Ten years ago, the world was a simple place to do business. Make an honest product, follow the import and export regulations (which, relatively speaking, were few and far between), avoid known toxins, and you were all set to go. Today – different story. You have to document, and report on, everything you do, familiarize yourself with various hazardous material safety and bioterror acts, and keep on top of a never ending slew of regulatory compliance acts coming out of the European Union, including the directives on the Restriction of Hazardous Substances (RoHS), Waste Electrical and Electronic Equipment (WEEE), and End of Life Vehicles (ELV).
Probably the most important act in the US is the Sarbanes-Oxley Act (SOX) of 2002, otherwise known as the Public Company Accounting Reform and Investor Protection Act of 2002, which established a new quasi-public agency (the Public Company Accounting Oversight Board, or PCAOB), that was drafted and passed in response to a number of major corporate accounting scandals (including Enron, Tyco International, Peregrine Systems, and WorldCom) in an effort to restore public trust in accounting and reporting practices.
The Sarbanes-Oxley Act contains a number of major provisions that address the disclosure of internal controls at public companies, the certification of financial reports, auditor independence, personal loans to any executive officer or director, insider trading, and required disclosures. Basically, auditors must be independent, independent auditors must “attest” to the disclosure of internal controls, the chief officers must personally certify the financial reports, personal loans to executive officers or directors are banned, and insider trades are prohibited during pension fund blackout periods. Failure to comply with any of the requirements could result in enhanced cival and criminal penalties for violations of securities laws.
In Europe, it’s a different story. Depending on the products you make, it’s either the Restriction of Hazardous Substances Directive (RoHS) that restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment; the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) that broadly covers the production and use of chemical substances; the Waste Electrical and Electronic Equipment Directive (WEEE) that imposes the responsibility for the disposal of waste electrical and electronic equipment on the manufacturers; the end of life vehicles (ELV) that force vehicle producers to have networks of facilities where the last owner of a vehicle may freely deposit such vehicle at the end of its life; or the cosmetics directive that was created to ensure product safety and public health while allowing the free movement of safe products within Europe.
Globally, we have the Kyoto Protocol, various industry codes of conduct, and forthcoming RoHS and WEEE equivalent acts in Asia. It’s a regulatory whirlwind, and it’s not about to stop. That’s why the e-Sourcing Wiki has started a wiki on regulatory compliance. Check it out – and feel free to add to it!