Examination of Witnesses (Questions 285-299)
Dr Kirstie McIntyre, Mr Andrew Clack, Professor Ab
Stevels and Mr Peter Evans
29 JANUARY 2008
Q285 Chairman: Perhaps I could ask
you to introduce yourselves.
Mr Clack: My name is Andrew Clack. I am responsible
for environmental policy issues within Panasonic UK, with particular
focus on implementation of the WEEE Directive. In that regard
I am also representing the company on the managing board of REPIC,
which is the largest, by-obligation WEEE compliance scheme in
the UK.
Mr Evans: Good morning. Peter Evans from Sony.
I am responsible for product environmental issues within the UK
for the Sony organisation.
Dr McIntyre: Good morning. My name is Kirstie
McIntyre. I work for Hewlett Packard. I am responsible for take-back
compliance for HP on a pan-European basis. In particular, I look
after WEEE packaging, and batteries (when it comes), for the UK
and Ireland, and then I have wider European responsibilities as
well.
Professor Stevels: My name is Ab Stevels. I
have been working for 40 years at Philips Electronics. In the
last 13 years of this period, I have been working in the field
of the environment on three subjects: eco-design; management of
eco in industrial organisations; and take-back and recycling and
systems. Currently I am a part-time professor at Delft University
of Technology. I am working in that capacity now for 12 years
and continuing.
Q286 Chairman: Thank you very much.
We are going to start off this morning with the general topic
of waste in the product life-cycle. We recognise that manufacturers
can reduce waste in a variety of ways, such as using less material
per product (whilst maintaining the product lifespan), making
a product last longer, using recycled material or creating less
waste during the production. Within the electrical and electronics
sector, where in a product's life-cycle do materials have the
greatest environmental impact?
Dr McIntyre: From the IT perspective, we find
the biggest environmental impact sits somewhere different from
where it sits with some other electronic products. It is quite
difficult to group all electronic products together. When you
think of everything from toys through to the very large servers
that we make that run air-traffic control systems, for example,
they are very different beasts. We find, quite interestingly,
that a lot of the environmental impact within the IT sector—particularly
when we look at computers, laptops, printers—is in the use
phase rather than in materials selection, and that is why we have
been concentrating very much within our design for environment
programmes on energy efficiency within our products. We do that
across our product range but we also work on materials and dematerialisation
and other things. I just wanted to demonstrate that not all electronic
products are the same and so we see different peaks of environmental
impact at different points of the product life-cycle.
Mr Evans: To follow on from Kirstie, that is
probably even more the case in consumer electronics. The work
we have done indicates that 70 to 75 per cent (depending on the
product) of environmental impact is, again, in the use phase.
But, if you look at materials, our understanding of the materials
is that the major impact of materials is their exploration and
their generation, of getting to the raw materials that we use
within the components of our products.
Q287 Chairman: Are the environmental
impacts determined by factors within your own company, such as
cost, marketing, design or production, or are they dictated by
decisions which are taken by your customers or by the businesses
to which you sell your products? Yes, Mr Stevels.
Professor Stevels: Thank you, my Lord Chairman.
In the first instance, the environmental impact of products is
being determined by their functionality which you want to realise.
In order to realise this functionality, you need certain physics
or chemistry, and they do, to a large extent, predetermine the
environmental impact of a certain device. On top of that, there
is a part which you can properly influence by eco-design, for
instance. But, as a matter of fact, you cannot go beyond the laws
of physics, even if you are very motivated by environmental issues.
To give you an idea: for most electronic products—it depends
a bit on the device—70 to 80 per cent is fixed by your functionality
decisions; some 20 to 30 per cent is the room in which you have
to manoeuvre with your eco-design procedures.
Q288 Chairman: Let us say that in
your labs someone develops a capability for switching off equipment
early rather than letting it run all night. For example, adolescents
using computers seem to assume that they switch themselves off
and, by and large, they do not and printers do not. Would senior
management really be concerned about adapting a bright idea like
that if it was going to add additional cost to the product in
a highly competitive market where price is as important as functionality?
Do you feel confident that your organisations are sufficiently
sensitive to their environmental responsibilities to take account
of technical changes, even though it might initially appear to
be less attractive in a commercial way?
