A Research Project of
The Centre for Sustainable Design

Developing competencies for
Integrated Product Policy (IPP):

A focus on the electronics sector

IPP-EPD Workshop 1 Report
21st June 1999.

[Return to: IPP-EPD Workshop Reports]

Content:

  1. Objectives
  2. Presentations
  3. Main questions
  4. Key issues
  5. Key outputs
  6. Concluding remarks
  7. Notes
The workshop was chaired and facilitated by Professor Martin Charter (CfSD, Co-ordinator) and  Inga Belmane (CfSD, Researcher).
 

1 Objectives

The main goal of the workshop was to discuss the current IPP debate from a stakeholders perspective (industry, retailers, consumer organisations and environmental NGOs). The objectives of the workshop were:
  • to clarify IPP definitions and objectives
  • provide examples of national policies
  • interpret IPP for industry
  • identify competence, information and knowledge gaps.


2 Presentations

The workshop was chaired by Martin Charter, Co-ordinator, CfSD.
  • IPP: EC perspective: Inga Belmane, CfSD
  • IPP: Industry perspective: Andrew Baynes, Sony International (Europe) Gmbh
  • The Dutch approach: POEM (Product Oriented Environmental Management): 

    • Christina Rocha, Delft University of Technology, The Netherlands.


3 Main questions

The delegates posed a range of questions in relation to IPP:
  • What is the impact of IPP on the supply chain management?
  • How do you make IPP happen?
  • What is the role of governments in the demand/supply side issues of IPP?
  • What is the role of consumers and consumer organisations in influencing consumption?
  • How to integrate economy, environment and innovation?
  • What is a better IPP framework (tools, influences) to green the market?
  • Should companies be responsible for sustainable consumption?
  • What channels should be developed for stakeholders’ dialogue?
  • How will IPP be incorporated in legislation?


4 Key issues 

Throughout the workshop a range of key issues were discussed.

4.1 IPP definitions

The significant developments, since the publication of the Ernst and Young report in March 1998, have been:
  • services are now included
  • the principle of continuous improvement has been incorporated
  • lifecycle perspective has been introduced.

4.2 IPP development scenarios

How will IPP be incorporated into legislation? Will it stay as a policy framework, passing the main responsibilities to member states (subsidiarity principle)? Or will it be a Directive? There seems to be a trend that national environmental product policies are developing faster than IPP at the European Commission (EC) level.
 
 

4.3 IPP agenda at EC

The Environmental Directorate (DGXI) at the European Commission (EC) is preparing a Green Paper, which is expected to be published in the 2nd quarter of 2000. It is seen as a major step in the debate on IPP. It appears that the next discussions will only take place after the Green Paper. DGXI  is looking for stakeholder contribution to the Green Paper and has been running stakeholder discussion/consultation sessions (e.g. session with representatives of industry and retailers, and one with consumers and NGOs).

The further developments of IPP at an EC level are uncertain, since the Finish presidency (July 1999 – January 2000)) did not appear to be very interested in speeding-up the development of process. The next presidency will be Portugal (January, 2000 – July 2000), which seems to be a similar case. Some participants were sceptical about the progress of IPP at the EC level (e.g. UK Consumer Organisation) –‘will it ever happen?’ However, the background paper on the informal meeting of Environmental Ministers at Weimar, May 7-9, 1999, [1] suggests that politically IPP has been given the ‘go ahead’.

At present, IPP is a European debate. There are indications outside Europe that political barriers may be introduced in an attempt to slow down the IPP development process, i.e. the U.S. may lobby against IPP, by using a ‘barriers to trade’ argument.
 
 

4.4 IPP implications for stakeholders

4.4.1 Industry

IPP can offer certain opportunities for industry to promote greener products more efficiently. It also can cause barriers to businesses. The following opportunities and barriers were recognised by the delegates:

Opportunities

Increase in sales
Public purchasing contracts are demanding certain environmental requirements. Without complying with them, companies can loose potential sales opportunities. ‘Business to business’ customers can pose similar demands through the supply chains.

