Responsible Recycling To Reduce Your Risk of Liability

Reducing your risk of liability
from off network technology
© SERI – Home of the R2 Standard 12/2/2015

© SERI – Home of the R2 Standard
Benefits of the Global Technology Boom
• Smart phones & tablets sales:
1.2 billion in 2013
2.1 billion by 2017
(Source: CCS Insight and ITU)
• As of 2014:
44% of world’s households
with internet access.
• 7 billion mobile subscriptions for world population of
7.2 billion (78% in Africa, Asia, and Pacific markets)
• Improved access to information, education, healthcare,
financial services & economic opportunities.

The Challenge of Unintended Consequences
Illegal Dumping
Illegal Exporting
Data Security Breaches
Significant harm to people
and the environment
Estimated 50 million tons of e-scrap generated each year.

The Challenge of Unintended Consequences
The U.S. is not immune to the challenges.
Abandoned Warehouses
Roadside dumping

In Response to Growing Concerns
• Multi-stakeholder group, convened in 2008 by the
U.S. EPA, tasked with identifying best practices for
recycling growing volume of used electronics.
• Result of this work:
The R2 Standard for Responsible Recycling
Non-profit
organization
that governs the
R2 Standard

A Safe & Sustainable Solution
• Protects data
• Protects people
• Protects the environment
• Preserves resources
• Requires legal compliance

• Requires industry best practices for data
destruction and sanitization.
• Requires tight security and chain of custody
controls to protect equipment and data.
Protects Data

• Safe management & tracking of potentially harmful
materials throughout the entire the recycling chain.
• Due diligence on all downstream vendors.
• Legal compliance with all applicable laws pertaining
to management/import/export of used electronics.
• Certification to ISO 14001 or RIOS
Protects People & Environment

How broken smart phones are being reused:
• Screens reused in new electronic toys
• CPUs reused in new remote controls
and e-readers
• GPUs reused in new digital picture frames
• Rare/precious metals recovered and reused
Preserves Resources by Emphasizing Reuse

R2 Standard permits partnerships that safely
& responsible maximize reuse opportunities
• R2 certified company, along with
partners in Romania & Thailand, kept
more than 5 million toner cartridges out
of land-fills last year.
• NEW manufacturing of cartridges
requires 400% more energy & resources
than RE-manufacturing cartridges to
original OEM specs.
• 3.5 quarts of oil is used to produce the
plastic in each new cartridge.
© SERI – Home of the R2 Standard 2015

• Emphasis on RESOURCE management
rather than “WASTE” management
• No landfilling or incineration permitted.
• Emphasis on reuse as most environmentally
beneficial option for used electronics.
Preserves Resources

• Requires compliance with all applicable
regulations, including Federal, state and local
• Requires compliance with all international
regulations including the Basel Convention
where it has been ratified.
Legal Compliance

Do you know what happens to your electronic
equipment after it leaves your possession?
You should.
The consequences of data
breaches, environmental liability,
and civil and criminal penalties
resulting from lack of due diligence
can do significant harm to your
brand, reputation and bottom line.

Your Broker/Recycler is NOT the final
destination for your used electronics
Used
Electronics
ITAD
Reuse
Developing
Countries
Low income
families
Schools
Recycle
CRT Glass
Processor
CRT
Processor
CRT Glass
Processor
Copper
Smelter
Low Value
Shredder
Secondary
Smelter
Primary
Smelter
Battery
Aggregator
Lithium
Processor
Lead Acid
Batteries
Nickel
Batteries© SERI – Home of the R2 Standard 2015

Understanding your risks
• 2015 study by IBM & the Ponemon Institute
found average total cost of a single data
breach is $3.79 million ($154 per data record).
• 2015 study by Blancco Technology Group & Kroll Ontrack
found an alarming 48% of the hard disk drives & solid
state drives they tested contained residual data.
‒ Study found ineffective deletion attempts had been
made on 75% of the devices containing information.
‒ In some cases, 100% of the data was able to be
recovered.

