EU REACH, RoHS, WEEE, Batteries and Packaging Legislation - Recent Developments and Compliance Issues

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1 Panellists/Speakers: Chaired by Sebastian Charles Dr Aidan Turnbull Bruce A Gordon Raminta Dereskeviciute Thursday 5 th March 2014 EU REACH, RoHS, WEEE, Batteries and Packaging Legislation - Recent Developments and Compliance Issues Copyright 2014 by K&L Gates LLP. All rights reserved. 1

2 AGENDA Chaired by Sebastian Charles, Partner, K&L Gates LLP Enforcement of WEEE, RoHS and REACH in the EU and the UK: case studies, responsibility of actors in the supply chain, ensuring compliance - Raminta Dereskeviciute, Senior Associate, K&L Gates LLP Business benefits for suppliers to use BOMcheck for substance declarations (REACH, RoHS2, etc) and Conflict Minerals - Dr Aidan Turnbull, BOMcheck.net, Director, Environ and Bruce A Gordon, Principal, Environ ENVIRON outsourced compliance management services for EU WEEE, Batteries and Packaging - Dr Aidan Turnbull, BOMcheck.net, Director, Environ and Bruce A Gordon, Principal, Environ klgates.com 2

3 Copyright 2014 by K&L Gates LLP. All rights reserved. Enforcement of WEEE, RoHS and REACH in the EU and the UK by Raminta Dereskeviciute

4 OVERVIEW: WEEE, ROHS II AND REACH How does the EU legislation apply? National law of each Member State ( MS ) specifies enforcement authorities, offences and penalties WEEE and RoHS II are directives implemented via national legislation of each MS and implementation may vary REACH is a regulation that is directly applicable in every MS (i.e. MS can require parties to comply without having to implement REACH into national law) but MS authorities are responsible for determining penalties What is required for compliance? Self-declaration registration CE markings declarations of conformity conformity assessments wheeled bin symbol (WEEE) klgates.com 4

5 WHY DOES IT MATTER? Criminal offences for non-compliance Penalties may be applied to directors/ management Interruption of business Manufacture Import Trade Invalidated insurance cover Defective product claims Reputational risk Contractual liabilities Revocation of trade licences klgates.com 5

6 OVERVIEW: EU PENALTIES Penalties are a matter for MS authorities to determine, which leads to different levels of fines Penalties must be effective, proportionate and dissuasive Criteria to be considered Seriousness of offence Environmental harm/scope e.g. if offence is minor and committed for first time authorities may issue warning for corrective action Report on penalties applicable for infringements on the provisions of the REACH Regulation in the Member States has been issued by the European Commission ( EC ) klgates.com 6

7 OVERVIEW: EU PENALTIES For administrative penalties, the level of fines varies. Criminal sanctions may apply. WEEE Denmark: unlimited fine for companies, up to two years imprisonment for individuals France: fine 2,250 to 7,500 for companies, 450 to 1,500 for individuals Germany: fine 10,000 to 50,000 Italy: fine 150 to 100,000 RoHS II Denmark: unlimited fine for companies, up to two years imprisonment for individuals France: fine 7,500 for companies, 1,500 for individuals Germany: fine 10,000 to 50,000 Italy: fine 50 to 100,000 REACH Generally 50,000 to 1m fine for the first infringement Belgium: 55,000,000 fine UK: unlimited fine klgates.com 7

8 WEEE OVERVIEW Source: klgates.com 8

9 WEEE: RECENT DEVELOPMENTS TO SCOPE OF EEE Open scope Scope currently ten categories of EEE From 15 August 2018 scope will be extended to include all EEE within six broad categories Photovoltaic panels from 14 February 2014 Review by EC of proposed open scope by 14 August 2015 Additional exclusions from 15 August 2018 klgates.com 9

10 WEEE: WHO IS RESPONSIBLE IN THE SUPPLY CHAIN? Producers Register and join producer compliance scheme Financial obligations Mark products with crossed out bin symbol Provide information on WEEE reuse and treatment Provide registered producer number to distributors Keep records of EEE placed on market Encouraged to improve design of EEE Distributors Take back obligations Record keeping for WEEE returned Make information available on treatment of WEEE klgates.com 10

11 WEEE: WHO IS RESPONSIBLE IN THE SUPPLY CHAIN? Scheme operators Be approved by environment agency Register members Report member information to authority (registration, EEE put on market, WEEE collected at designated collection facility and delivered to approved authorised treatment facility) Arrange for WEEE to be cleared/ treated Get evidence to show obligations are discharged Pay compliance fee where evidence is insufficient Submit declaration of compliance Retain records Establish systems to identify products for re-use Distance sellers viewed as producers so must register Must appoint authorised representative if selling in MS to another MS May appoint authorised representative if selling outside EU to MS klgates.com 11

