Disclosure Tools for Product Stewards
Regardless of what the law requires, disclosure is fast becoming a commercial imperative, especially for companies wanting to establish themselves as ‘green,’ said Lynn Bergeson, managing partner, Bergeson & Campbell, PC, during a session at Stewardship 2015.
In fact, laws often symbolize the minimum required. Companies are expected by consumers to do more. “Central to the concept of greenness and being part of the growing area of good product stewardship is the concept of disclosure,” said Bergeson. “What you say, how you say it and to whom—what you claim and don’t claim—is extremely important.”
Given this trend, third-party disclosure tools such as environmental product declarations (EPDs) and health product declarations (HPDs) are on the rise. During her presentation, The Legal and Stewardship Issues Associated with EPDs and HPDs, Bergeson helped Stewardship 2015 attendees understand the differences, strengths and weaknesses of each tool.
The need for standardized disclosure tools has become increasingly apparent. “’Green’ pretty much means whatever somebody says it should mean or could mean,” said Bergeson. Although the process of refining the tools is also an ongoing pursuit. EPDs and HPDs are two tools that have gained widespread use and recognition.
Basics of EPDs
EPDs have been around for about 10 years and are used prominently in the construction industry. “I regard them as tools to communicate the environmental impacts of a product through its life cycle, using quantifiable measures in accordance with globally recognized procedures,” Bergeson explained.
The central elements of EPDs are life-cycle assessments (LCAs) and product category rules (PCRs). The latter are detailed instructions for completing LCAs and EPDs, developed using ISO guidelines, through a collaboration of material suppliers, manufacturers, purchasers and consumers.
PCRs require significant time and resources, but the process is predictive and open. “And all of that is good, and in my view as a lawyer, essential,” said Bergeson. Among the impacts that EPDs address are the product’s carbon footprint, energy demand, ozone depletion potential, and other metrics.
EPDs can be costly to prepare. They include a registration fee, an annual fee, and the cost of producing the LCA. They can take six-to-eight months to generate. Yet for some products they are essential as a competitive advantage. For instance, in the construction industry, EPDs are used as product evaluation tools. It’s critical that your products be amenable to EPD systems, says Bergeson, because architects and builders will deselect products that don’t help them get points toward LEED certification.
Basics of HPDs
HPDs are relatively new disclosure tools, providing standardized formats for reporting product content and associated health hazard information for building products and materials, says Bergeson. The elements of an HPD include the manufacturer and product information, product testing and compliance, product ingredients, and disclosure of the presence of hazardous substances. The Health Product Declaration Collaborative maintains the HPD format and standards.
HPDs focus on hazard information, not risk. Specifically, they focus on compositional disclosure. As a result, they can yield exaggerated perceptions of risk and unwanted results. For example, silica is toxic as dust, but not when it’s a component of glass. An HPD would focus on the presence of the material in a glass product, not the risk it may pose. As a result, a building product could be perceived as potentially dangerous and lead to deselection. “A lot of things pose hazards, but if there’s no opportunity for exposure, why are we reporting it,” said Bergeson. She added that because HPDs are new, a risk element may be added someday. So far the standard development process hasn’t included a formal public process, but there might be more opportunities for transparency and participation by industry down the road.
HPDs don’t’ require third-party verification, but Bergeson says companies should consider the impact of not having it done by an outside party. “A verification makes a process more valuable, more credible,” she said. Also, third parties are often experts who are familiar with the HPD format. “The process is different [from EPDs]. The information is different, and ultimately how HPDs are used in connection with their counterparts, EPDs, is what intrigues me as a legal practioner,” said Bergeson.
Legal and Stewardship Considerations
The rise of EPDs and HPDs creates new questions for businesses and product stewards. For one thing, protecting proprietary information is more difficult. The pressure to disclose information is driven by the supply chain, said Bergeson, so “the more information that’s claimed as proprietary, the more likely your downstream customers are going to be unhappy.”
Likewise, poor communication along the chain can lead to misaligned disclosures. “So many times they’ll have some information redacted on one disclosure form and then publicly available in another,” said Bergeson. “You need to harmonize these disclosures.”
Whether a company should use these tools at all depends on many factors. Not all tools fit every company’s products lines or industry. That said, laws and regulations are increasingly used to define the minimum required by markets. “They’re the floor now. The new disclosure tools are much more in keeping with what businesses are moving towards,” said Bergeson.