Understanding your legal responsibility
 The Gramm-Leach-Bliley Act
 Requires companies that offer consumers
financial products or services like loans, financial or
investment advice, or insurance to safeguard
sensitive data – including devices. Additionally, prior
to allowing a service provider access to customer
personal information, the organization must take
reasonable steps to ensure that the service provider
is capable of maintaining appropriate safeguards.

 The Fair and Accurate Credit
Transactions Act (FACTA)
 Requires organizations to dispose of data contained
in consumer reports and records in a way that is
reasonable and appropriate to prevent
unauthorized access to or use of the information.
The FTC also encourages those who dispose of
any records containing a consumer’s personal or
financial information to take similar protective
measures.

 The Health Insurance Portability and
Accountability Act (HIPAA
 Requires that covered entities must have in place policies
and procedures regarding the transfer, removal, disposal,
and re-use of electronic media, to ensure appropriate
protection of electronic protected health information.
 Lack of sufficient controls for devices and media is one of
the top 5 most common sources of breaches, according to
Marylou King (former official with the U.S. Department of
Health and Human Services Office of General Counsel).

HIPAA continued -
 The new Omnibus Rule could increase the likelihood
that university hospitals and other health care providers
will face liability for conduct by business partners and
sub-contractors.
 This is significant since it is estimated that these
business partners, rather than the health care providers
themselves, are responsible for more than 60 % of
HIPAA violations.

 FTC’s Children’s Online Privacy Protection Act (COPPA)
Applies to companies that collect personal
information from children under 13 (such as social media
sites or other websites/apps that are used by children.
 Requires businesses take “reasonable steps” to keep
children’s information private and secure, and that
“reasonable care” be taken before releasing private data
to service providers or other third parties to ensure that
they are capable of maintaining the privacy and security
of the information.

COPPA continued –
 COPPA also requires that Businesses disposing of
personal data take “reasonable steps: to protect against
unauthorized access.
A COMMON THEME FOR DATA SECURITY REGULATIONS :
 Reasonable steps /due diligence/ precautions must be
taken by those collecting confidential data.

R2 Certified companies reduce
your risk of data liability
• The R2 Standard requires rigorous quality
controls to ensure your data is sanitized in
adherence to the most secure industry practices.
• Rigorous annual audits of R2 companies provide greater
assurance that data is effectively protected & destroyed.
• Results of the BLANCCO / KROLL ONTRAK study reveal ITAD
companies fell short 48% of the time in protecting data.
• “Certificates of destruction” are meaningless without proof
of a 3rd party audit to back up the claim.

Understanding environmental liability
The Resource Conservation
and Recovery Act (RCRA)
calls for “cradle to grave”
management of hazardous
waste, and makes generators of
hazardous waste liable for the
proper management or disposal
of the hazardous material.

Understanding environmental liability
Superfund – Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA)
• Enacted to help clean up releases of hazardous
substances into the environment. It authorizes the
federal government to demand and collect cleanup
costs from all companies that are deemed to have
contributed to the hazardous situation.
• If an initial polluter is unable to pay the clean-up costs
of their pollution (for instance a recycler), the
government can seek clean-up costs from firms
deemed to have contributed to that pollution
(businesses disposing of retired IT assets).