12 WEEE: UK OFFENCES AND PENALTIES WEEE Regulations 2013 (in force from 1 Jan 2014) Criminal offences punishable by unlimited fines Producer/ authorised representative: fail to comply with obligations, furnish registration etc information that is false/ misleading, or false/misleading declaration of compliance Scheme operator: fail to comply with obligations, furnish report with false/ misleading information, false/misleading declaration of compliance Distributor: fail to take back AATF operator: fail to comply with obligations, furnish report with false/ misleading information Person: fail to comply with financing obligations/ issuing evidence notes for approval of AATF Can apply to companies, unincorporated and partnerships Any officer of a company is liable to be proceeded against if offence is committed with his or her consent/ connivance or attributable to his or her neglect klgates.com 12

13 WEEE: UK ENFORCEMENT Environment Agency Enforces regulations so far as they relate to producers, producer compliance schemes and treatment facilities Maintains a public register Publishes information on WEEE Monitors producers and scheme operators Approves scheme operators and exporters Can serve enforcement notices Powers of entry and inspection Vehicle Certification Authority Enforces distributor obligations (take back) and requirements to mark products with crossed out wheeled bin symbol Powers of entry and inspection Mystery shoppers and inspectors report to VCA

14 WEEE: CASE STUDIES Largest UK fine so far Eight individuals and three companies Ordered to pay 220,000 in December 2012 For illegally exporting 450 tonnes of broken hazardous WEEE from the UK to Nigeria, Pakistan and Ghana US NGO Electronics TakeBack Coalition In February 2014 highlighted problem of collectors of WEEE exporting it to developing countries and/ or using it for low road processing Happening in EU despite WEEE Directive More enforcement is needed klgates.com 14

15 WEEE: INTERPRETATION BY MS Does prototype fall within the scope of WEEE Directive? Blue book:...responsible for designing and manufacturing a product with a view to placing it on the Community market... UK v German interpretation Is there a de minimis threshold for tonnage? Exemptions? How much information to include in the user manual? Is website enough? klgates.com 15

16 WEEE: HOW TO COMPLY IN THE UK Producers Register with producer compliance scheme, pay registration fee, report weight of EEE placed on UK market each year to scheme operator and whether EEE use is household or business (see list of approved compliance schemes on environment agency s website) Give producer registration number to anyone distributing/ selling your equipment) Consider what will happen to your WEEE and financing obligations involved Mark products with crossed out wheeled bin symbol Distributors: Take back obligations Join distributor take back scheme run by Valpack Retail WEEE Services Ltd Offer in-store take back Provide alternative take back service (e.g. make arrangements with PCS) Take back free of charge of very small WEEE (>25cm external dimension) if there is an EEE sales area of 400m2 or more Make information available on take back scheme (posters, leaflets etc) Log WEEE items returned Train all staff to ensure they understand the obligations under the regulation mystery shoppers expect all personnel to be informed klgates.com 16

17 ROHS II OVERVIEW Source: klgates.com 17

18 ROHS II: RECENT DEVELOPMENTS MSs had until 3 January 2013 to implement RoHS II Transitional provisions: substance restrictions gradually extended to new product categories From 22 July 2014 to 23 July 2019 concerning categories of EEE Cables, spare parts for the repair/reuse/updating of functionalities/upgrading of capacity for specific product category must comply from the same date as their product category Reviews of RoHS: first review by July 2014 of list of restricted substances EC is proposing to restrict five further substances in Annex II: hexabromocyclododecane (HBCDD) and phthalates DEHP, BBP, DBP and DIBP Will also address development of a methodology for future amendments to list of restricted substances EC to set up working group for substance review klgates.com 18

19 ROHS II: WHO IS RESPONSIBLE WITHIN THE SUPPLY CHAIN? Manufacturer Must not place EEE with restricted substances on market Technical documentation, conformity assessment, declaration of conformity, CE marking Distributor Verify CE marking and technical documentation Ensure manufacturer and importer have complied with their obligations Importer Only place RoHS compliant products on market Ensure manufacturer has complied with its obligations Authorised Representative (may be appointed by manufacturer s written mandate) Keep technical documentation and declaration of conformity available Cooperate with authorities klgates.com 19

20 ROHS II: UK OFFENCES AND PENALTIES Implementing Legislation: RoHS Regulations 2012 Criminal offences punishable by unlimited fines Different actors in the supply chain can incur penalties For an offence committed by a company - director, manager, secretary or officer may be prosecuted. As an alternative or in addition, the court may in some circumstances order the person convicted of the offence to remedy it and reinforce the authority s costs of investigating the offence Due diligence defence if a person can show, subject to certain conditions, that he took all reasonable steps and exercised all due diligence to avoid committing the offence klgates.com 20