Professor Stevels: My Lord Chairman, generally
speaking the answer is yes. It depends on the type of consumer
you are addressing. If you look to Western Europe, one-third of
the customers or interested people are so-called "price buyers",
at least for consumer electronics. There is only one thing which
is dominant and that is low price. On the other side, you have
also one-third who are "quality buyers". These quality
buyers are prepared to pay more, either for convenience or for
fun, but also for the environment. This is particularly the group
to cater to. There is a third group that we call, within consumer
electronics, the "tech buyers". These are people interested
in the latest technology, new features and things like that. What
you see generally developing today in the industry is a differentiation
in product. If you have a certain functionality, a certain product,
let us say a 28" or 32" or 41" TV, big companies
bring on the market three products: one catering to the quality
buyers; one catering to the feature buyers; and one catering to
the price buyers. That is a strategy you see today developing
among the big brands.
Q289 Lord Crickhowell: Picking up
the point on functionality, in the decades, as it is now, I am
sorry to say, since I used to spend quite a lot of time visiting
Panasonic and Sony, in Japan in their development and research
laboratories, as well as their factories in South Wales, I saw
of course a dramatic scaling-down of size. If you look back to
the early eighties, when I first had my job, most electronic devices
were large and heavy and the bits inside them were. One went through
a fascinating process in which one saw the newer, lighter, smaller
products emerging, and very often not being put straight on the
market because they did not want to introduce them immediately
as they had just got an earlier product accepted and marketable.
That was an interesting marketing phase. The question I suppose
I have is: accepting the laws of physics, which are immutable,
nonetheless we have seen a dramatic scaling down and miniaturisation
over the period. Is that simply economics? Has the waste element
played any part? What are the factors that have led to an extraordinary
scaling-down and the fact that you are using not only smaller
but much lighter equipment and quite different products. Is there
any element that affects our inquiry in that process?
Mr Evans: I agree entirely with you: the technology
has moved on considerably, but for manufacturers there is not
just the waste issue, there is also the issue related to operating
temperatures and the way we use the product in total. There is
the big benefit with lower operating temperatures that items such
as reliability and usefulness do extend. Making it lighter, less
power consuming, does in itself make it more reliable as well,
so a huge aspect of reliability comes into it in making it lighter
and smaller.
Professor Stevels: I would say that technology
is an important driver. Particularly IC technology (integrated
circuit technology) software has enabled us to come to important
reductions in the energy consumption of products and, also, in
materials used in products, so exploring the possibilities of
technology to support eco-design efforts is a very important issue.
This is not just about a designer dreaming behind his or her desk,
staring out of the window, wanting to do something nice to the
environment; this is also about systematically exploring the opportunities
of technology and, of course, adding creativity in using that.
That is very important but dependent on functionality. There have
been big achievements, for instance, for audio equipment. For
TVs it is a bit more difficult because you have to stick to a
certain size, but even TVs at a given size have become lighter,
less energy consuming, than they used to be 10 years or 20 years
ago.
Dr McIntyre: To give you an example of what
we see from a materials perspective: I have been running a series
of consumer charity take-back events here in the UK. In particular,
we have been working with Hertfordshire County Council over the
last month. I have had two over the last weekends and they have
been very, very successful events. We put advertisements in the
local papers and we invite the public in these areas to bring
along any brand of old IT. If we can refurbish it we will, and
we will donate it to charity—a local charity of the Council's
choice—and if we cannot refurbish it then we will recycle
it. We are very happy to do this. It is good PR for HP and it
is good for our environmental credentials: we put it into our
reports and it hits a lot of buttons from that. But what comes
back is teaching us an awful lot about how long people keep their
products. We understand our business customers. We have a direct
relationship with our business customers. We know how long they
keep equipment; they come back and buy it from us. But when a
consumer walks into a high street store and purchases a PC or
a printer, we never see them again. We do not know who they are.
Unless they fill in a warranty card and send it to us—which
is very unusual these days—we never know who they are. These
events have been very useful in teaching us about the materials'
value that we see from old IT products. Something like a Spectrum
ZX-82 is worth more money on recycling than it is on any of the
newer PCs because of the amount of gold that is in the connectors.
The economics have driven us to use increasingly smaller and smaller
amounts of gold to make these connectors, and, as Peter said,
with lower operating temperatures and higher reliability we do
not have to make the connectors quite as robust as they used to
be, because we are not trying to withstand that type of operating
temperature any more. It has been a very interesting exercise
to do these events. We were in Hemel Hempstead on Sunday and we
collected over 20 tonnes of old IT from the general public. People
are very keen to do these sorts of things, especially when you
put a bit of a sweetener, like "charity donation" with
it.
Q290 Lord Lewis of Newnham: Are these
HP events?
Dr McIntyre: Yes, these are HP events. We run
them together with the local authority.