• The Superfund Recycling Equity Act (SREA)
offers a measure of protection from environmental
liability for companies that take “reasonable care”
when conducting due diligence of the facility to
which the recyclable material was sent.
• Selecting R2 certified brokers/recyclers who undergo
rigorous annual audits provides greater assurance
that electronic equipment will be managed
responsibly.
R2 brokers/recyclers reduce your
environmental risks

• The FBI has seen a 53% increase in its economic-
espionage caseload in the past year.
• According to an FBI official quoted in the Wall Street
Journal:
“It’s actually shocking the lengths they will go to,
including trespassing at manufacturing sites, hiring
employees who will bring secrets with them, and
using computers to steal data.”
Increase in corporate espionage

• What is the cost of negative press?
Being associated with an environmental incident
or data security breach can have far-reaching
negative impacts on a company.
• The costs arising from such incidents can be:
– direct (such as environmental cleanup costs)
– indirect (loss of business resulting from bad press or public
concern over a data breach… Loss of shareholders)
Damage to Brand & Bottom Line

Most Globally Respected Standard
for Electronics Recycling & Refurbishing

Comparing R2 & e-Stewards
The Similarities –
• R2 & e-Stewards have a great deal in common.
• Environmental, health, and safety provisions
parallel one another.
• Both require compliance with all applicable laws
and regulations.
• Both require tracking, transparency and
downstream accountability.

Primary difference: R2’s emphasis on REUSE.
• Reduces need to mine for new raw materials.
• Reduces carbon footprint of manufacturing.
• Access to affordable, refurbished electronics has positive
social and economic impacts for developing countries.
Bridges the digital divide, improves education, & enables
participation in global economy.
• BAN (controlling body for e-Stewards) has lobbied for extreme
restrictions on resale of used electronics, which negatively
impacts the ability to reuse electronics and the ability of
brokers/recyclers to maximize reuse throughout the world.

Primary difference: The organizations behind the standards
SERI (Sustainable Electronics Recycling International), owner of the R2
Standard, and BAN (Basel Action Network), owner of the e-Stewards
Standard, have very different missions:
• SERI works to create a world where electronic products are repaired and
recycled in a way that promotes resource preservation, and health & safety
of the environment, communities, and workers. We do this through the
development of best practices, consensus-based solutions, & the R2 Standard.
• BAN works to prevent the globalization of the toxic chemical crisis. We work
in opposition to toxic trade in toxic wastes, toxic products & toxic technologies
that are exported from rich to poorer countries. Alternatively, we work to ensure
national self-sufficiency in waste management through clean production and
toxics use reductions and in support of the principle of global environmental
justice — where no peoples or environments are disproportionately poisoned
and polluted due to the dictates of unbridled market forces and trade

Primary difference: R2 allow more opportunity for
innovation and technological advances.
• SERI understands that the business world is dynamic and
purposely designed R2 with this in mind. The R2 Standard has
performance-based requirements. The method of
implementation, however, may vary among different
businesses and models. R2 allows companies to innovate and
change as the business and technologies evolve.
• Conversely, BAN has developed e-Stewards to be more
prescriptive, which inhibits a company’s ability to adapt to
changing circumstances.

Primary difference: Transparent development process
• R2 is a consensus-based standard.
‒ Organized and developed by a US EPA-convened group
of all key stakeholders.
‒ Issues and decisions about the technical requirements
and application of the R2 Standard are addressed by a
multi-stakeholder technical advisory committee (R2 TAC).
• Conversely, e-Stewards standard is developed & controlled
by a single organization (BAN) with limited input from
e-Stewards certified organizations and other stakeholders.

Former Exec. Secretary of the Basel Convention
for the UN Environmental Program weighs in…
“The R2 Standard provides the most comprehensive
solution for safe and sustainable electronics recycling
and repair. Its emphasis on reuse, and on resource
management over “waste” management, has become
increasingly important as electronic use around the
world – particularly in Asia and Africa – continues to
rapidly increase and deplete limited supplies of natural
resources…

Former Exec. Secretary of the Basel Convention
for the UN Environmental Program weighs in…
“…Clearly, efforts of the past decade to ban exports
of used electronic devices and components have not been
sufficient to respond to these developments. It is essential
to prevent illegal transactions, while improving recycling
practices around the world with training, technology
sharing and accountability.
In this area, the R2 program is leading the way.”
--Dr. Katharina Kummer Peiry

Responsible Recycling To Reduce Your Risk of Liability

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