12 – Electrical Equipment and Machinery - Global · PDF fileSpecification (if available)...

Sustainability Topics for Sectors: What do stakeholders want to know?

ELECTRICAL EQUIPMENT AND MACHINERY

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This table shows a list of topics identified as relevant by different stakeholder groups. They can be considered as stakeholders’ suggestions or requests for topics to be monitored or disclosed by organizations.

Additional information about the project can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx

12 – Electrical Equipment and Machinery

20 Topics

Companies that produce electric cables and wires, electrical components or equipment. Manufacturers of power-generating equipment and

other heavy electrical equipment, including power turbines, heavy electrical machinery intended for fixed-use and large electrical systems.

Manufacturers of heavy duty trucks, rolling machinery, earth-moving and construction equipment, heavy farm machinery and manufacturers of

related parts. Includes non-military shipbuilding. Manufacturers of industrial machinery and industrial components. Includes companies that

manufacture presses, machine tools, compressors, pollution control equipment, elevators, escalators, insulators, pumps, roller bearings and

other metal fabrications.

Sustainability Category

Topic Topic Specification (if available)

Explanation Reference(s)1 Constituency

Environmental Raw materials use

Production phase

Environmental management in production detailed guidelines including quantitative targets across the entire product range to minimise the consumption of energy, fuel and raw materials during the use phase documentation of products’ environmental impact / lifecycle assessments information on upgradability, reusability and recyclability

400 Financial Markets & Information Users

https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx




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As is the case with all manufacturing industries, environmental management in production is a priority area when looking at sustainability in the machinery sector because of environmental impacts related to production (energy and raw material use, waste, wastewater, emissions,...).

Toxic substances - Mercury

Management and disposal of products containing mercury

Mercury is a necessary element in compact fluorescent, high-intensity discharge and mercury vapor lamps. According to the U.S. Environmental Protection Agency (EPA), instead of disposing these light bulbs into the trash, it is imperative to recycle these light bulbs so that the mercury is properly contained and reused. Disposing of products containing mercury should follow a different procedure than containing. Mercury compounds are highly toxic and accumulate in any food chain, so mercury is not permitted in many new designs. Glass envelopes and wire electrodes may be fragile and require flexible leads to prevent damaging the envelope. The mercury drop forms a common electrode, so circuits are not reliably isolated from each other if a multipole switch is used.

379 Business

Energy consumption

Production phase

Environmental management in production detailed guidelines including quantitative targets across the entire product range to minimise the consumption of energy, fuel and raw materials during the use phase documentation of products’ environmental impact / lifecycle assessments information on upgradability, reusability and recyclability




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As is the case with all manufacturing industries, environmental management in production is a priority area when looking at sustainability in the machinery sector because of environmental impacts related to production (energy and raw material use, waste, wastewater, emissions,...).

Standby power of appliances and equipment

Most experts agree that standby power is electricity used by appliances and equipment while they are switched off or not performing their primary function. That power is consumed by power supplies (the black cubes—sometimes called "vampires"—converting AC into DC), the circuits and sensors needed to receive a remote signal, soft keypads and displays including miscellaneous LED status lights. Standby power use is also caused by circuits that continue to be energized even when the device is "off". A surprisingly large number of electrical products—TVs to microwave ovens to air conditioners—cannot be switched off completely without being unplugged. These products draw power 24 hours a day, often without the knowledge of the consumer. This power consumption can be called "standby power" and can represent up to 10% of electric consumption in a US household.

374 Mediating Institution

Water consumption

Production phase

KPI 14 Water Abstraction Definition Water is an essential resource that is required for a healthy environment and is used in the production and provision of numerous goods and services, such as




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electricity. In the UK approximately a third of drinking water is abstracted from groundwater, whilst the remainder comes from surface water. Abstraction of water can have significant local, or more widespread, impacts on the environment. The threat of climate change, resulting in severe droughts, floods and storms, also constitutes a challenge for water resources management. Countries around the world are aware of the need to use water resources more efficiently and reduce waste in order to ensure availability of the resource in the long term. To achieve this goal various market and financial instruments have been put in place, such as abstraction charges, effluent consents and pricing mechanisms. Processes Water can be abstracted for public water supply to produce drinking water following treatment. It can also be abstracted directly for use by businesses for a wide variety of uses including irrigation and for industrial processes (e.g. coolant, carrier or solvent purposes). Sectors Water is abstracted by various companies including water and sewerage companies, industrial and chemical companies, and power companies. Many sectors rely heavily on supplied water, although this impact should be reported as a supply chain impact and not a direct KPI. For more information please refer to Figure 4 and to the section on supply chains (Section 4.5).