Additional value
Environment can ‘add (extra) value’ to the product, e.g. more energy efficient washing machine results in less costs for consumers. According to a retailer, some environmentally aware customers are even ready to pay a small ‘green premium’ (e.g. 10-20 pence in UK).

Preparedness for new regulations
Companies who have established eco-product development and management programmes can be better prepared for the future taxes and regulations.

Constraints/barriers
Potential emergence of new taxes and regulations
Direct regulations and taxes are the measures most often applied in the environmental policy. The industry representatives feared whether it might be the same case with IPP.

Trade barriers
The high European standards can raise problems in relation to barriers to trade: can the suppliers outside Europe achieve higher European environmental standards? 

4.4.2 Environmental NGOs

What is the role of NGOs in IPP? Can NGOs undertake a role of education/information? 

4.4.3 Consumers and consumer organisations

The need for an independent, reliable information source was expressed by workshop delegates. Listening only to consumers can result in neglecting other important issues or a misperception of environmental aspects of products (for example, it is perceived that use of metals in electronics is better than plastics; however, both of these materials have their own advantages and disadvantages and there is no single answer as to which of these are environmentally preferable from a lifecycle perspective). Consumer organisations and advise centres can play a role of information and guidance provider.

4.4.4 Retailers

The retailers largely influence the choice of the products on the marketplace and are important gate-keepers between producers and consumers. They are influential actors in the education and information of consumers.

The opportunities might arise from IPP for retailers to have different market strategies, which are focused on environmental, social and ethical issues. For example, ‘Body Shop’ is a good example how to differentiate in the market by social/ethical considerations. 
 
 

4.5 IPP toolbox

The current proposed IPP toolbox is a mix of different policy measures, aimed at ‘greening’ consumption (demand side) and ‘greening’ product development (supply side). The workshop participants agreed that there will not be a ‘one fits all’ solution. However, the current toolbox needs more systematic considerations in which combinations of different measures will be applied.

Economic (e.g. taxes, product charges) and direct regulatory instruments (e.g. ‘producer responsibility’, bans, product standards) have been used in environmental policies for a relatively long time. Industry representatives feared that IPP discussions might result in new taxes and regulations and that the potential of other instruments has not been explored, e.g. negotiated  agreements. 

One of the leading principles of IPP is the involvement of all stakeholders. The IPP debate focuses more on the concept of ‘shared responsibility’, where different tasks are shared by different stakeholders along the product’s lifecycle. It is also clear that industry is in more favour of a ‘shared responsibility’ approach instead of passing all responsibility to the producer, which is the case of the proposed draft WEEE Directive. However, these tasks and responsibilities (e.g. economic, physical, information) must be clearly defined. It also means that all stakeholders must ‘buy into’ the process. 
 
 

4.6 IPP : product development and management

The issues below were highlighted as important on the supply side of IPP. 

4.6.1 IPP and supply chain management (SCM)

Supply chain management (SCM) is particularly important in the electronics sector, since a lot of companies are no longer manufacturers, but ‘systems integrators’. The EC discussions have not addressed these issues so far. Considering eco-product development issues along the supply chain, the following issues were raised:
  • The international aspects of supply chain: where are the majority of electronics component suppliers located? The research in the UK shows that it has been hard to find component suppliers based in the UK (e.g. in counties of Surrey and Hampshire). Are they now in the Far East? [2] 
  • Should companies educate and train their suppliers worldwide (e.g. producing eco-design checklists in Chinese)?
  • Can suppliers world-wide comply with the European standards? For instance, is it possible for a component manufacturer in China, to ensure 5% recycled content in plastics, as was proposed in the early drafts of the EC Waste Electrical and Electronic Equipment (WEEE) Directive?
  • The above research also showed that amongst electronics component suppliers there is very little or no awareness about business and environment issues, eco-design, and even the up-coming Waste Electrical and Electronic Equipment (WEEE) Directive in its 2nd draft.
  • How to get information passed down the supply chain? Are manufacturers of final goods able to educate all their suppliers (when there may be thousands of components in one final electronics equipment?), and what is the cost?
  • The supply chain is a potentially powerful channel to influence small and medium sized companies (SMEs) to improve their environmental performance since SMEs are more likely to listen to their customers.

