Electronics Compliance Evolution

Dec 11, 2018, 21:21 PM
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November/December 2018

By Katie Pyzyk

Electronics-Compliance-EvolutionHow quiickly does the field of electronics processing change? Bob Akers, enterprise director of the e-Stewards standard at the Basel Action Network (Seattle), compares it to starting a chess game and then going to bed, only to wake up in the morning to find that “somebody was playing chess while you were asleep, and you don’t know where the moves were.” As the business changes, electronics recycling certification standards also are changing to remain relevant and reflect recyclers’ commitment to quality.

These voluntary certification programs have emerged in the past 20 years as a means for electronics recyclers to demonstrate their commitment to best practices in certain areas, including quality, data security, and environment, safety, and health. They aim to “give reputable service providers some validation that they are doing the right things,” says Bob Johnson, CEO and founder of the National Association for Information Destruction (Phoenix), which offers its AAA certification for information destruction. When that program launched in 2000, “the data protection regulations we see today globally didn’t exist,” he says. Those regulations have come a long way in a short time—and the certification must keep up.

Some certification programs, like NAID’s, continuously adjust their requirements as they deem necessary. “There probably has not been a year that has gone by that NAID hasn’t updated or changed its certification” because data protection regulations change frequently, Johnson says. Other programs, like the Recycling Industry Operating Standard™—which last undertook a revision in 2016—plan major overhauls every few years. “Any standard, in order to maintain relevance over time, has to go through some revisions,” says Darrell Kendall, executive director of RIOS for the Global Recycling Standards Organization (Washington, D.C.), which manages it. ISRI developed RIOS to incorporate elements of the ISO 9001 quality standard, ISO 14001 environmental standard, and OHSAS 18001 health and safety standard into a single management standard for recycling facilities. RIOS goes through a re-examination every five to eight years.

One driver of revisions to electronics recycling standards is processors’ increasing focus on refurbishment and reuse instead of recycling for commodity recovery. Until about five years ago, processors most often would dismantle or shred and separate electronics into specification-grade commodities such as metals, plastics, and circuit boards, Kendall says. “Now there are so few electronics recyclers just doing that and not doing some sort of [information technology asset disposition] or refurbishing and repair.”

Necessitating that change in business model were shifts in the electronic product stream. Smaller devices and the growth of the Internet of Things mean modern electronics simply contain less recoverable material. Therefore, traditional recyclers are turning to refurbishment, electronics testing, and repair “to expand and diversify their services to find other ways to make money,” says Corey Dehmey, executive director of Sustainable Electronics Recycling International (Hastings, Minn.), which manages the Responsible Recycling, or R2, standard. Certification programs are adapting and “putting a much bigger emphasis on reuse,” Akers says. “Reuse, with new manufacturing practices, has challenges, too. We also must address data security, risk, and liability to keep our customers happy and comfortable with recycling.”

Companies seeking certification have noticed the changes. Up until a few years ago, “certifications were not as important for refurbishers because they really weren’t built for refurbishers,” says Chris Ko, CEO and co-founder of ER2 (Mesa, Ariz.), which holds numerous certifications, including NAID AAA and R2. “The newer regulations in R2 are definitely more advantageous for refurbishers and will add a lot of value,” he says. The more inclusive conditions “help separate the refurbishers from those primarily scrapping,” he says.

Recyclers and refurbishers—as well as standards organizations—also are navigating alterations to federal and state regulations, especially those pertaining to data protection and destruction. For instance, ITAD businesses that work on hospital electronics must be mindful of modifications to the Health Insurance Portability and Accountability Act. “Data protection regulations are anything but stagnant or stable. It is a continuing conveyor belt of new regulations,” NAID’s Johnson says.

The Return on Investment

Getting and remaining certified can present challenges, some electronics recyclers say, because of the cost and time commitment. “If you’re a small shop and you need these certifications, the barriers to entry can be a little stronger,” says Miles Harter, CEO of Dynamic Lifecycle Innovations (Onalaska, Wis.). But for Dynamic, which holds multiple electronics recycling certifications, including R2 and AAA, “it pays off,” he says. NAID’s AAA certification in particular proved to be “a really important one to set ourselves apart,” he says. Harter and other electronics processors say certifications serve a purpose beyond marketability; they have become, “for a lot of customers, an expectation.”

Standards organizations agree that although legal or regulatory requirements might have driven members to seek certification initially, customer demand is now the more frequent driver. These accreditations give recycling and refurbishment companies access to better electronic devices and contracts, Dehmey says. Further, “R2-certified companies want to work with other certified companies, … which has a compounding effect throughout the recycling chain.”