Q291 Lord Lewis of Newnham: I mean,
do you only recycle or deal with—
Dr McIntyre: No, we will deal with any brand.
Just IT, though. We try to avoid the other bits and pieces. We
do not know so much about them. They are not our area of expertise,
I am afraid.
Q292 Lord Bhattacharyya: Your major
market in the future is going to be China. It is already moving
in that direction. I know from your headquarters that that is
where you are going to concentrate. You have just said you have
three product differentiations based on costs. Your volumes are
going to be at the lower end. That is where your volume market
is. You have just said that you are concentrating on the top end,
using all the energy saving, all the high technology. What will
happen to the lower end?
Mr Clack: I do not accept that there is a disconnect
between energy efficiency and cost efficiency. Certainly as far
as Panasonic is concerned, while it has a tiered approach to the
product, the technologies behind them are basically the same,
and it is a matter of consumer choice as to the direction they
go. But there is certainly no clear distinction we make between
cost efficiency and environmental performance and efficiency at
all. Referring back to an observation made by my Lord Chairman
at the outset, I think it is true for all of our companies that
environmental performance and sustainability is right up at the
top of the agendas of all the companies, but it goes hand in hand
with cost efficiency.
Professor Stevels: I would like to make the
comment that there is a high correlation between overall improvement
and cost reduction that is contrary to what a lot of people perceive.
That was a bit triggered by the question by my Lord Chairman saying,
"if it costs more". The practice is that, in my period
at Philips Electronics, 75 per cent of the environmental projects
have been very profitable. You can feel that immediately because
there is a direct connection between less energy and less money.
Less materials is less money too. Less packaging volume or less
packaging materials is less cost. Simplifying your product architecture
so that products can be easily dissembled is directly related
to lower assembly costs. There are many examples. A lot of these
examples are in a book I have written about eco-design and recycling.
I have already sent a CD of the book to the secretariat. I would
like to leave this book here, so that if you would like to read
in more detail about the things we point out here in a couple
of seconds or minutes you can find it all there. This is one of
the important subjects: how does the environment relate with business?
There is a much more positive correlation than a lot of people,
those in the scientific community but also consumers and people
like you, think.
Q293 Lord Bhattacharyya: In the end,
you are not going to satisfy us; it is the consumer you have to
satisfy. If you look at most consumer electronic products coming
out of Korea, Japan and various other places, there is distinct
desire for the newer countries because of the cost issues, et
cetera, and penetration issues in the new markets. Do you design
that or is it just a superficial reduction in the way you do develop
a product?
Professor Stevels: I have two answers. All environmental
standards, all design practices of a company like Philips are
global, which means the environmental standards, the environmental
practices, the eco-design principles are the same all round the
world, irrespective of whether you are in Europe or in the United
States or in China or in India or in Korea or wherever you are.
That is important to realise. The second thing is that in the
so-called creative part, the pre-development of new product generation,
environment is on a par with other things, so you have an environmental
brainstorm, a mechanical brainstorm, an electrical brainstorm,
a software brainstorm and whatever brainstorm, and these things
are all consolidated in one meeting into a product concept, as
we want to design to the development. That is a point to notice.
Maybe in connection with what I said before: the budget of the
department I was having was paid by the business community and,
in the 12 years I was in that department, I never had business
problems. First of all, when I started, I had to build up the
credibility. After that time, we got either enough or even plenty
of money.
Q294 Lord Lewis of Newnham: You say
there are a whole variety of contributory factors that go in towards
it. How do you prioritise the contribution that each is making?
Is it done purely on a financial basis?
Professor Stevels: No. For that purpose we use
the so-called "eco-design matrix" which is consisting
of two sides. On the vertical axis you have option one or proposal
one, proposal two, idea three, whatever—a long list of ideas—ideas,
for instance, coming out of the environmental brainstorm are listed
as so-called "green options". On the horizontal axis
you have: environmental benefit, business benefit, consumer benefit,
societal benefit. That is one part, the benefit part. The second
part is the feasibility part: the technical feasibility (Is it
easy or difficult?), the financial feasibility (Do you have to
invest? Yes or no), and things like that. Each idea is ranked
in, let us say, a qualitative form, because you have to do it
a bit quickly if you have a lot of ideas, and then you say, "Well,
the ideas with a lot of pluses scored best" and that gives
you priority. Of course you would say: "And what would you
do in case you had both pluses and minuses?" Well, practice
shows that you have a lot of ideas where you have a lot of pluses,
and this is already giving you a full agenda—so, so far,
we are not up to the stage that you say, "Well, we have these
really conflicting things, where one benefit is imposed on the
other." Maybe in the electronics industry we are lucky that
we are in this situation. Maybe as eco-design progresses, this
will be getting more difficult, but, also, on the other hand,
technology developments will help us to stay in the plus and to
have a lot of pluses.