4.6.2 Innovation

How can IPP influence innovation? Whether it is about continuous improvement of existing products (e.g., eco(re)design) or eco-innovation (of new products)? 

4.6.3 Orientation towards services

In general, it has been assumed that product replacement by services is an environmentally preferable option. However, there is a big knowledge gap concerning services (evaluation of environmental impacts, tools for eco-product development in service sector, etc.). 

4.6.4 Eco-product development and EMS

The Dutch government and industry has come up with the concept, which links environmental management systems and product development – POEM or Product Oriented Environmental Management. The reasons for introducing the POEM concept are:
  • Around 1000 eco-design projects have been completed in the Netherlands up to now, and the majority of them appeared to be ‘ad hoc’ projects without continuation,
  • Therefore, a more systematic approach was needed; it is important to recognise that eco-design has both technical and management considerations.
The preliminary findings from experience with POEM are:
  • POEM can easily be integrated into existing environmental management systems,
  • POEM requires higher co-operation amongst different business functions,
  • The business benefits of POEM are not clear,
  • What is the actual ambition of POEM in terms of eco-innovation? How can POEM stimulate innovation?
The current developments regarding inclusion of product management into formal EMS schemes are:
  • ISO 14 001 is considering the development of DfE (Design for Environment) technical report for informative/educational purposes only (i.e. guidance document)
  • EMAS: discussions have just started.

 

4.7 IPP: Consumption issues

The delegates found that the consumption side of IPP has been less addressed when compared against environmental product policies.  There was a consensus amongst the delegates that it is crucial to influence the consumption side but it was also realised by participants that it is a hard and difficult task. The importance of the consumption side is crucial in order to reduce environmental impacts from products.  The following issues were raised:
  • How can companies influence consumption side?
  • The consumer needs information and guidance about products. How can a consumer get it and what kind of information do consumers need?
  • How are companies communicating with their customers?
  • How to raise basic awareness on the consumption side?

4.7.1 Communications with customers

In order to find out customer needs, better dialogue with them is necessary. Conventional market research techniques have not worked. The communication function with customers is usually carried out by marketing and sales functions, which are some of the least  aware ‘green’ business functions. That leads to the lack of knowledge about customer needs and expectations on environmental issues. 

4.7.2 Rebound effects: improved products but increased consumption: 

It has been noticed that environmental improvements to products are out-weighted by increased consumption. Good examples are e.g. light bulbs and washing machines, where cost savings have encouraged customers to increase the consumption (e.g. leave the lights on, wash clothes more often). There is an opportunity for consumer education. 

4.7.3 Consumer education

What kind of information and education is necessary for a consumer? Too much information can produce ‘rebound effects’ (e.g. consumers get bored). For basic consumer education, it is important to focus on single aspects where there might be an interest from a consumer. These aspects could be energy consumption in households, and ‘do it yourself’ shops. 

The delegates stressed that the education and re-education on different levels (schools, universities, professional institutions, inside companies (especially marketing and sales functions, etc.) is necessary. 

4.7.4 Needs for information and information sources

If IPP is to differentiate between environmentally preferable and less preferable products for consumers to choose, objective and reliable information sources are necessary. Companies are currently developing internal eco-design benchmarking tools. However, there is nothing to benchmark against if one wants to see where the product stands against the best practice in industry. Benchmarking exists for certain, simple to measure aspects, such as stand-by power consumption for monitors. However, it is hard to compare products in their overall environmental performance.  The need for better environmental benchmarking possibilities was expressed. 


5 Key outputs 

The delegates were asked to define one main question and one conclusion after the workshop.