The standards bodies aim to provide a better return on investment for recyclers and refurbishers than simply a seal of approval. “Nobody likes spending money on this [certification] stuff … [so we’re] doing things behind the scenes and finding those value-adds for them,” e-Stewards’ Akers says. He views his organization’s work to raise awareness and forge partnerships as an opportunity-builder for members. “We can’t close the sale for the recycler, but we can certainly open the doors for them,” he says.

Refurbishers say they find certification benefits on both sides of the supply chain. On one side lies compliance verification for the client providing devices for refurbishment, and on the other is confirmation for the resellers or users purchasing the refurbished products. End-use customers need to ensure the “refurbished device has truly been processed in a way they can be confident that the product they’re getting is exactly what we said it was,” Ko says.

Standards organizations seek the electronics processors’ input during standards rewrites to make sure the standards align with their needs while still upholding the program objectives. Sometimes trying to find terms that satisfy all parties is a demanding task. “We know we have a complicated standard, [and] we are trying to find ways to make it less complex while maintaining those bright lines we do not want to violate,” Akers says. Recyclers recognize the tricky balancing act. “How do you do the right thing while still keeping commerce alive?” Harter asks. “You have to make sure things are done right and there’s tight control, but you also need to innovate and create as much value as possible.”

Much of that value now lies in the fact that certification has become “a minimum requirement” for working in this sector, Ko says.

Recent and Upcoming Changes

Those considering getting or renewing one or more electronics certifications will need to stay abreast of the changes to the standards they’ll need to uphold. The latest developments include the following:

E-Stewards. What many consider the most notable e-scrap certification change this year occurred in October, when e-Stewards adopted the NAID AAA standard, requiring all current and future e-Stewards-
certified recyclers also to become NAID AAA certified. Although BAN launched the e-Stewards program in 2003 as an environmental initiative, “data security and reliability are moving to the front of [our enterprise partners’] concerns, even beyond environmental sustainability,” Akers says.

Adopting the AAA data destruction and device sanitation standard “just makes a lot more sense” than e-Stewards starting from scratch to devise its own such standards and to train auditors, Akers says. The NAID audit style differs from that of several other programs in that it uses unannounced spot audits. E-Stewards added unannounced inspections to its certification in 2015. That change “prepared us to respond to spot audits” that NAID will require, says Ned Eldridge, founder and CEO of Export, Pa.–based ITAD business eLoop. “We’re used to being able to bring visitors into our business and illustrate our compliance on demand.”

E-Stewards also began deploying GPS-based EarthEye tracking devices, which it installs inside bulkier electronics—including servers, printers, and LCD monitors—to track downstream compliance. “We do deploy them without knowledge of the certified e-Stewards,” Akers says. “It’s like having an auditor on duty 24/7.” He calls it a “wonderful marketing tool” because e-Stewards companies that subscribe to the program “can show their clients and prospects their own downstream in almost real time.”

BAN expects to release another new version of the e-Stewards standard in 2019. In the meantime, the program is developing new alliances with other organizations it hopes ultimately could spur increased business, Akers says.

NAID AAA. NAID’s ongoing update process means that “there are dozens of changes” to the program at any given time, and it just went through another round, Johnson says. NAID recently subjected its certification program to a third-party audit to verify that it aligns with the European Union’s General Data Protection Regulation, which passed in May. It made some small alterations based on the audit results, but the expectations largely meshed, Johnson says.

Within the last five years, NAID launched a certification program for companies that erase hard drives for resale. “Up until then, it was fair to look at NAID certification as two separate programs: one is for the physical destruction of media … and the other for sanitization,” or wiping data from electronic media and reselling them, Johnson says. The organization took longer than it anticipated to launch the hard-drive sanitization program because it had to introduce a new way to audit those businesses, and it wanted to get the proper conditions in place from the start, he says. That includes quality-control checks, unique device tracking, and requiring separate software programs for quality control and device sanitization. “The last thing we want is a NAID-certified company putting out hard drives that come back with information on them,” Johnson says.

About a year ago, NAID added another new certification, for data erasure from solid-state memory devices, which “presented a whole host of new issues for us” because those types of devices are “not as consistent in their architecture as a conventional hard drive,” Johnson says. The organization had to create a system to validate that items such as cellphones had been properly erased. Most companies that previously earned the hard-drive erasure certification now also hold the solid-state erasure certification, Johnson says.

RIOS. RIOS’ updated standard includes stronger quality, health, and safety requirements. For example, near-miss incidents now require a root-cause investigation, highlighting the standard’s concentration on “leading indicators rather than lagging indicators” and the “stronger focus on a risk-based management system,” Kendall says. The goal was a standard that “forced recyclers to look at their risks and mitigate those risks to the extent possible,” he says.

