Optional Criteria

Certification Body is a 3rd Party non-profit called “EPEAT”, after the name of the registry, Electronic Product Environmental Assessment Tool – Run by the Green Electronics Council (an NGO) – www.epeat.net

Broad Stakeholder Group

Designed to be a Leadership Standard – Revision Process Intended to occur every 3-5 years

Case Study: IEEE-1680.1 Computers/Notebooks/Monitors

27

The first GOLD product was not achieved until 2007 – This was a good sign! It told us the standard was working the way it

was expected to

EPEAT Registry as of August 2, 2006

28

EPEAT Registry Today – 6.5 Years Later

•Is the fact that 70% of products are GOLD an indication that the standard has become too readily Achievable? Clearly Meaningful, but

•Is it less Meaningful today? •Revision process to begin in 2013

The Standard has not been updated yet

29

IEEE-1680.2/.3 (Imaging Equipment / TVs) Development Process

Leadership Standard

Very broad stakeholder involvement – Manufacturers, academics, industry associations, governments,

NGOs, suppliers, recyclers, retailers – About five times as many participants as 1680.1

IEEE rules allow any IEEE member to vote on final draft, not just the development team

ANSI-related issues with “Commercial Terms” – ANSI Standards historically must avoid them but some can be

appropriate in sustainability standards

30

IEEE-1680 Looks Elsewhere for Future Standards

Based on Suite of Challenges and IEEE Rules that Don’t Fit the Need, the leadership committee decides they need

SDO rules and procedures to ensure efficient standard development

SDO rules and procedures that effectively ensure that the consensus body represents a balanced group of stakeholders. SDO rules and procedures to effectively ensure that a single interest group cannot block action or dominate the voting.

To ensure a lack of financial barriers to participate (stakeholders).

Processes that use trained facilitators and group leaders and that provide good technical and process support for the questions being addressed by stakeholders. Compatibility of processes with development of an environmental leadership standard, including approach to commercial terms. A willingness to work with us and a practical way to move our standards process to the new SDO option.

Credibility and track record of the SDO in developing standards and adoption of their standards.

31

Commercial Terms?

E.g. Warranty – “Any provision relating to warranties may be considered prohibited

under the ANSI Essential Requirement and thus lead to rejection of the proposed standard.” i.e. Clause 3.2 of ANSI ER: Provisions involving business relations between buyer and seller such as guarantees, warranties, and other commercial terms and conditions shall not be included in an American National Standard.

– But, longer warranties imply longer-term support and longer-term support implies keeping things in use and out of landfills Maintenance/Upkeep is environmentally preferable to Throw Away/Replace

– Ultimately included a requirement to document procedures for repair/replacement within 3 years of sale (1 year for consumer product) Note saying “Availability of warranty or service contract would meet this verification requirement”

32

NON-TRADITIONAL STAKEHOLDERS

33

Other Potential (Non-Manufacturer) Stakeholders

Environmental NGOs (non-governmental organizations) – E.g. Clean Production Action, Center for Environmental Health, etc.

Universities

Government Agencies – NIST – long involvement in standards – EPA

Retailers & Distributors

Institutional Purchasers

Recyclers

Labor

Suppliers?

34

Environmental NGOs: A Key Stakeholder for EP Standards

Long history of environmental activism – Since (at least) Rachel Carson’s “Silent Spring”

Have distinct opinions, and often have expertise – Rarely have industry expertise (unless they hire it)

Try to set de facto standards and requirements for industry – Electronics – Chemical Safety

35

Other Stakeholders’ Challenges

They often don’t have experience with the standards development process

Have no visibility into how it works

View it as a closed and mysterious system

Takes more time than they expect to make progress

Can cost too much (time & travel) for the perceived return

36

EU NGOs (and Government) are Serious about Standards Oversight

Three Environmental NGOs in the EU – ECOS: European Environmental Citizens’

Organisation for Standardisation

– ANEC: European consumer voice in standardisation Focuses on CEN, CENELEC, ETSI Not solely environment-focused

– UK Sustainability Network for Standardisation New, UK sustainability focused

Some funding from Governments

37

Regulation EU 1025/2012 on EU Standardisation

Focuses on European Standards bodies

Requires annual publication of work program

Requires transparency between, and cooperation amongst, national standards bodies

Improve access for SMEs

Encourages participation of public authorities

Requires notification of “stakeholder organisations”

Describes government financing of standards and other organizations

38

LESSONS LEARNED / CONCLUSIONS

39

Lessons Learned 1: Plan Ahead and Set Expectations

“The Journey of Ten Thousand Miles Begins With a Single Footstep” – Lao Tsu

Setting the long-term direction and goals is critical

Realistic timeline is important

Realistic expectations from the start are critical – Especially for non-traditional stakeholders

40

Consensus Standards require Balanced Stakeholder Representation – Industry can overwhelm balance: ensure customer or customer-

representing stakeholders are included to enhance credibility – ANSI-accreditation for SDO is desirable

Non-Consensus Standards risk credibility gap

Chair has to be credible, knowledgeable and independent – Consider academics (but check for consulting practice conflicts),

state/federal regulator, or hired facilitator (consultants, e.g.)

Non-traditional Stakeholders (primarily NGOs) may need assistance to cover costs

Lessons Learned 2: Breadth and Credibility

41

Product Sustainability is an Extremely Broad topic – Specialized experts in one area may not be knowledgeable in

another and nobody will know everything about all areas – There are many unknowns; identify/research/resolve Be driven by science, not emotion or desire

Use smaller, focused working groups to address specific issues or sections – Then make recommends to the larger team – Easier to schedule meetings; faster decisions

Have a way to cap the committee size – Can become unwieldy, esp. with such broad requirements

Convening in-person meetings at the start is critical – Set the tone, get to know the players

Lessons Learned 3: Development

42

Certification can be important

1st Party and 2nd Party Certification is becoming seen as less credible – i.e. Self-Certification or e.g. Industry Association or a

membership group as Certifying Body

Drive for 3rd Party Independent Certification – Or define a path to get there

Lessons Learned 4: Certification

43

Drivers (or initiators) may be outside industry – US EPA initiated and drove IEEE-1680.x (computers, etc.) – UL Environment initiated standards like UL 7001 and UL 110

Industry may be cold to the idea and feel forced into it, so – Have solid justification and describe the need for it – Show value and benefits to manufacturers – Allow them “baby steps” to “get their feet wet”

Other stakeholders may fight this – Develop a Roadmap to “sustainability” over time – Engage trade associations

NGOs (and others) may also be uninterested – Have a tendency to choose their causes

Academics like a (funded) research challenge…

Lessons Learned 5: Engagement and Participation

44

Many “Sustainability” standards for a variety of products already exist

Take an “Eyes-Wide-Open” approach and be diligent and realistic about – Where you are – Where you want to go, and – What can be accomplished when

Find the right SDO, build a solid and diverse group of committed stakeholders, and Get Started!

Conclusion

45

Thank You For Your Attention/Q&A

Michael Kirschner | Principal Consultant ENVIRON International Corporation 201 California Street, Suite 1200 | San Francisco, CA 94111

T: +1 415 426 5019 | C: +1 415 342 3217 mkirschner@environcorp.com