Customer pressure is accomplishing what many regulations haven’t — holding corporations accountable for their environmental, social and governance (ESG) responsibilities. Consumers, investors and NGOs, for example, are demanding action on toxic per- and polyfluoroalkyl substances (PFAS), which are widely used in electronics manufacturing.
There’s also a clock ticking for users of these chemicals: 3M, the largest supplier of PFAS to the manufacturing industry – will stop producing them by 2025.
“At this point, [PFAS is] the hottest topic by far that my team is being asked to talk about,” Cally Edgren, senior director of sustainability for Assent, told EPSNews. Edgren personally has spoken with hundreds of companies since an update to the Toxic Substances Control Act (TSCA) was finalized in September. TSCA requires manufacturers to report on 1,462 different PFAS chemicals in their products — dating back to 2011 — requiring extensive data collection from suppliers.
Source: Assent
“I would say customers, followed by supply chain obsolescence, are bigger factors driving fear right now than the regulations themselves,” Edgren added.
But it’s not just PFAS that have companies scrambling. The Uyghur Forced Labor Prevention Act (UFLPA) bans the import of products associated with certain regions of China that practice slave labor. Shipments are being held up at seaports while stakeholders collect data.
Manufacturers have been caught unaware of many of these regulations because of their global, complex supply chains. Electronics industry associations have sounded the alarm regarding PFAS compliance. “But [companies] are absolutely being driven first and foremost by their customers,” said Edgren.
Among non-regulatory concerns, she said, are increasing litigation from citizens and regulators to discontinue PFAS; investors demanding plans to end the use of PFAS; and companies publishing their intent to end PFAS use, which forces competitors to respond. Additionally, consumers want PFAS-free products and NGOs are pushing for less PFAS in the environment.
PFAS saturation
An estimated 12,000 household products contain PFAS, and semiconductors and microchips require these substances to function. In chip fabrication, PFAS are used for etching, testing, lithography, anti-reflective coatings and rinsing. European chemicals society ChemSec reports the electronics and semiconductor industry uses 4,400 tons of PFAS per year in the EU alone.
When 3M –which faces mountains of litigation — exits the PFAS market, there will be instances where acceptable substitutes are unavailable. Manufacturers face a number of unsavory choices: reengineer their products; opt out of certain global markets; or seek an exemption to the ban.
Assent’s Cally Edgren
But exemption is not a long-term solution, Edgren warns.
“I think the biggest trap is thinking that this is operating like other materials restrictions in the past. I think [businesses] have also underestimated that these are complex chemicals, like 30-40 characters long. This actually requires a little more technical guidance than we’re used to.”
Companies have also waited until the last minute to address compliance. “There’s thinking that ‘well, I’m sure if 3M stops making stuff, someone else will just start making it,’” said Edgren. “Well, not necessarily, because 3M owns a lot of the patents to those individual chemicals and 3M is not going to sell those off.”
UFLPA-related risks
Some of the pitfalls Assent has identified regarding the UFLPA is the perception it pertains only to certain regions of China where ethnic minorities are effectively enslaved. “Chinese manufacturers are clever about routing things through other countries,” Edgren said. “So, I think if companies are just purely looking at country of origin type data to determine what their risks are, that’s definitely a trap.”
Initially, the UFLPA associated forced labor with four main commodity groups, including solar panels and cotton. “I think a lot of manufacturers looked at that list and said, ‘I don’t import cotton or tomatoes, I’m not making solar panels, so I’m not going to worry about that,’” Edgren said. “And they stopped paying attention. Monitoring regulations, both existing regulations and what’s coming is extremely important because those regulations change.”
For example, in 2022, the U.S. suspended tariffs on solar panels imported from non-Chinese Asian nations. Congress recently battled over that suspension when those nations were suspected of re-exporting solar panel subassemblies made in China.
Electronics industry associations often lobby legislators and provide guidelines on regulations. Because electronics supply chains are so complex, risk management firms have developed tools to help companies determine their exposure to PFAS, UFLPA and similar statutes.
Assent has just released its tool for Complex Manufacturers. Similar tools are available for monitoring carbon emissions, such as EcoVadis’ Product Carbon Footprint (PCF) Data Exchange, and Resilinc’s supply chain mapping service. The regulatory landscape will continue to expand, experts say, and non-compliance carries financial, operational and reputational consequences.
Author: Barb Jorgensen
Barbara Jorgensen has more than 30 years’ experience as a journalist, working for leading electronics industry publications such as Electronic Business, Electronic Buyers’ News and EDN. She was one of three founders of EPSNews, which was acquired by Aspencore in 2017. As a freelance writer, Barb wrote and managed an award-winning custom publication for Sager Electronics; was a leading contributor to Avnet Global Perspectives magazine; was a regular columnist for the National Electronics Distributors Association monthly newsletter and wrote for industry associations such as IPC. Barb was also a featured blogger on the b2b Website Allbusiness.com and helped launch Electronics Sourcing North America, a start-up magazine serving purchasing professionals in the Americas.
Prior to her freelance career, Barb was a senior editor at Electronic Business, the pre-eminent management magazine for the electronics industry, featuring world-class manufacturing companies such as Dell, Hewlett-Packard, Cisco and Flextronics International. Before joining EB for the second time, Barb spent 6 years with Electronic Buyers’ News as managing editor, distribution, winning several awards for coverage of the distribution beat. A graduate of Binghamton University (formerly the State University of New York (SUNY) at Binghamton), Barb began her journalism career with the Gannett newspaper chain. She has worked for a number of local newspapers in the Greater Boston area and trade journal publishers Reed Business Information and UBM.