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Calculation or measurement procedures For abstracted water, the majority of charges are levied according to the licensed volume, but actual volumes abstracted are reported to the Environment Agency. It is the actual volumes abstracted that should be measured. Reporting guidance The table overleaf illustrates the scope of measures that should be reported. In most cases reporting will be much simpler, as most companies focus on a specific type of abstraction. The most appropriate way of reporting abstracted water should be in cubic metres. If an estimation method has been used this should also be reported. Compliance with any abstraction consents, such as those provided by the Environment Agency in the UK, should also be reported. Companies should also discuss whether water has been re-used or returned to source (e.g. cooling water). Direct abstraction should be reported as the volume taken, not the licensed volume. Water use It is important to distinguish water abstraction from the use of supplied water. The environmental impacts associated with supplied water use are indirect and more guidance on how these can be reported can be found in section 4.5 – Supply Chains.



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Water consumption in m3


Wastewater Production phase

Environmental management in production detailed guidelines including quantitative targets across the entire product range to minimise the consumption of energy, fuel and raw materials during the use phase documentation of products’ environmental impact / lifecycle assessments information on upgradability, reusability and recyclability As is the case with all manufacturing industries, environmental management in production is a priority area when looking at sustainability in the machinery sector because of environmental impacts related to production (energy and raw material use, waste, wastewater, emissions,...).


Emissions to air Production phase

Emissions to air 1. Greenhouse Gases 2. Acid Rain, Eutrophication and Smog Precursors 3. Dust and Particles 4. Ozone Depleting Substances 5. Volatile Organic Compounds 6. Metal emissions to air




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Total CO2, NOx, SOx, VOC emissions in million tonnes


Environmental management in production detailed guidelines including quantitative targets across the entire product range to minimise the consumption of energy, fuel and raw materials during the use phase documentation of products’ environmental impact / lifecycle assessments information on upgradability, reusability and recyclability As is the case with all manufacturing industries, environmental management in production is a priority area when looking at sustainability in the machinery sector because of environmental impacts related to production (energy and raw material use, waste, wastewater, emissions,...).


Social Labor conditions Temporary workers

Temporary workers are often employed during peak times in order to cover high production demands. They are easy prey to discriminatory recruitment and employment practices Temporary workers are confronted with a number of disadvantages ranging from high job insecurity, lower wages, fewer social security benefits, fewer training opportunities and less information regarding health and

429, 481 Civil Society Organization



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safety and weaker protection of their rights, including the right to unionise and collective bargaining

Wage levels In many major electronics production countries, minimum wage levels are too low to allow workers to cover their basic needs. As commonly understood, a living wage should cover the basic needs of a worker and a small family and also include some discretionary income. In order to achieve fundamental improvements in regard to wage levels, awareness among companies needs to be raised. In particular, awareness is necessary regarding the fact that payment of minimum wages is often insufficient and instead living wages need to be introduced. Many workers therefore need to work excessive overtime in order to earn enough money to support themselves and their families.

429 Civil Society Organization

Freedom of association and collective bargaining rights

Workers in electronics companies are usually not allowed to elect their own representatives; nor are they able to communicate, let alone negotiate, with management. The absence of these rights makes it almost impossible for workers to improve their working conditions. These findings are in sharp contrast with reports from electronics brand companies, which claim that compliance of their suppliers with freedom of association and, in some cases collective bargaining, is high Somo’s research shows that workers in the electronics industry are categorically denied the right to associate freely and bargain collectively.

