Properly assessing environmental pollution risks is an important component in the responsible management of used electronics.  Potential risks are inherent in the products being recycled, such as the presence of lead and mercury.  Risks can also stem from the way products are managed.  For example, improperly stored materials may expose the area around a facility to storm water contamination.  Poorly designed or managed treatment processes may result in toxic wastes or by-products that present environmental risks.  For R2-certified recyclers, the totality of environmental risks from processing used electronics must be considered in determining whether pollution liability insurance is needed.

Initially, the R2:2008 Standard required that all certified companies carry pollution liability insurance.   In developing the current R2:2013 version of the standard, the R2 Technical Advisory Committee revisited this requirement because of the lower risks of refurbishment-only operations.  It recommended that the requirement be changed so that the level of liability insurance be proportionate to the level of risk present at each facility.  As a result, R2:2013 contains language that presumes the need for pollution liability insurance but also allows for a company to demonstrate it has adequate insurance for the evaluated risks.  The burden of proof is solely on the company.

For a company to successfully demonstrate it does not require any pollution liability insurance an assessment must be conducted by a qualified individual.  A self-assessment is not acceptable.  Nor would a "phase 1" environmental site assessment study of the site qualify as an acceptable environmental risk assessment of a company's current activities. 

Commissioning an acceptable type of assessment can be difficult.   Most insurance agents are not experienced in the recycling industry, nor in pollution liability.  An environmental risk assessment must be conducted by a qualified environmental professional.  Qualifications to look for include but are not limited to:

• CHMM - Certified Hazardous Materials Manager
• PE - Professional Engineer (Environmental)
• PG - Professional Geologist
• RG - Registered Geologist
• Commercial Insurance Underwriter or Risk Manager with qualifications in pollution liability insurance and quantification of environmental impacts.

Although a professional environmental assessment may cost a few thousand dollars (U.S.), the savings from not needing pollution liability insurance is likely to be recouped in the first year.   Check with your insurance company first, as free resources may already be available to you.

The bottom line: all R2-certified companies are presumed to have environmental pollution risks and must carry pollution liability insurance unless they demonstrate through a qualified environmental risk assessment that they have a minimal level of risk that does not warrant pollution liability insurance coverage.

Editorial Note:  Input for this article was provided by Dwight Clark, of Full Circle Compliance LLC, and by Ross Fields, of the Leavitt Group.