Q295 Lord Lewis of Newnham: Thank
you very much indeed. That is extremely useful. Perhaps I could
turn on to a point which has in fact been touched on by Lord Bhattacharyya.
What incentives are there for manufacturers in the electronics
industry to design out waste in a more effective manner, as it
were? Do you think this is easier for the larger companies than
it is for the SMEs, the companies of this particular nature?
Dr McIntyre: To be honest with you, there are
not enough incentives. The laws that come through, particularly
if you look at things like the WEEE Directive and other such laws—Producer
Responsibility—they create a lowest common denominator,
which is good, because it drags all of the laggards up to a good
level, but it does not reward the innovators. An innovator could
be a very large company, like our own, or it could be an SME,
but a law creates that lowest common denominator factor; it does
not reward those innovators, however large or small they are.
I think it comes back to your point earlier: How do we get consumers
to buy these products? With consumers and also a lot of public
procurement—so you have very small buyers and very large
buyers—we find at the moment there is an overemphasis and
over prioritisation on lowest cost and people do not look at the
cost of running that product throughout its lifetime. We call
that "total cost of ownership". We are looking very
much at trying to educate, in particular, those big consumers,
those big buyers—public procurement, for example, the £1.5
billion that is spent by the UK Government on procuring IT in
a year. That then rewards the people who innovate, it rewards
the people who make the changes, and it justifies for us to spend
more money on R&D. I think that is true whether you are an
SME or whether you are a very large company. If you have the right
product that you are selling in, and you can persuade the consumer
or the customer to buy it, and you are able to show you can offset
those costs throughout the product life-cycle. I think people
are getting better at it. Energy bills are increasing, people
are becoming more concerned that, "If I buy this piece of
electronic equipment, how much energy will it use throughout its
life-cycle?" It is not possible to buy less than an A-rated
fridge these days.
Q296 Lord Lewis of Newnham: You have
touched on a point which I think is very important, and that is
that there are occasions when some of the legislation that appears
from the European Union appears to be at a distinct difference
from the application of, say, the WEEE Directive. I think of the
Hazardous Waste proposals, which in fact make the disposal of
WEEEs a very much more difficult operation than it would have
been in the past. What about things like the Energy Using Products?—which
is I think another Directive which comes from the EU. Also, REACH
is now beginning to make an imposition on you, inasmuch as they
are now concerned with not only the initial effect but the articles
themselves have to be classified in some way or other. Have you
found there is competition, as it were, between certain aspects
of legislation and the WEEE Directive directly?
Dr McIntyre: It is difficult to talk parallels
between those three pieces of legislation that you have mentioned
because they look at different parts of the product and the way
the product behaves. WEEE is very much towards the end-of-life
area, although of course there is a part of WEEE which does talk
about design and the fact that it should be encouraging manufacturers
to design out waste and to make their products easier to recycle.
We are very keen on seeing those pieces pulled through on that
piece of legislation. The Energy Using Products Directive looks
very much at the energy that the product uses throughout its life-cycle
and is trying to generate some standards so that consumers are
able to compare products within the range that they want to buy.
REACH is about showing that manufacturers have control over their
supply chain and the materials they are using within their supply
chain. They are all aiming towards the same thing, which is improving
environmental impact, but it is quite difficult to pull parallels
between them.
Q297 Lord Lewis of Newnham: But it
may influence how you deal with the actual WEEE Directive which
is the end-of-product.
Mr Evans: The issue we have is that those three
pieces of legislation are all piecemeal. There is nothing that
links them. In fact, you will get many cases when they are in
contradiction to one another. If you take, particularly, hazardous
materials, mercury in backlights of PCs, for example, by eliminating
the mercury in backlights we have had to increase the power consumption
of the product to make the backlights as bright as they were previously.
There are unintended consequences of reducing hazardous materials.
I also think there is something we need to do in terms of a holistic
approach towards it. The reality is if we have a society where
we just repair and keep products, then we never improve the overall
energy efficiency of the products that are in place. Certainly
in Sony's case, if you consider the first Walkmans that were introduced
in 1985, they ran on two AA batteries for an hour and a half.
The modern equivalent, which is an MP3 player, will run for 80
hours on one single charge. It weighs about one-tenth of the weight,
and so, therefore, do the raw materials going in. If we had just
kept our Walkmans and kept on using those, then the environmental
impact would have been significantly different. There is this
disconnect between waste, between design, and energy use. I do
not know if there is anything we can do very simply to bring those
three together.