GRSO aimed the refresh at ensuring RIOS meets the needs of all recyclers, not just electronics recyclers, “truly making it our industry’s product … [and] applicable to everyone in the industry,” Kendall says. With the recycling industry facing market forces like tariffs, China’s tightened scrap import regulations, and a stronger push for health and safety accountability, “the certification base is changing a little bit from being predominantly electronics to being more forward-thinking recyclers of all commodities,” including metal and paper recyclers, he says.

GRSO also overhauled the RIOS management system implementation guide, which “gives a facility all the tools, templates, instructions, and tricks of the trade in a step-by-step guide through the entire standard,” Kendall says. Previously, implementing the standard was “technical and tough,” he says. The implementation guide now serves as a simple, comprehensive reference tool.

R2. The biggest change to the R2 standard recently is “the exponential growth of certification” and its expansion into more countries, says SERI’s Dehmey. He also has seen a particularly notable uptick in certification for businesses that handle mobile phones. Other changes include initiatives for quality improvements, including spot audits and requiring all R2 lead auditors to go through a rigorous, SERI-provided training class.

SERI generally updates the R2 standard every five years, with the newest update scheduled for release in 2019. Members can expect greater attention to data security and an even more heightened focus on quality, both for reused equipment and materials recovered from dismantled electronics, Dehmey says. The finished product has not yet achieved final approval, but it will “better fit a constantly changing industry,” Dehmey says. “R2 originally was a one-size-fits-all standard, and we’re restructuring it to fit a more diverse environment and to be more scalable and adaptable.”

Some industry participants have raised concerns over a proposed R2 change that they say could weaken the certification’s value. It would introduce a supply-chain mapping technology “to chart the flow of material throughout the downstream recycling chain,” replacing the need for peer-to-peer sharing of the downstream recycling chain when both organizations are R2-certified, says Sean De Vries, R2 director. Third parties would not be able to access the electronic database without permission, making the process “more secure than the current format of sending spreadsheets. … This is a common practice in other sustainability standards that SERI has studied,” De Vries says.

Not all refurbishers are convinced that the change will benefit them. They fear it could create more risk when dealing with downstream firms because it “allows me to just say ‘they’re R2 certified, and I know that the auditor checked their downstreams,’” instead of having to “get downstream vendor information all the way to the commodity level,” which is the requirement currently, says Craig Boswell, president of HOBI International (Dallas). Although the change would address some tracking issues refurbishers face when they are selling products for reuse, not recycling for commodity value, it would do so “potentially at the risk of watering down the standard,” Boswell says.

ISRI members have expressed their concerns to ISRI about the change. The idea that refurbishers “have no idea what happens [downstream] … is troubling for us because we want transparency to the very end,” says Billy Johnson, ISRI’s chief lobbyist, who joined the R2 Technical Advisory Committee earlier this fall. “The easiest, safest thing to do is to leave the due diligence requirement alone,” Johnson says. If the change does go through, ISRI would seek “more clarification … to make sure the refurbisher is not going to be held liable for someone else’s decisions,” he says. ISRI understands why SERI is proposing the change, he adds—“they’re trying to be a one-stop shop, which is a nice thing, but we’re not sure it settles the contract.”

SERI doesn’t see liability risks in the proposed change, De Vries says. “I think there’s maybe misunderstanding” of the intent, he says, and additional communication and education prior to final approval could solve the problem. “We certainly want to provide all the right tools to ensure that the materials are being handled properly by the standard, being tracked properly, and accounted for,” he says.

Despite this concern about the proposed downstream due diligence change, “I’m a big believer in R2,” Boswell says. “One of the reasons … is the excellent work they’ve done on making downstream due diligence a focus” thus far, and in making the standard more applicable to a variety of business models, he says.

With the importance electronics processors place on certifications to secure and keep customers, it’s no surprise that major changes can cause them concern. Dynamic Lifestyle Innovations’ Harter urges companies to get involved in the standard-making bodies and to provide feedback whenever possible. “If you’re actively involved through trade associations, you’re going to have more input than if you just sit on the sidelines,” he says. “Get proactive, and be involved in various committees and organizations to help drive that change for something that’s important to your organization.”


Katie Pyzyk is a contributing writer to Scrap.

Certification programs for electronics processors are evolving almost as fast as the electronics industry itself. Recyclers and refurbishers say they must adapt despite the difficulty and cost because certification is the new industry normal.
  • 2018
  • Nov_Dec

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