21 ROHS II: UK ENFORCEMENT National Measurement Office (NMO) may enforce by: Making test purchases Exercising powers of entry to premises Obtaining warrants Requiring production of compliance information Inspecting processes, documents, products Seizing and detaining products Issuing a compliance enforcement notice requiring action to be taken Issuing a recall notice klgates.com 21

22 ROHS II: UK CASE STUDIES NMO regular market surveillance projects to assess RoHS compliance Will contact companies by letter to respond to RoHS response form within 28 days Responses allocated to enforcement officers who may contact company for further information Visit or contact companies to offer advice and support on compliance Household appliances: March 2012 one business improvement plan required, two warning letters issued, 11,000 of non-compliant products prevented from being placed on the market, 30 items seized, eight site visits Gadgets and Novelty Equipment: May 2012 three investigations and 7,500 of stock removed from market Souvenirs and Gifts: March 2013 NMO attended one company to inspect paperwork and then closed the matter Shower and Sensor Tap: April 2013 one warning letter issued klgates.com 22

23 ROHS II: HOW TO COMPLY CE marking Analyse components or materials used in suppliers products. Verify supplier declarations or establish presence of restricted substances Work closely with manufacturers and suppliers of components to ensure that finished products do not contain restricted substances above permitted quantities Integrate compliance with RoHS II into company s larger environmental efforts Update IT systems to collect data Provide staff training Consider provisions in contracts with suppliers Consider requirements of conformity assessment Onus is on the manufacturer/ importer/ distributor/ responsible person to ensure compliance or that an exemption applies Be aware of EC powers to extend restricted substances and transitional provisions until 2019 klgates.com 23

24 ROHS II AND REACH RoHS applies only to articles (EEE), whilst REACH is broader Ongoing discussion as to how MS interpret article The definition of article under REACH is different from homogeneous material in RoHS (important with respect to the 0,1% threshold) RoHS has a mandatory CE mark and conformity declaration, whilst REACH doesn't The list of REACH substances with restrictions (Annex XVII and SVHC Candidate List) is growing, RoHS lists a smaller number of restricted substances (in Annex II) that can also be added to Caracal (Competent Authorities for REACH and CLP group) is currently addressing overlaps between REACH and RoHS Suggested by industry professionals that methodology used to assess future RoHS restrictions must align with REACH assessments Further developments expected klgates.com 24

25 REACH: RECENT DEVELOPMENTS Interaction with RoHS (see above slide) Phase-in of REACH until 1 June 2018 Extension of REACH to nanomaterials EC impact assessment on amending the annexes of REACH to take better account of nanomaterials Meeting of MS experts and other stakeholders in March 2014 Proposals presented to the REACH Committee around summer 2014 Annexes of REACH could be amended by the end of 2014 klgates.com 25

26 REACH: WHO IS RESPONSIBLE IN THE SUPPLY CHAIN? Suppliers (importers and manufacturers): Must register substances in quantities greater than one tonne per year with ECHA Submit dossier of relevant information on each individual use of a substance (include chemical safety report if <ten tonnes p/a) Deadlines according to new or existing substances, volume and hazardousness Safety data sheets to be provided to recipients of substances Downstream users (companies/ individuals who use a substance): Provide information on uses of substances to suppliers so suppliers can use information in registration dossier for ECHA Produce their own dossier and risk assessments, register information with ECHA if not covered by supplier s registration dossier Implement safety and risk management measures specified by suppliers and pass information to customers on safe use Inform suppliers on new information on hazards of the substance Comply with authorisation conditions or restrictions klgates.com 26

27 REACH: ENFORCEMENT ECHA forum (Forum for Exchange of Information on Enforcement): Coordinates a network of MS authorities responsible for enforcement Not an enforcing authority but work has important influence on enforcement May reject registration of substances May ask authorities to enforce on its behalf REACH EN force Report December 2013 on obligations of downstream users formulation of mixtures Based on reports of 1,181 inspections throughout Europe from Recommendations made to ECHA forum, ECHA, industry and enforcement authorities/ inspectors REACH Information Portal for Enforcement (RIPE) klgates.com 27

28 REACH INFORMATION PORTAL FOR ENFORCEMENT (RIPE) Web-based portal enabling national enforcement authorities to access information submitted to ECHA so that they can effectively enforce REACH e.g. Was a dossier submitted, by whom and when? Expected to be used by 2,500 inspectors but not available to public Aims to improve competitiveness of compliant chemicals industry klgates.com 28

