Posts filed under ‘Compliance Excellence’
In October the Federal Trade Commission (FTC) issued an update to the “Green Guides,” a set of rules that govern how marketers marketers communicate a product’s environmental attributes. To learn more about how the new guidelines could impact NAEM member companies, we spoke with Mark Duvall, an attorney with Beveridge & Diamond P.C. and an expert on product regulations.
Q: What are the Green Guides and why do you think we are seeing an update now?
MD: The Green Guides were first adopted in 1992 to provide guidance to marketers with respect to their environmental marketing claims. The intent was to help them avoid making deceptive statements that could put them in a liability. They were revised in 1996, 1998 and again this year.
It was time for an update because the nature of the environmental marketing claims changed since 1990s. Today there is more of a focus on carbon emissions and the idea that products are non-toxic, or free of particular chemicals, such as Bisphenol A or formaldehyde. Plus, over the past 15 years the FTC has brought a number of enforcement cases. It selects its enforcement cases with the eye of setting a message and this update is a way for the FTC to send that message more broadly then just through the enforcement.
Q: Can you give me an example of a potentially deceptive claim?
MD: An example that the FTC sometimes uses is “contains no CFCs”. (CFCs are Chlorofluorocarbons.) That sounds like it is a good thing because Chlorofluorocarbons are the things that work on the ozone layer and consumers might be inclined to buy a product because it contains no CFCs. But they have been prohibited in all products for years. There is nothing special about a product that has no CFCs.
Q: What are some of the key changes?
MD: It really depends on the type of claims they make. One of the things the guidelines did was to carry over most of the guidance from the previous 1990s version. The FTC clarified that the Green Guides apply to business-to-business communications. There is a common perception that the Green Guides only apply to marketing directed at individual consumers, but there is a lot of marketing directed at other businesses.
There are also new sections on certifications and fields of approval. There is also new guidance on claims of renewable energy or renewable materials, or carbon offsets, as well as “free of” claims and non-toxic claims.
Q: What do the Green Guides say about “free of” claims?
MD: There is an interesting aspect in the “free of” claims that you can make a claim when a chemical is still present, but at a diminished amount. A good example is “formaldehyde-free”. Think of wood products that are sometimes glued together using urea formaldehyde resins. There is also formaldehyde given off from the wood itself because the wood naturally generates formaldehyde at low levels. The FTC says that you can make a “formaldehyde-free” claim if you are not using formaldehyde resins, even though there may be a small amount of formaldehyde being naturally given off by the wood.
Q: There are so many different kinds of certifications and seals of approval out there these days, what do the Green Guides say about those?
MD: Unqualified seals and certifications are regarded as general environmental benefit claims, which are almost impossible to substantiate and therefore are considered deceptive. That makes it important to qualify appropriately the certifications to limit them to particular environmental attributes.
Q: What is an ‘unqualified certification’?
MD: Let’s say that you get a certification that says you are ‘eco-friendly’, without any qualification that explains in what way you are eco-friendly. What that does is suggest there are no environmental drawbacks for your product and that is probably not going to be the case. If you have received an award for being eco-friendly, it is because of a particular attribute or combination of attributes. The FTC is saying it can be deceptive if you don’t limit that certification to the particular attributes for which you are receiving credit. So in other words, the FTC wants greater specificity for the particular attributes that the third party is recognizing your product.
Q: Does that inherently endorse certain certifications and discredit others because some certifications may be more general?
MD: Not automatically. It may be that some certifications are specific in the certification itself. If not, it is up the marketer to qualify that broad certification as saying we were awarded this eco-friendly certification because our product is made with renewable materials. So if the certification itself doesn’t narrow it down to the specific attributes, then the marketer may have to qualify that claim by identifying what the specific attributed are.
Q: Does the fact that these certifications often cost money have any impact on their credibility?
MD: The FTC says that the fact that you pay a fee for the services of an independent, third party to conclude the certification does not need to be disclosed because consumers expect that to happen. On the other hand, if there is an exchange of money and the third party doesn’t do any evaluation but just hand over a certification (which happened in a recent enforcement case) that is deceptive. However if the award is coming from a trade association of which you are a member, your membership has to be disclosed. The impression the consumer has is that the awarding agency is an independent third party; there is a material connection between the two it needs to be disclosed.