429, 480 Civil Society Organization



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‘Freedom of association in the electronics industry’ by SOMO is based on extensive and on-going research carried out since 2004

Occupational health and safety

Operations and supply chain

Health and safety in the company and in the supply chain Health and safety standards. Health and safety standards for suppliers. Monitoring and training of suppliers Whether assembling machine components, carrying out welding work on ships or installing an entire production plant, the health and safety of employees is vital. This is true for own employees as well as suppliers.


Occupational health and safety risks

Exposure to toxic chemicals

Workers in industries using chemicals are especially vulnerable through exposure to toxic chemicals and related health effects. These include an increased cancer rate in workers in electronics facilities;


Workers in industries using chemicals are especially vulnerable through exposure to toxic chemicals and related health effects. high blood lead levels among workers at lead-acid battery manufacturing and recycling plants and flame retardant exposures among workers in electronic waste recycling


Electronic waste (e-waste)

Occupational health risks from electronic waste (e-waste)

The fastest growing type of waste stream is the electronics waste stream in the industrialized countries, growing almost three times faster than the overall municipal waste stream. This is a result of the fast pace of technological innovation and, consequently, the




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shortened lifetimes of electronic products Health-damaging exposure to e-waste can result in long term, often irreversible effects, such as infertility, miscarriage, tumors, endocrine diseases and birth defects. The workers often suffer from cuts, coughs, headaches, upper respiratory problems, rashes and burns. Thousands of people are working in the informal waste industry in Ghana. Children constitute around 40 percent of the scrap workers at Agbogbloshie dumpsite.

Migrant workers Recruitment and employment

Recruitment and employment of migrant workers Number of migrant workers employed Countries of origin Gender of workers Positions within company Length of contracts Recruitment channels Any fees for recruitment Passport retention Migrant workers both internal and external are a significant and growing feature of all company activities. There are over 200 million migrants in the world. They are found within nearly all business sectors and across all regions. Many migrant workers, particularly those working in unskilled jobs are subject to discrimination and are vulnerable to exploitation and abuse. For many migrants exploitation begins during




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recruitment. Exorbitant fees and other charges, often at usurous rates of interest can leave many migrant workers effectively bonded labour whatever the subsequent conditions of employment. Company due dilligence and reporting should therefore extend into the supply chain for labour.

Product safety Customer safe handling of product

Customer-focused product responsibility refers to measures aiming at enabling the company's customers to handle the products safely. Design guidelines on product safety. Information and training on the safe handling of products for customer employees. Measures for reducing noise Possible safety risks in the machinery sector refer to the use phase by the customer.


Percentage of products sold or shipped corporate subject to product recalls for safety or health reasons Spending on product safety per unit produced corporate


Eco-design of products

Life Cycle Assessment (LCA) of products

Environmentally conscious design helps manufacturers lower the environmental impact of products throughout their entire life cycle—from purchasing raw materials to recycling or reusing the resources found in old equipment. It means reducing consumption of the earth’s limited resources, cutting back on the energy used to produce and operate these devices, and proper disposal once the appliances are no longer being used. Environmentally conscious design is examined during product development, and prior to an appliance being

381 Business



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manufactured and sold,product assessment is conducted to evaluate how successfully it will reduce environmental impact. The key is making sure that improvements are being made in an ongoing manner. Environmentally conscious design (ECD) of electrical products is fundamentally appropriate. For decades, NEMA companies have been at the forefront of efforts to integrate ECD considerations into electrical and electronic products. They have steadily reduced or eliminated the use of hazardous materials while not compromising safety and performance standards.

Improvement rate of product energy efficiency compared to previous year


Eco-efficiency of products: Optimising the consumption of energy, fuel and raw materials during the product's use phase. detailed guidelines including quantitative targets across the entire product range to minimise the consumption of energy, fuel and raw materials during the use phase documentation of products’ environmental impact / lifecycle assessments information on upgradability, reusability and recyclability The machinery industry produces durable capital goods, whose loading on the environment occurs principally during the use phase. Besides manufacturing products




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with a long product lifespan, the key to a sustainable machinery industry thus lies in improving their eco-efficiency.

