© Copyright 2014 by K&L Gates LLP. All rights reserved.

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

Thursday 5th March 2014

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Panellists/Speakers: Chaired by Sebastian Charles Dr Aidan Turnbull Bruce A Gordon Raminta Dereskeviciute

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

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© 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

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)

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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

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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’)

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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

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WEEE OVERVIEW

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Source: http://ec.europa.eu/environment/waste/weee/pdf/faq_weee2.pdf

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

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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

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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

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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

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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

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

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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?

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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

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ROHS II OVERVIEW

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Source: http://ec.europa.eu/environment/waste/rohs_eee/pdf/faq.pdf

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

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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

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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

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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

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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

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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

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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

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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

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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

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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 2011 –

2012 Recommendations made to ECHA forum, ECHA, industry and

enforcement authorities/ inspectors REACH Information Portal for Enforcement (RIPE)

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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

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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

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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

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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

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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

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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)

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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

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CONTACT US

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Raminta Dereskeviciute +44 20 7360 8264 raminta.dereskeviciute@klgates.com

Sebastian Charles +44 20 7360 8205 sebastian.dereskeviciute@klgates.com

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

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Compliance management services for WEEE, Batteries and Packaging

Leading international environmental and life sciences consultancy

• Established 1982 by former advisors to US President Carter

• 1,500 staff

• 88 offices

• 19 countries

• 5,000 client engagements per year

• $280m revenue in 2012

49 offices North America

25 offices Europe/Russia

9 offices China/Asia

Pacific

1 office Africa

3 offices South America

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Experience and expertise

• UK Government (DTI/DEFRA) RoHS & WEEE Guidelines, 2003

• Web-based system to manage B2B WEEE compliance in EU Member States www.b2bweee.com, 2005

• First organisation to gain licence to operate a WEEE compliance scheme in the UK www.b2bweee-scheme.com, 2007

• 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

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

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

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

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 (www.b2bweee.com)

• 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

Batteries Directive 2006/66/EC

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

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Packaging Directive 94/62/EC

• 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

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.

ENVIRON Packaging Compliance Services

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

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

Without ENVIRON’s compliance management services ....

With ENVIRON’s compliance management services

www.b2bweee.com

Compliance management services for WEEE, Batteries and Packaging

Business benefits for suppliers to use BOMcheck tools to make declarations for REACH, RoHS2

and Conflict Minerals

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

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:

https://w9.siemens.com/cms/supply-chain-management/en/supplier-at-siemens/basic-information/environment/product/Pages/stewardship.aspx#

…and select this link

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

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

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

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

www.B2BWEEE.com www.B2BWEEE-

Scheme.com

2005

Wrote several Joint Industry Statements on RoHS and WEEE for EU Medical Device Industry and represented Industry at RoHS negotiations with the European Commission

2007 2008

Joint Industry Guide to REACH compliance for component suppliers & equipment manufacturers

available free from www.BOMcheck.net

2008

Co-Chair of IPC 1752A Standard for Materials Declarations

2010

UK National Expert and European Regional Coordinator for IEC 62474 Standard. Helped write EN 50581 Standard for RoHS2 Technical Documentation

2012

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 62474 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

… to gather materials declarations from over 3,500 suppliers for more than 1.6 million parts

More than 570 companies use BOMcheck

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

Manufacturer account = free Access to download all declarations data, e.g. for part numbers you buy from your suppliers

‘Super User’ Account

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

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 SEC-reporting 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 2013. 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)

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

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

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.

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

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.

BOMcheck and CFSI validate ‘new smelters’ reported by suppliers

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

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

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

Guide to Using BOMcheck and EN 50581 for RoHS2 Technical Documentation

Reviewed by

–European Commission RoHS2 Working Group

–UK Government RoHS2 Regulators

–UK Government RoHS2 Enforcement Agency

Available free-of-charge at www.bomcheck.net/rohs

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HOW TO USE SGS BOMcheck SERVICES TO COMPLY WITH EN 50581:2012

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 50581 requirements

Prepare SGS RoHS Assessment Verification Report

Use BOMcheck to collect documents from suppliers which comply with quality and trustworthiness requirements

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

Six lists of substances in BOMcheck Regulatory Compliance Declaration tool

Confidential Divison, MMMM dd, yyyy, Reference

Following BOMcheck chemicals guidance for REACH and other substance regulations

• Use BOMcheck guidance to identify materials which could contain restricted or declarable substances. Exclude materials which don’t have compliance risk.

Screen materials for compliance risk

• 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 materials expert

• 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

Ask your supplier

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

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)

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 50581 requirements for RoHS2 Technical Documentation

5. Chemicals guidance for REACH and other substance regulations

6. Resources available for implementing BOMcheck

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:

– E-mail: bomcheck@environcorp.com – Phone : +44 1225 748458

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.

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 61906 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)

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 www.Amazon.com 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

Business benefits for suppliers to use BOMcheck tools to make declarations for REACH, RoHS2

and Conflict Minerals

ANY QUESTIONS?

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

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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.

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