Q: What about claims a company makes based on its own research?
MD: In most cases, companies will develop their own substantiation for their own marketing claims and there will not be a third party. In that case FTC has concluded that claims such as biodegradable are deceptive if the product is unlikely to biodegrade in the real world because it is disposed of a manner which precludes that. So before companies make a product claim, they need to understand what the likely use of that product will be in the market and are responsible for making a claim based on that use.
Q: How widespread do you think this impact is going to be?
MD: I think it is going to be significant. This is nation-wide guidance. It is unlikely to be updated again for several years. The guidance had been proposed in 2012 and some companies responded to the proposal but others waited for the final. Now that the final is out there is no reason not to go ahead and review marketing claims in light of the green guides.
For more information on the FTC’s updated Green Guides, please visit: http://www.ftc.gov/opa/2012/10/greenguides.shtm.
Perhaps you can relate to this situation: Just as our client’s sales force was poised to ship a hot new product to a dozen market countries, one of the process chemists happened to mention to the environmental manager that the product contained a “nano” component. Suddenly these small particles became a very big deal to the environmental manager, who needed to determine the relevant regulatory restrictions on a tight schedule.
Although the use of nanomaterials dates back centuries, commercial use has increased dramatically over the last decade as manufacturers have used their unique properties to create competitive advantage. In response to this increased use, environmental managers now must navigate an ever-evolving suite of regulations and health and safety precautions for those employees working with nanomaterials.
Nanomaterials can offer increased strength, conductivity, or reactivity, but particle size can also affect certain physicochemical properties, and even the toxicological effects of the substance. These may include:
- Decreasing the size of a particle increases the relative proportion of atoms on the surface. Consequently, the dissolution rate and the relative rate of reactivity can increase, for example.
- Each atom on the particle surface has fewer bonds than it would have if it were located in the middle of the particle. As a result, the energy associated with those atoms, known as the “surface free energy” differs from the free energy associated with atoms in the center of the particle. The surface free energy can affect such physical properties as the melting point, equilibrium solubility, and reactivity. The latter explains why nanoscale catalysts can be so effective.
- When the diameter of the particle is of the same magnitude as the wavelength of the electron wave function, so-called “quantum effects” occur. At this point the electrical and optical properties of the particle may change, allowing for carbon nanotubes to conduct electricity, or silver particles to appear blue, for example.
Managing the potential risks of nanomaterials can be a daunting challenge for environmental managers. One of the most difficult issues to solve is that regulators around the world define “nanomaterial” differently, with the size cutoff ranging up to 2000 nanometers (nm) and some definitions including other parameters. An environmental manager concerned with product registration must carefully parse the regulatory definitions and their application to nanomaterials, to determine if their products are regulated differently than bulk materials. Other environment, health and safety (EHS) risks associated with nano-scale materials include:
- Evolving product registration requirements;
- Appropriate health and safety precautions for workers;
- Waste management;
- Perceptions and misperceptions by customers; and
- Other life cycle concerns.
The scenario described at the beginning of this blog ended with a twist. Although the raw material supplier characterized their product as a nanomaterial, perhaps for the “cool factor” associated with the name, it did not actually meet the regulatory definition of a nanomaterial in any of the market countries. No special registration, classification, or labelling provisions applied to the material, and our client’s product could be shipped without delay.
Kate Sellers is Principal Environmental Engineer with Arcadis and co-author of the book, “Nanotechnology and the Environment”. She will continue the discussion about managing nano-scale materials during NAEM’s upcoming webinar “Understanding the EHS Opportunities and Challenges of Nanotechnology” on August 16.
With more than 30 years in the oil and gas, and hard rock and coal mining industries, Sandy Stash has significant experience representing business on controversial natural resource, public health and environmental issues. A petroleum engineer by training, she spent her early career as one of the first women to work as a drilling engineer and drilling rig foreman at ARCO locations across North America. Today she is the Global Senior Vice President of Health, Safety, Security, Environment and Operational Assurance at Talisman Energy. Her current project is introducing a holistic operational management framework that will govern risk management across Talisman’s global businesses. We spoke with her at NAEM’s recent Environmental Women’s Leadership Roundtable about her career.