The main challenges and opportunities in the industrial equipment sector are associated with the use of products. Key issues include energy efficiency, safety, clean internal combustion and lean disposal options. Leading companies are increasingly focusing on product innovations and use life cycle analysis during product development


Electromagnetic radiation (EMR)

Health risks from exposure to EMR from use of products

An electromagnetic field (also EMF or EM field) is a physical field produced by moving electrically charged objects. It affects the behavior of charged objects in the vicinity of the field. The electromagnetic field extends indefinitely throughout space and describes the electromagnetic interaction. It is generally recognized that extra-low frequency (50-60 Hz) electromagnetic fields (ELF-EMF) are present in the environment as a result of the generation, transmission, distribution and use of electricity in modern society. The available scientific evidence indicates that public exposure to ELF-EMF is not a cause of long-term chronic adverse health effects, based on the multi-million dollar,6-year National Institute of Environmental Health Sciences (NIEHS) RAPID research program. The RAPID program’s findings, reported to the U.S. Congress in 1999, are supported by several highly respected and independent organizations including the National Research Council of the National Academy of Sciences

380 Business



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(1996), the American Physical Society (1995), the World Health Organization (ongoing) and the British National Radiological Protection Board (2001).

Quality management of products

Recalls and claims

To understand the company's quality management of products Number of recalls due to the cause of troubles and failures Number of claims due to the cause of troubles and failures

597 Business

Other Corporate governance

Gender participation on governance bodies

GOVERNANCE / EUROPE: boardroom lady boom: is it possible without quotas? On 22 June, the CapitalCom agency published its 2011 survey into the boardroom gender mix of CAC 40 companies, with fairly encouraging results: the proportion of women on the board has doubled in recent years, from 10.5% in 2009 to 20.8% in 2011. In January, the French parliament adopted legislation imposing quotas for the proportion of women on the board of major companies. Under the measures, the development of female board membership is mandatory and gradual: 20% for listed groups, public companies of an administrative, industrial and commercial nature by January 2014, rising to 40% by January 2017. The law also stipulates that companies with no women present on their board must appoint at least one within six months of it being on the statute books (voted on 13 January 2011). In France, some 2,000 companies are




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affected (the 650 largest listed firms and companies with more than 500 employees and those generating sales in excess of €50bn). In terms of sanctions for noncompliance, appointments that run counter to the parity principles are to be declared null and void and attendance fees are to be temporarily suspended. At the European level and at the instigation of the Vice-president of the European Commission, Viviane Reding, the European parliament will decide in March 2012 on whether to adopt common legislation on this matter (a mandatory proportion of women in decision-making positions of 30% in 2015 and 40% in 2020). This will depend on the level of improvement seen based on the self-regulation of European companies, in accordance with the equality initiative adopted by the European Commission in December 2010 and the European parliament resolution of 17 January 2008 calling for the Commission and member states to promote a balance between women and men on company boards, particularly where member states are shareholders. Europe as a whole illustrates the degree of hesitation between a soft-law approach and conventional legislation (quotas in this instance), but it is clear from the experience at national level that the second method tends to get much better results.



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Supplier screening

Human rights and occupational health and safety

Lengthening supply chains in emerging markets increase companies’ potential exposure to human rights abuses and occupational health & safety issues. Sector leaders manage these risks as an integral component of their supply chain management.


Supplier agreements and supply chain partners screened for risk of ESG infringement Share of supplier that are signatories to the EICC (Electronic Industry Code of Conduct)


On 9 and 10 May 2012, GoodElectronics and makeITfair organised a Round Table on workers’ rights in the global electronics sector with representatives from the electronics industry and civil society organisations (CSOs) from around the globe. About 80 participants came together to exchange information and discuss the key topics of temporary labour and wage issues in the global electronics industry. There were exchanges on migrant labour, the position of employment agencies, living wages, engagement between electronics companies and CSOs, and much more. Discussions took place in the context of the overarching themes of freedom of association and the right to collective bargaining. The May 2012 meeting followed a first Round Table that makeITfair and GoodElectronics organised in May 2009. The May 2009 meeting enabled a diverse group of participants to bring their own often diverging analyses to the table. The meeting’s report presented proposals concerning a range of topics, including the need to work towards formal social dialogue, as well as




