Increasingly, electronics design and manufacturing decisions are being driven by the worldwide proliferation of government regulations concerning the environment, sustainability, and other ethical considerations. These regulations vary widely among nations for each industry, so a product that is approved for market in one country may be rejected in another. As if that wasn’t complicated enough, electronics manufacturers also have to cater to the idiosyncrasies of diverse consumer bases.
Whether for designs in medical, transportation, industrial, or defense and aerospace markets, regulations guide everything in the product life cycle. Their impact is felt from initial selection of materials to power consumption, emissions, and, ultimately, waste and recycling. Passive components, critical to most electronic products, need to be designed according to a sound strategy. Resistors, magnetic components, and optoelectronic devices all must address environmental compliance efficiently and cost effectively.
Clearly, the financial health of electronics manufacturers depends on a sound strategy for environmental compliance. It’s a burden we must bear, for the alternative is to pay the hefty price of non-compliance, whether counted in fines, penalties, recalls, or lost business.
In The Beginning
The European Union’s Restrictions on Hazardous Substances (RoHS) was the first environmental legislation to have a major impact on component manufacturers. EU directives and their ratification into national laws compelled component suppliers to use smaller quantities of harmful metals like lead and cadmium in our products. Ten years on, lead-free devices are ubiquitous, and EU RoHS compliance is pretty much a given.
But RoHS legislation has proliferated and evolved, with comparable regulations being introduced in China, Japan, South Korea, and Turkey, as well as in California and other states in the U.S.
China’s RoHS (officially known as “Administrative Measure on the Control of Pollution Caused by Electronic Information Products”) is having the biggest impact on component manufacturers, simply because of the size of the market it covers. But its scope is different from European legislation, as it includes a different range of products. In China, automotive electronics and radar equipment, which are currently excluded from EU RoHS, are included. Meanwhile, EU legislation regulates toys and many domestic appliances that are outside the scope of China’s RoHS.
Furthermore, China’s regulation does not allow exemptions; labels, marks, and disclosure are mandatory. For those failing to comply, the penalties differ from EU RoHS. Everyone in the supply chain, including relevant government officials, has responsibilities and is subject to penalties.
REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals) is the other key environmental consideration for electronics manufacturers. This EU regulation addresses the production and use of chemical substances and their potential impacts on both human health and the environment. Some call it the strictest law to date regulating chemical substances, and it will affect industries throughout the world.
When fully implemented, it will require all companies manufacturing or importing chemical substances into the EU (in quantities of one ton or more per year) to register these substances with the European Chemicals Agency. More crucially for electronics manufacturers, REACH also requires suppliers to notify the agency of any “substances of very high concern” (SVHC) in their products if the total quantity used is more than one ton per year and the SVHC represents more than 0.1% of the mass of the object.
As with RoHS, regulations similar to REACH affect markets around the globe including the U.S., South Korea, and China. China’s revised version of the “Provisions on Environmental Administration of New Chemical Substances,” also known as “China REACH,” goes further than the European legislation in that suppliers need to submit new chemical substance notification to the authorities irrespective of annual tonnage.
The regulatory environment is set to become even more complex as environmental laws are enacted in markets such as the U.S., Australia, and Turkey, soon to be followed by the Indian subcontinent, South America, and African nations.
Additional legislation, focusing on other ethical issues, is also becoming more common. Precious metals in particular are subject to international regulations, voluntary and statutory, related to responsible sourcing of minerals. Much of the concern is focused on the use of resources from regions in an around the Democratic Republic of the Congo (DRC). Like “blood diamonds,” the mining of tantalum, tin, tungsten, and gold helps to fund civil war in the region, leading to exploitation of the local populations and extreme violence against them.
To counter this, the Conflict Mineral Law requires U.S. companies to disclose the source of these minerals in their products. While it does not apply to non-U.S. or non-quoted companies, the requirement for disclosure ripples nearly all the way down the line of supply. On the voluntary side, companies such as TT electronics that are members of the Electronic Industry Citizenship Coalition (EICC) are bound by a code of conduct that requires:
- policies to ensure their products do not use conflict minerals
- performance of due diligence on the source and chain of custody of these minerals
- provision of due diligence measures to customers upon request
In addition to environmental and ethical concerns, economic factors driven by raw materials are coming into the equation. For example, the scarcity of rare earth metals has become a sensitive economic and political issue. The supply chain has been hit by dramatic price rises, fueled by China’s recent restrictive quotas on rare earth exports. (It has a near-monopoly, shipping around 95% of the world’s supply). The demand for these elements is growing, as they are (ironically) used in wind turbine generators and motors for electric vehicles.
Higher costs and, more crucially, uncertain supply of key elements pose potential obstacles for customers, which is why they should take a critical look at suppliers’ track records in managing the whole supply chain, the strength of their relationships with raw material suppliers, and the long-term agreements they have in place.
Information Is The Key
The diversity and complexity of environmental- and ethics-based regulation has created a significant change in how component manufacturers deal with these issues. Without a major shift in the organization, it would not be possible to ask all the right questions of our suppliers or to respond to the influx of information requests from customers. We couldn’t tick all the boxes today’s legislation demands.
For many companies, like TT electronics, the way forward has been to establish a central database of materials and employ specialists to maintain it. Management then can know what materials are used in what products and to pass that information on to those who need it. As part of the manufacturer’s Environmental Management System (EMS), the database is monitored, reviewed, and constantly improved so it can verify legal and other requirements to external interested parties.
There are further benefits to centralizing materials information tasks. For one, it frees engineering teams to focus on key activities instead of a mountain of materials-related paperwork. Also, it’s easier to measure workload accurately, to allocate costs and resources to environmental issues accordingly, and to identify any product issues arising from using green materials. Contrary to many expectations, environmental measures at TT electronics have actually improved products rather than creating tradeoffs because of the synergy between controlling sources and materials for compliance reasons and doing so to enhance product quality. For customers it’s a boon, not a burden.
As component manufacturers learn to cope with the obligations of environmental compliance, they can help their customers gain green credentials too. An obvious example is developing devices with lower power consumption, smaller footprint, and lower weight (Fig 1). Furthermore, the development of new passive components that improve power management delivers environmental rewards one stage higher up the supply chain (Fig. 2). And, supplying components that meet the needs of green technologies like hybrid electric vehicles and renewable energy offers direct returns to environmentally conscious consumers.
Nothing could better demonstrate how environmental compliance and product quality go hand in hand. Shouldering the burden of environmental compliance brings benefits all around.