GT: You were one of the first women to work as a drilling engineer. What was it like for you back then?
SS: Actually, it was a blast! In all seriousness, I made a conscious decision, particularly as a woman, to get some good solid field experience. The first thing I learned about was the equipment. I also gained a better understanding of the culture of the oil industry. And finally, I learned an awful lot about influencing people because as you might imagine, I was a 22-year-old female thrown on a drilling rig, ostensibly to be “the boss,” yet I really didn’t know what I was doing. I think I learned a lot about how to listen to people, how to influence them and how to build the teamwork necessary to make me successful.
GT: Throughout your career, you’ve also been involved with driving change in a lot of complex organizations. What are some of the strategies you’ve used?
SS: Well, first of all, it’s very, very hard work because I think that as human beings we tend to be change resistant, so I think it’s important to take the time to understand everyone’s perspective. Number two, there’s a bit of collaborative work that needs to be done to come up with a common vision. In other words, it’s a lot easier if you own part of the change, rather than having someone else telling you that you need to change. The third thing is that once you’ve made the decision, you need to be very clear about who is accountable for the outcomes. And finally, and this may be the toughest part, you’re always going to have some people who don’t want to get on board, and you need to get them out of the way.
GT: You have been involved with structuring the EHS guidelines for Talisman’s hydrofracking operations. One of the most important components you identified was a commitment to transparency. Could you explain why you included that?
SS: Hydrofracking or ‘fracking’ comes under a lot of pressure because of the concerns that people have about the materials or the chemicals that go into the frack jobs. Truthfully, it’s a very, very small percentage because mostly it’s water and sand, but we feel that we can dispel a lot of concerns and bad information by just fully disclosing what chemicals are in our frack jobs. And finally, by being transparent about chemical usage and whatever it is, the next very important step is that you actually set metrics to improve, reduce or increase whatever the metric is. So transparency leads to very important target-setting, which is important for all of us to continuously improve our businesses.
GT: You also said that your attitude when it comes to incidents is “Not on my watch.” What did you mean by that?
SS: I think that as HSE professionals we should be preventing accidents, not responding to them. We may always have the need to respond, but the more we can do in the way we design our plants, operate our plants, train our people and create clarity around people’s accountability, the better we will be at preventing accidents in the first place.
For more interviews with speakers from the Environmental Women’s Leadership Roundtable, please visit www.youtube.com/NAEMorgTV.
We are told that our education, particularly our technical skills, will prepare us to succeed in a career in environment, health and safety (EHS) management. So back when I was working on my degree in Environmental Engineering, I was taught how to design, build and run projects. I developed technical skills as well as project management skills. And while these elements are certainly important to every EHS manager, one critical component tends to be left out of our schooling: the art of selling and marketing.
We know that EHS programs don’t succeed without senior management support. The consequences of not having this support — insufficient budgets, lack of assistance from other functional areas, conflicting priorities and unnecessary obstacles — can be devastating. But to gain this support, you must know how to sell your program.
I’m not talking about the ability to make cold calls or engage in business development activities, of course — I’m talking about selling a project, idea or program.
Marketing means engaging the company in a targeted fashion. What has sold your program or idea to senior management will often not be the same set of benefits that convince your facility managers or operators. Your strategy needs to address all impacted “customers.”
Because selling and marketing are such critical components, it is important that you take the time during your program design process to plan how you will sell and market it. Put together an internal marketing plan that addresses the implementation strategy and the tactics you will use to promote that strategy. A good marketing plan is like a game plan: It serves as a guide for the actions you need to take, but also provides some flexibility to shift tactics to address any issues that may arise.
Here are a few tips for selling and marketing your EHS program that you should consider when developing your internal marketing plan. (And don’t be afraid to borrow ideas from your marketing people!)
- Understand your company: You need to know your company’s goals and how it makes money. Simply knowing its EHS issues is insufficient; you need to understand your company’s position in the market.
- Lead with your strength: Define the biggest or broadest benefit of your program and lead with that. Keep the message simple and consistent.