29 REACH: UK OFFENCES AND PENALTIES Implementing Legislation: REACH Regulations 2008 Criminal offences punishable by unlimited fines Contravening provision of REACH Causing/ permitting another person to do so Obstructing enforcement authorities Providing false statements Failing to provide information when requested Enforcement authority may bring civil proceedings for such remedy as is appropriate if a criminal sanction would not work klgates.com 29

30 REACH UK ENFORCEMENT Health & Safety Executive (HSE) Enforces registration and supply duties up to the point of retail sale Local authority trading standards departments responsible for consumer protection issues Environment Agency, HSE and local authorities Enforce use-related duties, as per existing arrangements for enforcing health, safety and environmental legislation (Health and safety at Work etc Act 1974, Environment Act 1995) UK Border Agency May detain goods at import for two working days on request/ if it has reasonable grounds to suspect that goods are in breach of REACH HM Revenue and Customs May disclose information obtained or held in the exercise of its functions relating to imports to facilitate the exercise of a duty of the above klgates.com 30

31 REACH: LEGISLATIVE DEVELOPMENTS EU Waste Framework Directive and REACH interaction In March 2013 CJEU decided that it is for each national court to decide whether hazardous waste had ceased to be waste based on REACH and WFD requirements Particularly, it is for the national court to consider whether a substance met the requirements for derogation from Annex XVII or REACH EU REACH Committee has voted to add nine substances to authorisation list Substances added to Annex XIV will require authorisation for use By 2019 substances will be banned unless authorised Adopted proposal from EC to update test methods regulation by adding Eogrts and five other tests to test methods Reduces use of animals in REACH tests Committee to agree amendments to Annexes VIII to X to stipulate data requirements klgates.com 31

32 REACH: HOW TO COMPLY Designate person in charge and ensure everyone knows who that person is Centralize all relevant information electronically Keep all documentation retained as hard copies together All confidential documents should be marked as such Prepare a checklist of all documents and where they are kept Update the information on a regular basis Ensure relevant people know where and how to access information Prepare a to do (and not to do!) list for on-site inspection klgates.com 32

33 REACH: HOW TO COMPLY Keep information for 10 years after last manufacture/ import/ supply/ use Must be available (hard copy or electronic) Keep information available on site regarding operations Provide information on administrative and regulatory matters within a reasonable time if requested REACH audit Assessment of company s operations Risk management Review of response readiness to demonstrate compliance to relevant authorities in the event of an investigation Assessment of the operations of a target company in an M&A scenario (due diligence) klgates.com 33

34 REACH: HOW TO COMPLY Compliance review Review of compliance documents Mock inspections Incident handling Training On legislative requirements Best practice workshops How to respond to an inspection Is your contamination risk assessment viable? Insurance coverage assessment Insurance/ risk mitigation klgates.com 34

35 CONTACT US Raminta Dereskeviciute Sebastian Charles klgates.com 35

36 SPEAKER: RAMINTA DERESKEVICIUTE REACH Experience Advising the metals / chemicals industry and related associations on numerous aspects of REACH and CLP: REACH consortia formation; Identification of chemical substances which are subject to registration; Late registration, data sharing and disclosure of test data. Participation in a SIEF Authorisation and restriction procedures and related requirements; Relations with downstream users and distributors; Advice on EU Regulation on classification and labelling of chemicals. Challenging ECHA s and EC s decisions before ECHA's Board of Appeal, the General Court and the Court of Justice of the European Union Was engaged in drafting the Implementation Guidelines for REACH Regulation on Data Sharing (RIP 3.4) Contributor to first REACH book to practitioners REACH Best Practice Guide to Regulation (EC) No 1907/2006 Speaker in numerous conferences on REACH, CLP and chemical legislation around the world Other Experience Compliance with WEEE, RoHS, Water Framework Directive, Waste Directive, Seveso Directive, Batteries Directive EU Raw Materials Initiative Transport of dangerous goods, including ADR and IMDG Emissions trading scheme and renewable energy, including CRS Energy Efficiency Scheme klgates.com 36

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38 Compliance management services for WEEE, Batteries and Packaging

39 Leading international environmental and life sciences consultancy Established 1982 by former advisors to US President Carter 25 offices 49 offices Europe/Russia 1,500 staff North America 88 offices 19 countries 5,000 client engagements per year $280m revenue in offices South America 1 office Africa 9 offices China/Asia Pacific 3

40 Experience and expertise UK Government (DTI/DEFRA) RoHS & WEEE Guidelines, 2003 Web-based system to manage B2B WEEE compliance in EU Member States First organisation to gain licence to operate a WEEE compliance scheme in the UK Wrote several Joint Industry Statements for EU Medical Device Industry and represented MD Industry at European Commission Outsourced compliance management services for WEEE, Batteries and Packaging regulations in EU Member States, 2009

