The Waste Electrical and Electronic Equipment Directive 2002/96/EC and 2003/108/EC compel producers of electrical and electronic goods to recycle items when they come to the end of their useful life. It is aimed at reducing the amount of waste in landfills—and stem potential pollution caused by toxic products in some goods.

The directive aims to encourage the design of environmentally-friendly products, experts noted.

It was intended to come into force in August 2005, although implementation was delayed in some member states, and its product-labeling liability is retroactive to that date, sources noted.

Experts say that the directive—which will apply in all European Economic Area member states, although it is yet to be implemented in the United Kingdom—requires producers of electrical and electronic goods to label their products with a symbol (of a crossed-through wheeled bin) to indicate that separate waste collection is required.

Scope of application

The directive applies to three types of producers of electrical and electronic goods-manufacturers that sell goods under their own name, companies that resell equipment produced by other suppliers under their own brand name, and companies that import or export goods into a member state covered by the directive, explained Matthew Elkington, global head of research and development in the Risk Consulting Practice of Marsh Ltd., a unit of Marsh Inc., in London.

Under the directive's terms, there are 10 categories of electronic and electrical equipment: large household appliances; small household appliances; information technology and telecommunications equipment; consumer equipment; lighting equipment; electrical and electronic tools; toys, leisure and sports equipment; medical devices. Exceptions include implanted or infected products; mentoring and control instruments; and automatic dispensers, Mr. Elkington explained.

If you are a producer of electronic and electrical goods, your liability differs depending on whether you supply goods to businesses or to consumers, Mr. Elkington explained.

If a company has produced a household product before August 2005, which subsequently becomes waste after that date—so-called "historical waste"—then producers are responsible for collecting a certain amount of such waste, regardless of whether or not they produced the actual products being collected, based upon their market share, Mr. Elkington explained.

If producers have supplied goods, such as laptop computers to businesses, then they are responsible for the collection of such goods on a one-for-one basis, he noted.

Products placed on the market after August 2005 are regarded as "new waste" under the terms of the directive.

For such waste, producers are responsible for collecting, treating and recycling their own products only, Mr. Elkington explained.

In case of producers going insolvent, the directive requires producers to put up a financial guarantee that its products will be recycled at the end of their useful life. The directive does create additional costs for producers of electronic and electrical equipment, noted Rod Freeman, a partner at Lovells law firm in London.

They not only have to be responsible for the labeling of the product, but also for its recycling and collection.

In addition, he noted, the directive has been interpreted slightly differently in many of the countries that fall under its scope, and this means that companies have to be mindful of the requirements in all the states in which their goods are sold.

And potentially any recall of goods deemed by officials to not be in compliance with the directive could be both costly and cause reputational damage, he noted. To date, he said, there have not been large numbers of products pulled from the shelves, but it is "still early days".

Some large producers of electronic and electrical goods have taken steps to deal with the directive's impact.

Companies can also band together to form collective schemes, such as the Recupel organization in Belgium—a not-for-profit group that is designed to aid companies with the collection and recycling of electrical and electronic goods.

Under such plans, companies can share the costs of the financial guarantees imposed by the directive, among other things, explained Mr. Elkington.

And a group of large manufacturers, including Braun, Electrolux, Hewlett Packard and Sony, in 2002 set up the European Recycling Platform, aimed at ensuring cost-effective ways of complying with the WEEE directive.

Surer future

Another option for companies that fall under WEEE's scope is to purchase recycling insurance, noted Mr. Elkington.

By buying an insurance policy, companies may be able to cap their future liabilities under WEEE, he noted.

For companies that are producers of electronic and electrical goods in several European countries, insurance contracts could provide a pan-European financial guarantee structure, rather than companies needing to join national collective schemes in all states where they sell goods.

Some insurers already provide pure financial guarantee products, or surety bonds, to help companies meet the WEEE directive's financial guarantee requirements, Mr. Elkington explained.

But more sophisticated products, whereby factors such as the recyclability of goods would be reflected in the premium are being explored, he noted.