- Develop the program “brand”: All successful programs have a common language, look and feel, regardless of where they are implemented in the company. Develop talking points that provide a quick and easy summary of the program to keep everyone focused on the key goals.
- Identify your best customers: If you can identify and engage those who will gain the most from the new program, they can help you sell it. Listen to the “voice of the customer” (or voice of the employee) and use their words to engage them and get them excited about the new program.
- Know your competition: There will be other programs that will compete for time and money. You need to have a plan to address these challenges and convince detractors that they can also gain from your program.
What other strategies have you used to effectively introduce new EHS programs in your company?
Kelvin Roth is President of the NAEM Board of Directors and the Director of Environment, Health & Safety for AMCOL International Corp.
On March 26, the Occupational Safety and Health Administration (OSHA) published its updated Hazard Communication Standard (HCS). The new rule, which applies to all hazardous chemicals, has been harmonized the Global Harmonization System (GHS) and will affect all companies that make, transport or use hazardous materials. Mark Duvall, Principal at Beveridge & Diamond P.C., has been following the HCS since it was a proposal in the early 1980s. We caught up with him this week to learn more about the updated rule and to understand its potential impact.
What’s the genesis of this latest HCS update?
OSHA adopted the HCS in 1983 and since then they’ve made a number of adjustments to it. They made the latest round of changes for two reasons. The first is because the GHS is out there and the United States wants to harmonize its hazardous communications with those of other countries for the promotion of international trade. The second is that the agency believed that GHS would represent a clear improvement in the hazardous communication standard and thus help protect employee safety.
What is the GHS?
In 1992 the United Nations Conference on Environment and Development issued a mandate to develop a globally harmonized chemical classification and labeling system. It adopted the GHS in 2003. The standard was intended to create a common system for hazard communications. At the time, the lack of consistency across countries was a burden to international trade.
The GHS applies to hazardous chemicals. It doesn’t apply to articles, or products that have a fixed shape, which are not intended to release a chemical. There are also exemptions for certain kinds of chemicals that are subject to detailed regulation in specialized areas. So drugs, toy additives and pesticide residues in food ‘at the point of intake’ are not covered by GHS. It does, however, apply to worker exposure and transportation of drugs, food additives and pesticide residues in food.
It’s important to note that the GHS is a hazard-based system designed for trade; it’s not a risk-based system. Each company in the supply chain must consider its own risk and exposure conditions and decide on risk abatement measures.
How does OSHA’s rule compare to the GHS?
Let’s begin by talking about the three main elements to the GHS:
1. The classification system: The GHS has identified physical hazards, chemical hazards and environmental hazards, and classified them by defining them and defining different categories within each hazard class with objective criteria. Once a classification for a chemical component has been determined, you then need to classify the mixture to which it belongs. Under the old OSHA standard, there was a pretty simple rule for determining the hazards of a mixture. The mixture was determined to have all the health hazards present if they had it at .1 percent or greater, with no regard to dilution. And that ran into a problem with acute toxicity for example if you took something that was acutely toxic at 100 percent and dilute it down to 5 percent, it might not qualify as acutely toxic anymore. What GHS does is it provides guidance on how to calculate the hazards of a mixture depending on the particular hazard categories of the various components and their proportions in the mixture. And there are different approaches for different kinds of hazards. It’s more complicated, but it’s generally regarded as a more accurate system than the old OSHA system.
2. Labeling: Under the GHS there are multiple things that must appear on the label: the product name, the company’s name address and phone number, the standardized hazard statement, a pictogram and a precautionary statement. Under the old OSHA standard, you could express a hazard using any statement you wanted. Under GHS, there is a prescribed hazard statement assigned to each hazard category. There’s also a requirement for a pictogram, or a symbol conveying a visual idea of the hazard. A precautionary statement is what you should do in response to this hazard information (e.g. first aid instructions, personal protective equipment). And finally, there’s a requirement for a signal word. One is ‘Danger,’ the other is ‘Caution’. This is all different from the old OSHA rule, which required only the name and address, the name of the product and “appropriate hazard warnings” (which led to very different descriptions of the hazards for the same product).