41 EU product environmental regulations Recycling requirements Packaging Directive (as amended) 94/62/EC WEEE Directive 2002/96/EC (WEEE Recast 2012/19/EU) Batteries Directive 2006/66/EC Substance regulations RoHS Directive 2002/95/EC (RoHS2 Directive 2011/65/EU) REACH Regulation 1907/2006

42 Challenges for WEEE, Batteries, Packaging compliance 3 Directives with national variations and differing requirements in 28 EU Member States Other European countries (e.g. Iceland, Norway, Switzerland) also have WEEE, Batteries and Packaging regulations Companies may lack internal resources to understand and manage different compliance requirements for WEEE, Batteries and Packaging in each EU Member State where products are sold. WEEE, Batteries and Packaging regulations in EU 28 continue to change as new requirements are implemented

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44 Waste Electrical and Electronic Equipment (WEEE) Directive 2002/96/EC

45 ENVIRON s WEEE compliance (B2B and B2C) Services Assessment of client products /sales arrangements to identify EU WEEE producer responsibilities Pan-European web-based WEEE Compliance Systems to manage and communicate legally robust B2B collection and recycling arrangements in EU 28 ( Recommend compliant B2C WEEE collection, treatment and recycling options in EU 28 Management of WEEE producer registration and reporting to WEEE Regulatory Authorities in EU 28

46 Batteries Directive 2006/66/EC

47 ENVIRON s Batteries Compliance Services Assessment of client sales arrangements to identify batteries producer responsibilities Identify battery type, weights and chemistries as required to register as a batteries producer in EU 28 Calculate client battery obligations in each country based on sales Provide advice on battery collection, treatment and recycling options in EU 28 Member States Join batteries compliance schemes and pay registration / battery recycling fees on behalf of client Re-calculate and report client battery obligation each year Advise on Article 11 Design for Removability requirements 47

48 Packaging Directive 94/62/EC

49 ENVIRON Packaging Compliance Services Assessment of client sales arrangements to identify Packaging producer responsibilities in all 28 EU Member States Recommended compliance action plan for each EU 28 country Establish compliance arrangements for packaging (or audit client s existing packaging compliance arrangements), including: Recommend the most cost-effective and reliable packaging compliance scheme in each country Calculation of weight of packaging to report to the packaging compliance scheme in each country Calculation of packaging recycling fees payable in each country

50 ENVIRON Packaging Compliance Services Join / manage membership of approved packaging compliance scheme in each country and pay registration / packaging recycling fees on behalf of client fees invoiced to client at cost Re-calculate packaging obligation each year and report packaging obligation to packaging compliance schemes.

51 We can help you ensure compliance across Europe at the lowest cost Identification of your company s obligations for WEEE, Batteries and Packaging across all 28 EU Member States Detailed compliance action plan for each country, as required Assist your company to become fully compliant in each country, including: Calculating your company s WEEE, Batteries and Packaging obligation in each country Recommending the most cost-effective and reliable recycling arrangements / compliance scheme in each country We calculate and compare the registration and recycling fees you would pay by joining different schemes in each country We can also audit your existing WEEE, Batteries and Packaging compliance arrangements to advise whether you are getting best value at lowest cost

52 We can pay your registration and recycling fees and invoice you at cost We can join your company to approved compliance schemes in each country and pay the registration and recycling fees on your behalf We will invoice you for the actual registration and recycling fees We can re-calculate your WEEE, Batteries and Packaging obligation each year and manage your regulatory reporting and compliance scheme membership We will invoice you for the actual membership and recycling fees

53 Without ENVIRON s compliance management services...

54 With ENVIRON s compliance management services

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56 Compliance management services for WEEE, Batteries and Packaging

57 Business benefits for suppliers to use BOMcheck tools to make declarations for REACH, RoHS2 and Conflict Minerals

58 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

59 5 minute video explains REACH Candidate List requirements to Siemens suppliers Released May, 2012 Explains why Siemens encourages suppliers to provide Full Material Declarations (FMDs) To view the video, visit the Siemens website here: and select this link

60 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

61 October 2007: Siemens invited ENVIRON to build BOMcheck Siemens and ENVIRON consulted leading OEMs to develop the technical specification and business plan ENVIRON built a pilot system for testing Siemens encouraged other OEMs to join the Industry Steering Group EU Trade Association COCIR launched BOMcheck, May 2008 COCIR membership includes GE, Siemens, Philips, Toshiba, Hitachi, Agfa, Intel and several other global electronics companies Praised by European Commission BOMcheck is the first system that allows OEMs to reduce the industry burden of REACH and RoHS compliance by compiling a centralised master database of substance data from suppliers Dr Freimut Schröder, Siemens Healthcare and COCIR Environmental Policy Focus Group chair