Professor Stevels: Although these three Directives
and pieces of legislation are completely different, there is one
commonality: it takes a long time before they are really introduced
to the real world. That means in all three cases we have to deal
with legislation which is based on the insights of, for instance,
1995, as in the case of the WEEE, but we have to implement it
in 2007. In between, the world has been changing a lot in this
field. We have new technology, we have new insights. I have written
a 650 page book about the developments in EcoDesign and recycling
in this period[2].
All of this has not been taken into account in 1995. The basic
problem and the common problem for all these three pieces of legislation
is that we are now faced with real outdated, old-fashioned legislation,
and therefore it would be very wise if this legislation was being
split in two parts: one is what I would call the basic part and
the other is the execution part. What is missing in all these
three pieces of legislation is, particularly, this execution part.
That means that, apart from operational problems, outdated insights,
you get also big differences between Member States. The other
commonality of this legislation is it has not created a common
market. It has created just the opposite: it has created a fragmented
market. These are the kinds of recommendations we have done in
this area. The United Nations University Review report—I
have been the scientific adviser for this project—that you
separate between the basics, the principles and the execution,
allow flexibility in the execution to keep it in line with the
latest developments, and also differentiate according to product
type. If you are going recycle a television set: the requirements,
efficiency costs, a way of organising, will be different to scoring
the optimum result, compared to, for instance, computers or printers.
Q298 Lord May of Oxford: So far,
we have been talking in fairly general terms and, as I understood
it, you have said that the impetus of technological advance has,
indeed, produced all sorts of improvements. I am interested in
whether you could give us some specific examples—and you
have already given us one, perhaps, of your "bring your old
computer" days—where the companies have implemented
practices which reduce waste that were deliberately implemented
for that purpose and have achieved their aim.
Dr McIntyre: I can give you an example which
we are just about to launch tomorrow, so we are a little bit ahead
of schedule, I am talking about it today. In particular we are
looking at recycled plastic content in our products. The majority
of a lot of our products is made out of different types of plastics.
We have been looking very much at trying to close the loop, so
when we get our own products back—and that is why I am very
interested in these take-back days—we understand what we
are getting back from the customers and then linking that into
putting those materials back into our new products. We have a
family of scanners which you would buy to use at home—you
could buy them through a high street store—and they have
up to 80 per cent post-consumer plastic in them. That is one set
of products that we have done that with. The launch we are making
tomorrow is about our ink cartridges. We have prioritised the
top 10 most popular ink cartridges and we are increasing the recycled
plastic content in those ink cartridges. Depending on which cartridge
it is, we achieve somewhere between 70 and 100 per cent recycled
plastic content in those ink cartridges. We use a variety of plastics
from our own waste that we get back because we have our own closed-loop
recycling process for cartridges—which is a voluntary system
because cartridges are not in the scope of the WEEE Directive—and
we use also old plastic bottles. Last year, we used 2.5 million
kilos of old plastic bottles to make new cartridges and next year
we have made a commitment that we will double that amount. Having
started with the top 10 most popular cartridges, we will extend
that out across our cartridge range and then into other products
as well.
Q299 Lord May of Oxford: Coming back
to the answer you gave to Lord Lewis about your box, where you
ticked things under different categories, that is an example of
something that clearly delivers an environmental and social benefit.
What were the cost implications? Did you also tick positively
the cost box?
Dr McIntyre: Yes. We are a business, at the
end of the day, and I am afraid in most cases it has to tick that
box as well. As I said earlier, one of the things we would like
to see, and about which we were looking very much to start educating
our consumers and our business customers, is this total cost of
ownership. Particularly with public procurement, best value has
been prioritised over total cost of ownership for a very long
time. We see this changing very, very gradually across Europe—some
countries are better at it than others with the prioritisation
that they put. Where we can show customers that the cost, if you
spread it over the lifetime of the product, is better than just
looking at the upfront cost of that, we are then able to invest
in more R&D. In terms of the finances, in terms of the economics,
it makes more sense. We can invest more money upfront into making
more of these innovative changes that drive through. As my colleagues
have also said, the reality is that we start with the premium
products but then it flows down through towards all of the "low
end products". With a lot of it, we make commitments across
the product board.
2 Stevels, A Adventures on EcoDesign of Electronic
Products, 1993-2007, Delft University of Technology, Design
for Sustainability Program Publication 17. ISBN 978-90-5155-039-9. Back
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