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June 04, 2002
Electronics and Appliances Sector Rated Highly for Environmental Performance
by William Baue
German research firm also finds, however, that there is much room for improvement in the sector's
social performance.
SocialFunds.com --
Last week, the Munich, Germany-based social and environmental research firm Oekom Research AG released another in its series
of "Corporate Responsibility Rating" sector reports. This most recent report evaluates the world's
top 16 manufacturers of office electronic equipment and domestic appliances. The industry received
significantly higher ratings for environmental performance than social performance. This may be
because new electronics and appliance recycling laws in Japan and the European Union (EU) are
forcing companies to develop stricter environmental practices. Specifically, the laws encourage
manufacturers to integrate recycling into product design, as the regulations ensure that products
will be returned to the company after being used by consumers.
 Oekom's Corporate Responsibility Rating assesses the
environmental and social performance of companies by examining 200 criteria. Companies are graded
on a scale from A+ to D-, with A+ being the best possible score. The electronics and appliances
sector scored relatively well in overall environmental performance, earning a B-. The report
particularly applauded the sector for its progressive innovations that facilitate the recycling
process.
"The equipment can be dismantled [and then] easily and quickly upgraded," said
Frank Werner, the Oekom researcher who performed the analysis. "This prolongs its useful life and
can stem the flood of obsolete equipment a little."
Japan's new household electric
appliance recycling law, implemented in April 2001, and the EU Parliament's current draft of a
similar law hold manufacturers responsible for recycling their electric appliances. However, the
two laws differ significantly in where they place the economic onus for recycling.
The
Japanese electric appliance recycling law, called the "Japan model," calls on consumers to foot the
recycling bill when they return the appliances to retailers. However, critics point out that
consumers wary of shouldering the economic burden of recycling may divert used appliances into
illegal dumps. Also, the development of a large market for used appliances could hurt
manufacturers that have established recycling centers. That is because the centers need to receive
a large number of appliances to keep costs down. The Tokyo metropolitan government suggested that
the Japanese law, which covers television sets, refrigerators, washing machines, and air
conditioners, shift from a pay-after to a pay-before scheme to circumvent these diversions.
The EU law, which falls under the rubric of "waste electrical and electronic equipment" (WEEE),
places the economic responsibility on manufacturers for collecting and recycling used electric
appliances. The recycling of "orphan products," or products manufactured by companies that then
disappear, presented a difficulty for the law's authors. The legislators solved this problem by
requiring existing companies to share the burden of recycling orphans. To prevent companies from
avoiding recycling costs by closing shop before their products were returned, the law also
established an upfront fee to cover future recycling. The law's authors also outlawed the practice
of installing "clever chips" that seek to buoy the new market by preventing products, such as
ink-jet cartridges, from being reused.
The trend toward legislating recycling is pushing
the office electronics and appliances sector to create innovative practices for product recycling.
Apparently, this challenge has inspired the industry to advance its environmental performance much
more progressively than its social performance. The Oekom study revealed the sector's dismal
record for employing women in management positions, especially at Japanese firms. Sharp and Toshiba, both of which scored well
with an overall grade of B, have a mere 0.5 percent of their top executive positions filled by
women. Oekom compares this to Xerox, the U.S.-based rival that
employs 31 percent women in the upper echelon of its management. Overall, the electronics and
appliance sector scored a C- on its social rating.
"Despite the poor social performance,
the overall results of the study are encouraging," said Mr. Werner. "With an average score of C+,
manufacturers of office equipment and domestic appliances showed themselves to be more progressive
than companies in many other sectors."
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SRI World Group, Inc. All Rights Reserved.
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