62 What type of organization should develop and manage this database for OEMs? Independent company with no conflicting business interests Established international offices and sufficient resources Expertise in environmental product regulation Experience in providing web based systems International reputation with Regulatory Authorities

63 Independent expert on environmental regulations with extensive experience of web-based systems UK Govt. (DTI/DEFRA) RoHS & WEEE Guidelines 2003 Web-based system to manage B2B WEEE compliance in multiple Member States. First organisation to gain WEEE compliance scheme licence in the UK Wrote several Joint Industry Statements on RoHS and WEEE for EU Medical Device Industry and represented Industry at RoHS negotiations with the European Commission Joint Industry Guide to REACH compliance for component suppliers & equipment manufacturers Co-Chair of IPC 1752A Standard for Materials Declarations UK National Expert and European Regional Coordinator for IEC Standard. Helped write EN Standard for RoHS2 Technical Documentation Scheme.com available free from

64 Centralised shared web database designed and directed by industry BOMcheck Steering Group Siemens, Philips, GE, Osram, Sony Mobile, Schneider Electric, Toshiba, Agfa, Texas Instruments, TE Connectivity, FUJIFILM Web meeting / conference call every 2 months: Direct development of new functions and features on BOMcheck Coordinate joint activities to engage suppliers (workshops, trainings etc) BOMcheck Substance List Working Group / VT Siemens, Philips, GE, Osram, Sony Mobile, Schneider Electric, Agfa, Bayer, Toshiba, Texas Instruments, TE Connectivity Web meeting / conference call every 2 months to: Maintain one BOMcheck list of restricted and declarable substances Update list as new substances added to REACH, etc

65 More than 570 companies use BOMcheck to gather materials declarations from over 3,500 suppliers for more than 1.6 million parts

66 Supplier account = 300/year Access to BOMcheck guidance and declarations tool to generate and maintain substance declarations for part numbers you supply to your customers Super User Account Manufacturer account = free Access to download all declarations data, e.g. for part numbers you buy from your suppliers

67 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

68 Conflict Minerals Legislation In July 2010, U.S. Congress signed into law the Dodd Frank Wall Street Reform and Consumer Protection Act Section 1502 includes conflict minerals reporting requirements for SECreporting companies (US publicly traded companies) SEC Final Rules published August 2012 Conflict minerals defined as Tin, Tungsten or Tantalum which has been smelted, and Gold which has been refined, after 31 Jan Commonly known as 3TG metals Reporting requirements expected to impact directly about 6,000 SEC reporting companies and indirectly all of their suppliers Companies must report annually whether they are DRC conflict free or Not DRC conflict free. Can declare DRC conflict undeterminable for up to 2 years (up to 4 years for small companies)

69 Is your company in scope? 1. Are you an SEC-reporting company? 2. Are 3TG metals necessary to the functionality or production and intentionally added and contained in a product you manufacture, or contract to be manufactured? No de minimis levels or exemptions for small companies 3. If yes, then conduct a Reasonable Country of Origin Inquiry to determine if 3TG metals do not originate from DRC region or are from recycled or scrap sources (which are also treated as conflict free) Disclose results on company website and file Conflict Minerals Disclosure Form SD with SEC each year If 3TG may originate from DRC region, then conduct due diligence on conflict free status and file additional Conflict Minerals Report

70 Industry compliance approaches EICC GeSI Conflict Minerals Reporting Template Standardized collection of information from suppliers Enables manufacturing companies to carry out supply chain RCOI to identify the smelters for 3TG metals in their products Conflict-Free Sourcing Initiative Conflict-Free Smelter Program Independent, third-party audit tool with a compliance protocol that determines which smelters can be validated as conflict-free ITRI Tin Supply Chain Initiative (itsci) bagging and tagging program in DRC region to trace minerals from the mine to the smelter

71 First fully integrated Conflict Minerals and RoHS, REACH web database Extensive feedback on data management challenges with other web platforms has helped industry develop the first web database which: Provides one integrated tool for suppliers to upload their EICC GeSI Conflict Minerals Reporting Templates at the part level or company level at the same time as they publish materials declarations for RoHS, REACH and other regulated substances. Validates the data in the supplier s EICC GeSI Conflict Minerals Reporting Template and provides immediate detailed feedback to the supplier on how to correct any data validation errors which are preventing upload. Works in partnership with the Conflict-Free Sourcing Initiative to validate any new smelters which suppliers identify so that they can be added to the smelter list and invited to join the Conflict-Free Smelter Program. Enables manufacturers to leverage the Conflict-Free Smelter Program and the upcoming EU Responsible Sourcing Regulations to work towards DRC conflict free status by 2015.

