Bracing for the WEEE Directive

Bracing for the WEEE Directive

Also this month:

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I'm pleased to take over the hot seat at Ask the Experts. Each month we'll respond to the most interesting, and hopefully challenging, questions put forward by our readers -- that's you, so please let us know your issues and challenges in advancing sustainable practices in your business, organization or community. (Just send your questions to [email protected].)

("We" is me, the Natural Logic team, and several of our friends and associates, including Jen Boulden, Gary Lucks, Jackie Ottman, Gifford Pinchot, and others.)

You can also find my monthly strategic columns on business and environment on my Web site and irregular shorter writings on my Weblog.

On to this month's questions!


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The European Union's WEEE (Waste Electrical and Electronic Equipment) takes effect August 13 2005; RoHS directive (Restriction on Hazardous Substances) kicks in July 1 2006. Are WEEE ready?

Gil:
WEEE requires end-of-life take-back and recycling of Electrical and Electronic Equipment sold in Euope. RoHS will restrict the sale of equipment containing lead, mercury, cadmium, hexavalent chromium, and polybrominated biphenyls or polybrominated diphenyl ethers.

The directive has been rippling through the electronics industry for some years, as major brand companies pass the requirements though to their supply chains. But don't think you're off the hook just because you're not an "electronics" company -- since many products now have electronics embedded in them. Toys, to name just one un-obvious example. And future EU directives will address product energy efficiency, chemical constituents, and more.

There are many tools and services available to help companies grapple with the EU directives, and with Design for Environment challenges in general.

Some resources:
Industry readiness -- or lack thereof -- is cause for concern, considering that Europe represents about a third of the electronics market. A recent survey by Design Chain Associates reported that "Fewer than 20% are actively selecting compliance schemes, while 5% have selected compliance schemes. The survey also revealed that 23% percent haven't even started and 17% are 'completely confused.'"

The confusion is understandable. Design Chain president Mike Kirschner notes: "Direction on how to comply with WEEE is sparse and confusing in most EU member states." But even more concerning: "60% of respondent companies are doing nothing to reduce WEEE costs."

Is this a big deal? Maybe not. EU states may provide extensions and exemptions. But I wouldn't want to base my strategy on that possibility. Not when about a third of tech industry revenues are earned in the European market.

Here's the bad news. The directives and the impending deadlines have been known for years. The political momentum has been evident for decades. The driving science, articulated by The Natural Step and others, has been known for centuries. And, for those who've missed the signs, the EU periodically tips its hand with documents like Towards a Thematic Strategy on the Sustainable Use of Natural Resources (released October 2003).

So, homework for everyone: When you find yourself surprised by events, take a moment and ask yourself whether you've been paying attention to the right things. (And whether you can count on your competitors doing the same.)

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What is Scenario Planning? How is it useful?

Gil:
Scenario Planning is an approach to preparing people and organizations to more effectively face uncertain futures.

Scenario Planning was developed to a fine art at Royal Dutch Shell under the leadership of Arie de Geus. (Shell analysts, says Wikipedia, "publicly estimated that this planning process made their company the largest in the world.") Peter Schwartz, who worked with de Geus at Shell, co-founded Global Business Network, with scenario planning a a key arrow in its quiver. Schwartz's book, The Art of the Long View, describes the approach; the Wikidpeida posting offers some additional references.

As I blogged recently:
With futures uncertain, a prudent company, executive, investor or person will make some investment in being prepared for contingent futures that have large potential impact, even if their perceived likelihood is relatively low.

If oil goes to 60 dollars a barrel -- wait a minute, it has! If (when?) oil goes to 100, what would be the impact on your business -- your own cost structure, the cost structure of your supply chain and the reliability of critical inputs (from raw materials to commuting employees).

At issue is not only the projected likelihood of such events, but the potential impact -- and the costs of preparing for or attempting to prevent those impacts.
Scenario Planning, according to Wikikpdeia, "is in large part an adaptation and generalization of classic methods used by military intelligence.

Any particular scenario is unlikely. However, good analysts select the features of scenarios so that the features are both possible and uncomfortable. Scenario planning can therefore help policy-makers anticipate hidden weaknesses and inflexibilites in organizations and methods. When found years in advance, the weaknesses can be repaired or reduced more easily and more correctly than if a similar real-life problem should present as an emergency. For example, a company may discover that it needs to change contractual terms to protect against a new class of risks, or collect cash reserves to purchase anticipated technologies or equipment.

Therefore, the flexible plans to cope with similar problems can have real future value.
The point, then, is not to predict the futures -- that's a fool's quest -- but to:
  • consider the spectrum of possible futures you might face (the surprises as well as the likely ones);
  • develop a spectrum of possible responses that will be most adaptive;
  • train your perceptions and reflexes to be able to quickly and appropriate respond to emerging trends that may look random to others, but look to you like a part of a pattern that you've seen before.
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Who's taking the lead on combating global warming?

Gil:
Globally, it's the European Union -- with collective and national goals far more ambitious than in the U.S., and aggressive programs in many countries to meet those goals -- and a growing number of business leaders, like the utility CEO who is now calling for carbon taxes.

Sectorally, the insurance industry -- and especially the reinsurance industry -- which is less motivated, perhaps, by the scientific "debate" than by the net present value (NPV) of the potential future risk that their actuaries have calculated. (Find an example here.)

In the U.S., it's 173 cities (at last count) that have joined the Mayors Climate Protection Agreement, pledging to "meet or beat the Kyoto Protocol targets" in their own communities.

Bottom line, it's the purchasing decisions each of us makes, both individually and in our institutional capacities, that have the potential to move markets.

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Why is innovation so hard to sell?

Gil:
That's the title of a recent posting at Dave Pollard's always intriguing Save the World blog.

It's a critically important question since "selling innovation" -- or nurturing, accelerating, extending innovation -- is one of the core tasks of sustainability advocates. (Not the only one, of course. Innovations not only need to be created, they need to be embraced and embedded in day-to-day practice, which can be even more challenging.)

Dave offers four reasons:
  1. People don't like to change.
  2. Everyone thinks they can do it themselves.
  3. It's a "dragon" issue, so it involves a lot of trust.
  4. It requires understanding of how and why the market has moved on without you.
Darn these fickle and irrational customers!

What's happened here? We've defined the [customer] demographic and affinity segments in terms of what we have to sell, rather than how these affinity groups define themselves. And we've defined their needs in terms of the features and attributes we can offer, instead of much more broadly in the emotional terms that the customers define and recognize their needs themselves.... Once we get fixed in our mind what our demographic targets are and what needs we're filling, we start to define our customer in the context of what we can sell to them, and we can't shake that mindset. Meanwhile, the customers are defining themselves in completely new ways constantly -- as the culture changes, as they get older, as their needs and wants evolve. While we were focused on them, the customers have left us behind.
It's a variant on the age-old admonition to sell benefits, not features -- an obvious truth, one that everybody knows, and one that's more honored in the breach.

Sharon Drew Morgen takes the issue a step further, arguing that the challenge isn't learning how to sell, but learning how your customer buys. I'd say that perspective applies to these internal marketing challenges as well.

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Gil Friend, systems ecologist and business strategist, is president and CEO of Natural Logic, Inc. -- offering advisory services and tools that help companies and communities prosper by embedding the laws of nature at the heart of enterprise. Sign up online to receive his monthly column via email.