The electronics industry in a new regulatory climate: Protecting the environment and shareholder value

With the adoption of the Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) Directives in February 2003 and their coming into force in August 2005 and July 2006, respectively, the European Union has paved the way toward greater environmentaI responsibility and sustainability in the electronics industry. The directives require complete phase-out by July 2006 of several of the most toxic chemicals commonly used in the electronics industry - lead, cadmium, hexachrome, mercury, and two brominated flame-retardants. In addition, companies are required to assume responsibility for their products at the end of their useful lives. Other major markets such as Japan, Taiwan, China and California have initiated similar legislative and voluntary requirements. What does this all mean for electronics companies and their shareholders? This paper provides an overview of recent environmental requirements as they relate to electronic component manufacturers. Results of background research and a survey conducted by Citizens Advisers are presented to evaluate industry preparedness to meet the new environmental requirements. The authors found that many suppliers are actively working to meet the requirements and build a stronger market position, however the effort is not uniform across all companies. Producers who are lagging in their compliance efforts may incur higher costs or market exclusion. The paper concludes with recommendations on what role investors can play to promote greater environmental responsibility in the electronics sector, while at the same time helping to increase shareholder value. © 2004 NetLogex, LLC. All rights reserved.