3. Safety Data Sheets: A safety data sheet is a written compilation of information about the hazards of that product. In industrial chemicals, there is a list of data elements that have to show up. Under the old OSHA standard there was no required format for that. Now, under GHS and now under OSHA, there’s a prescribed format for the disclosure on the safety data sheets. GHS does not use the term ‘material safety data sheet’, and OSHA is adopting that language so MSDSs will now be called Safety Data Sheets (SDS). There’s a standard format and there’s also specific information that has to be included in each section.
What are some of the differences between the GHS and the updated HCS?
OSHA has not completely taken GHS. There’s a whole set of environmental hazards that are classified in GHS, which are not included in the new OSHA rule because the agency doesn’t have statutory jurisdiction. However, OSHA does require companies to include the section heading for environmental hazards; the hope is to encourage voluntarily disclosure of that information.
OSHA also adds some requirements that focus on the workplace where chemicals are present and where there is exposure potential. It requires training, it requires a written hazard communication program and it requires labeling of containers and chemicals in the workplace. Because GHS focuses on trade, it doesn’t really address the occupational exposure aspect.
The OSHA rule also differs from GHS in its classification requirements. Under the old OSHA standard, you simply had to indicate that something was acutely toxic. Now, under the harmonized rule have to classify the hazard of acute toxicity and put it into one of several buckets. Rather than adopt all five GHS categories, OSHA omitted the lowest toxicity level because it concluded that it wasn’t appropriate to in a worker protection context.
When does the new OSHA rule go into effect?
The rule goes into effect on May 25, 2012 but compliance will take place in stages:
- Dec. 1, 2013: Deadline for training employees on the new label elements. Companies will start transitioning to GHS and they need to train employees to understand the new label warnings, particularly the pictograms.
- June 1, 2015: Classification, labeling and the SDS requirements. This is the same date that the European version of the GHS goes fully into effect. Distributors, however, may continue to ship products with the old labels until December 1, 2015.
- June 1, 2016: The other workplace requirements take effect. These include requirements for hazard communication program and training on newly identified hazards. Between now and then, companies can comply with old rule, new rule or with both.
Mark Duvall is a Principal with Beveridge & Diamond, P.C. in Washington, DC, where he heads the law firm’s chemicals practice, as well as its FDA and OSHA practices. He will share his advice during NAEM’s upcoming webinar, “Preparing for the OSHA’s Globally Harmonized Hazard Communication Standard” on April 24.
At a February meeting of my company’s environment, health and safety (EHS) leaders, a guest speaker reminded the group how important relationships are in effective EHS management. The following day, I picked up the Feb. 20, 2012, issue of Time magazine that featured a cover article on the science of animal friendships.
I’m certainly not suggesting that animal friendships can teach us how to develop effective workplace EHS relationships, but these two incidents did remind me how the relationships we build as EHS managers directly impact the organization’s EHS culture. Here are a few of my observations on relationship-building principles that have worked to strengthen EHS culture in organizations:
- Emphasizing the team over the individual: This applies to EHS programs, projects involving cross-functional teams, safety committees, awards, and just about everything else within an EHS context except, perhaps,filling out regulatory agency required reports. The fact is that the EHS function can accomplish almost nothing on its own. Without interdepartmental relationships founded on trust, the EHS role can be lonely and frustrating.
- Acting as an enabler: Before approaching a person or team of people with an EHS issue, answer the questions: “What’s in it for each of them? And how can I help?” This exercise will start you down the path toward a consensus-based solution and help you develop an enabler’s mindset.
- Validating the other person’s perspective: When business leaders and core business process owners feel that the EHS people are cognizant of the demands of their jobs, understand the pressures they face and are aligned with the overall goals of the enterprise, they will be more receptive to EHS initiated projects, and more likely to include the EHS function in decision-making.
- Standing for what’s right: EHS managers who consistently act in the best, long-term interest of the organization (rather than doing what’s expedient, politically advantageous, or in the near-term interest of the EHS function) will, over time, build credibility and respect. These are characteristics of healthy EHS working relationships.
I am sure there are other important principles to relationship-building. What other principles or relationship-building experiences have had a significant impact on EHS culture in your organization?