Retailer:
Conclusion: Learnt about IPP debate
Question: What can we do to help the process?

Manufacturer:
Conclusion: Confirmed difficulties on the consumption side
Question: How do we influence IPP debate?

Government:
Conclusion: The debate on IPP is not fixed and input from different stakeholders is welcomed. The EC policy makers have been thinking more in terms of direct regulations (e.g. Directives) but for IPP to avoid the pre-dominating approach of direct regulations, DGXI needs more support and input from stakeholders.
Question: How do we intensify action?

Academia:
Conclusion: Surprisingly, an open-minded discussion from business in the workshop.
Question: How to progress the consumption side? How can IPP be made flexible (i.e. to incorporate latest findings)?

Consumer organisation:
Conclusion: At this stage have no firm conclusions on IPP (‘the jury is out!’)
Question: Need to explore international/global context.

Environmental NGO:
Conclusion: Need to know more.
Question: How do we establish and maintain high standards, taking into account the international context? 

Manufacturer:
Conclusion: Need to know more.
Question: Telecom industry is fast developing – will IPP act as constraint? What are the strengths and weaknesses of existing policy tools?

Manufacturer:
Conclusion: IPP is a relatively new and open debate when compared to the discussion on WEEE Directive. There seems to be opportunity to influence the process.
Question: In what form will IPP be delivered? 

Government:
Conclusion: IPP is an important issue for environmental policy. EC needs input to enable better co-ordination of discussions with different Directorates at an EC level.
Question: How can integration be carried out? And tools co-ordinated efficiently? 

Academia:
Conclusion: A more practical approach is necessary in order to understand what tasks and responsibilities of different stakeholders might or should be.
Question: How will implementation be addressed in IPP e.g. integration – what does it practically mean? What will be the priorities of IPP?

Academia:
Conclusion: IPP is a complex, evolving area, debate is in its early stages.
Question: How to influence the consumption side? What is the potential impact(s) on the supply chain?
 

6 Concluding remarks

  • A more practical approach is necessary to interpret what IPP really means for industry and what are responsibilities/tasks for different stakeholders.
  • More information and knowledge is necessary.
  • Three main issues were raised by the delegates:
    Consumption issues 
    Companies have no/little control in influencing the consumption side. Consumption issues are very complex and it is clear that without addressing the consumption side significant improvements are not possible. 

    Supply chain 
    Supply chain management is specifically important in the electronics sector where companies are not manufacturers but ‘systems integrators’. Eco-product development is closely related to how the environmental knowledge is passed up and down the supply chain. 

    IPP frameworks (objectives, tools, priorities)
    Main questions: What are the objectives and priorities of IPP? How will different tools be integrated on both supply and demand sides?

  • The IPP debate is open and immature, therefore stakeholders input is necessary.
  • The Green Paper is the next major milestone of IPP. Until then, no important actions will be undertaken, e.g. many stakeholders (particularly business) have adopted a ‘wait and see’ approach.
  • There is a mix of tools proposed by EC. However, it is important that these tools are used in co-ordinated manner. Additionally, IPP should not mean new regulations.
  • The IPP debate is in its discussion stage within EC but at the same time national approaches are progressing at different speeds (the most advanced appear to be the Netherlands, Sweden, and Denmark).
  • How is IPP going to be implemented and in what form, e.g. does it mean a new Directive?
  • Where does IPP fit within the context of DGXI work? How and to what extent can IPP be integrated in work/responsibilities of other Directorates (DGs)?
  • The trade issue is an important aspect to consider in relation to IPP. However, it may be used as an lobbyist argument against IPP e.g. by USA and may slow down IPP progress. 


7 Notes

[1] Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, ‘Informal Meeting of EU Environmental Ministers on Integrated Product Policy (IPP)’, Background paper on Product Related Environmental Policy, Bonn, May 7-9, 1999.

[2] The Centre for Sustainable Design, ‘Chain of Uncertainty: a survey amongst suppliers of electric and electronic components, assemblies and materials’, January 1999.
 

 

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