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structural stakeholder consultation and collaboration between the industry and CSOs, in particular also on training projects. The 2009 meeting called upon the electronics industry to upgrade existing codes of conduct, by following International Labour Organization (ILO) conventions on freedom of association and collective bargaining, and by including clauses on living wages, labour agencies and migrant labour. One proposal was for companies to gear up their purchasing practices, for instance, by including penalties and financial incentives for their suppliers and by developing an in-depth cost-benefit analysis of electronics production. It was suggested that this would pave the way for defining the business case for a living wage. Another set of proposals concerned the problem of temporary labour. It was suggested that companies should provide quantitative data at the factory level on the percentage of workers recruited and hired by labour agencies and think of an acceptable ratio of regular to temporary workers.

In the opinion of makeITfair and GoodElectronics and the participating CSOs, too little progress has been made on these important dossiers since 2009. Major labour rights problems still persist on the work floor, and the ways forward that were identified in 2009 have not yet been put into practice. While individual companies and industry initiatives have made efforts to address labour rights violations, these steps have been inadequate and



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insufficient. Worse still, the main focus remains on code compliance. Codes of conduct often use weak language, do not cover all relevant issues, monitoring is limited in scope, and enforcement of corrective action plans is poor. Code compliance does not answer to the real needs regarding workers’ rights in the global electronics supply chain.

1 All references can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx




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References

All references can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx

109 Department for Environment, Food & Rural Affairs (DEFRA), Environmental Key Performance Indicators: Reporting Guidelines for UK Businesses, 2006.

153 European Federation of Financial Analysts Societies (EFFAS) and Society of Investment Professionals in Germany (DVFA), 2010. KPIs for ESG - A Guideline for the Integration of ESG into Financial Analysis and Corporate Valuation, Frankfurt am Main: EFFAS.

193 Frandsen, D. M., Rasmussen, J. & Swart, M. U., 2010. MakeITFair: What a waste - how your computer causes health problems in Ghana, Copenhagen: DanWatch.

253 Institute for Human Rights and Business (IHRB), 'The Dhaka Principles for Migration with Dignity', Dhaka, 2011.

374 Meier, A., Nordman, B., Busch, J., Payne, C., Brown, R., Homan, G., Sanchez, M., Webber, C., 2008. Low-power mode energy consumption in California homes, Berkeley: California Energy Commission, PIER Buildings End–Use Energy Efficiency.

379 National Electrical Manufacturers Association (NEMA), ' The labeling of mercury containing lamps', 2004

380 National Electrical Manufacturers Association (NEMA), 'NEMA Statement on Extra-Low Frequency Electromagnetic Fields (ELF-EMF)', 2002.

381 National Electrical Manufacturers Association (NEMA), 'Statement of principles, end-of-life management of electrical products', 2009.

389° Natixis, 2011. Strategy Note Equity Research - Strategy/SRI: Monthly review June 2011, Paris: Natixis.

400° OEKOM, 2010. Industry Focus, Machinery, Munich: OEKOM.

429 Overeem, P., 2012. Workers’ rights in the global electronics sector, Report of the May 2012 makeITfair and GoodElectronics Round Table, Amsterdam: SOMO.

460 Robeco SAM, 2012. The Sustainability Yearbook 2012, Zurich: Robeco SAM.

480 Stichting Onderzoek Multinationale Ondernemingen (SOMO), 2012. Freedom of association in the electronics industry, Amsterdam: SOMO.




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481 Stichting Onderzoek Multinationale Ondernemingen (SOMO), 2012. Temporary agency work in the electronics sector, Amsterdam: SOMO.

529 United Nations Environment Programme (UNEP), 2012. Global Chemicals Outlook (GCO): Towards Sound Management of Chemicals, Nairobi: United Nations Environment Programme (UNEP).

597 World Intellectual Capital Initiative (WICI), 2010. Electric Components KPIs, Tokio: World Intellectual Capital Initiative (WICI).

° Resource available on request and/or for a fee.

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