72 BOMcheck data validation and detailed feedback to suppliers Company pilot programs took an average of 3 or 4 interactions with suppliers to achieve complete and coherent EICC GeSI Conflict Minerals Reporting Templates. BOMcheck Industry Steering Group shared the results from their pilot programs to develop a comprehensive set of data validation checks and error messages. BOMcheck carries out these data validation checks automatically Provides immediate detailed feedback to the supplier on how to correct any data validation errors Supplier s EICC GeSI Conflict Minerals Reporting Template must pass all checks before it can be uploaded and shared on BOMcheck

73 BOMcheck and CFSI validate new smelters reported by suppliers Version 2.03a of the EICC GeSI Conflict Minerals Reporting Template now includes > 99% of the world s Conflict Minerals smelters, each identified with a unique Smelter ID. BOMcheck works in partnership with Conflict Free Sourcing Initiative. If the supplier believes they have identified a potential new smelter then Supplier uses BOMcheck to verify basic information with the company BOMcheck follows-up with company and uses CFSI Smelter Identification Questionnaire to collect and check the necessary information to add the new Smelter ID to the smelter list in the EICC GeSI template. BOMcheck provides new Smelter ID for supplier to include in their EICC GeSI template so that it will upload to BOMcheck Conflict-Free Sourcing Initiative will invite the new smelter to join the Conflict-Free Smelter Program.

74 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

75 EU RoHS2 Substance Restrictions apply to each homogenous material in the part Maximum concentration in any homogenous material in the part Cadmium/cadmium compounds : 0.01% Lead/lead compounds : 0.1% Hexavalent chromium compounds : 0.1% Mercury/mercury compounds: 0.1% Polybrominated biphenyls (PBB): 0.1% Polybrominated diphenyl ethers (PBDE): 0.1% Exemptions in RoHS2 Directive Annex III exemptions applicable to parts used in any equipment Annex IV exemptions only applicable to parts which are exclusively used in Medical Devices (Cat. 8) and/or Monitoring and Control Instruments (Cat. 9) Part numbers which claim Annex IV exemption are shown in orange Do not select Annex IV exemption if part could be used in other equipment

76 New RoHS2 technical documentation requirements for Manufacturers Article 7 places new obligations on Manufacturers to draw up Technical Documentation, carry out internal production controls, provide EU Declaration of Conformity and affix CE Marking Technical documentation of internal production controls shall: Specify requirements for product design and manufacture Enable assessment of RoHS conformity for the product Technical documentation shall, wherever applicable, include: A general description of the product Bill of materials Examinations carried out (i.e. materials assessments, declarations from suppliers etc) Test reports

77 Reviewed by Guide to Using BOMcheck and EN for RoHS2 Technical Documentation European Commission RoHS2 Working Group UK Government RoHS2 Regulators UK Government RoHS2 Enforcement Agency Available free-of-charge at

78 HOW TO USE SGS BOMcheck SERVICES TO COMPLY WITH EN 50581:2012 Use BOMcheck to collect documents from suppliers which comply with quality and trustworthiness requirements SGS can: Risk assess parts list for product BOM based on agreed strategy SGS can train suppliers to upload their Materials Declarations to BOMcheck. SGS can also automatically upload any SGS test report to BOMcheck for the supplier if needed. Review a representative sample of the suppliers test reports to verify against EN requirements Prepare SGS RoHS Assessment Verification Report 82

79 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

80 Six lists of substances in BOMcheck Regulatory Compliance Declaration tool

81 Following BOMcheck chemicals guidance for REACH and other substance regulations Screen materials for compliance risk Use BOMcheck guidance to identify materials which could contain restricted or declarable substances. Exclude materials which don t have compliance risk. Ask your materials expert Use BOMcheck detailed guidance to investigate materials with a compliance risk. Check where substances are used, trade names, other chemical names and alternatives. Use FMD tool to check compliance for CAS numbers. Ask your supplier If your materials expert doesn t know, then use BOMcheck detailed guidance to ask specific questions to your supplier. Attach documentation from your supplier to your declaration in BOMcheck Confidential Divison, MMMM dd, yyyy, Reference

82 BOMcheck enables suppliers to eliminate 89 REACH Candidate List Substances 151 substances on the REACH Candidate List (16 December 2013) BOMcheck guidance enables supplier to eliminate 89 substances which are not normally found > 0.1% w/w in materials and parts supplied for use in hardware products and electrical and electronic equipment BOMcheck Substance List Working Group shares chemical knowledge to decide which REACH Candidate List Substances are not normally found > 0.1% w/w in materials and parts Supplier s Regulatory Compliance Declaration is set to compliance = Yes for these 89 substances If supplier answers that they do use substances in a very unusual way (e.g. trade secret, unique process, etc) then supplier required to complete all 151 REACH Candidate List substances individually

83 Materials at risk of containing remaining 62 REACH Candidate List substances Lithium ion batteries, ultraviolet lamps, electrolytic capacitors, ultrasound transducers, ceramic capacitors and actuators Polyurethane Plasticisers, flame retardants and stabilisers (e.g. found in plastics, rubber, sealants, adhesives, textiles, etc) Humidity indicators (e.g. silica gels which change colour when they absorb water) Glass High temperature insulating materials Biocides (e.g. to prevent mould growth inside polyurethane foam) Wood, paper, cotton and other plant-derived materials Yellow and red pigments for plastics and paints PVDF Plastic Specialist paints and coatings Acrylic adhesive glues Materials and parts that are not listed here do not normally contain REACH Candidate List substances > 0.1% w/w (exception is trade secret, unique process etc)

84 Agenda 1. Background, why OEMs need a centralized database 2. Why ENVIRON was asked to build BOMcheck 3. Integrated Conflict Minerals tools with built-in data validation 4. Materials declarations comply with EN requirements for RoHS2 Technical Documentation 5. Chemicals guidance for REACH and other substance regulations 6. Resources available for implementing BOMcheck

85 Supplier training webinars and guidance, tools in Chinese, Japanese, German and English BOMcheck provides monthly introduction webinars for suppliers Explains REACH, RoHS, Batteries and Packaging regulations Demonstrates how suppliers can make declarations in BOMcheck 1.5 hours, free-of-charge, suppliers can attend multiple times All suppliers are required to complete the recorded BOMcheck expert user training when they first login Provides step-by-step demonstration of all tools on BOMcheck BOMcheck tools, help screens, summary guide and detailed user guide are available in Chinese, Japanese, German and English BOMcheck encourages suppliers to practice on demonstration site before they make declarations on live site BOMcheck helpdesk available 8.00am to 7.00pm European time: Phone :

86 Support services available from Tetra Tech and Celestica Launched in 2004, Celestica s Green ServicesTM offering was the first complete product conversion offering for RoHS compliance. Celestica provides supply chain management services to manufacturers who join BOMcheck and sign a Non- Disclosure Agreement for Celestica to use the manufacturer s login details on BOMcheck. Tetra Tech helps companies achieve their product compliance goals through technology implementation and has extensive experience in managing material compliance projects in the automotive, electronic, healthcare and aerospace industries. Tetra Tech provides BOMcheck ENOVIA MCC integration services, consulting services and customised training services.

87 Using BOMcheck API to automate data download to your PLM system BOMcheck API exports data in industry standard formats XML: IPC 1752A International Standard (ENVIRON is co-chair) CSV (tab separated) using IEC PAS naming convention Partner programme and IT Change Request Control Board PTC: connection to Insight/Analytics Enovia: connection to MCC Siemens PLM: connection to TeamCenter Oracle: connection to Agile PLM (TechniData: connection to SAP EHSM)

88 Security arrangements ensure suppliers data is safe BOMcheck contracts include strict obligations on ENVIRON to ensure security and confidentiality of Member s Data Only 3 Security-Approved ENVIRON staff have Administrator access Steering Group companies DO NOT have any special access BOMcheck uses same internet servers as security certifications include SAS70 Type II, PCI DSS Level 1, ISO 27001, FISMA BOMcheck web application security is audited by Siemens Cyber Emergency Readiness Team (CERT) Siemens CERT carry out a 5 day audit each year. The last audit was completed in January 2012

89 Business benefits for suppliers to use BOMcheck tools to make declarations for REACH, RoHS2 and Conflict Minerals

90 ANY QUESTIONS?

91 STOP PRESS CONFLICT MINERALS On 5 March 2014 the EC published a Proposal for a Regulation on conflict minerals due diligence certification Importers of tin, tantalum, tungsten, gold and their ores originating in conflict-affected and high risk areas have the option of self-certifying as a responsible importer Member States will monitor compliance by responsible importers with obligations concerning management systems, risk management, third party audit and disclosure The Commission will publish a list of responsible smelters and refiners The Regulation must be agreed by the European Parliament and the Council of the EU before it becomes law For further details please ask for our client alert klgates.com 95

92 This presentation is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon with regard to any particular facts or circumstances. klgates.com 96