E-Waste and ESG Compliance: What Companies Need to Know

Introduction

In an era of rapid technological advancement, companies are expanding quickly, driven by the efficiencies provided by the latest technology. To stay competitive, companies are constantly upgrading their electrical and electronic equipment; however, this constant upgrading leads to a critical question that too often goes unasked: “Where does our e-waste go?“

As Environmental, Social, and Governance (“ESG”) issues become increasingly important, this is a topic that companies, general counsels, chief sustainability officers, and even boards of directors cannot afford to overlook. This article explores the significance of electronic waste (“e-waste”) and how companies should address it within the context of ESG and the legal framework.

What is E-Waste and Why Does it Matter for ESG?

To grasp the concept of e-waste, it is important to first note that there isn’t a single standardized definition of ‘e-waste.’

Generally, e-waste refers to discarded electronic and electrical devices. Common corporate e-waste includes computers, laptops, monitors, networking equipment, servers, and storage devices. As technology progresses, these devices quickly become obsolete, and companies frequently update their hardware to keep pace with advancements in software and security, thereby generating significant amounts of e-waste, and as technology continues to advance, the problem only escalates.

So, what is the big deal with e-waste? While the responsibility for handling and disposing of e-waste often falls to facilities management or the IT department, the issue is far from straightforward. E-waste typically contains hazardous substances like lead, mercury, and cadmium. Therefore, improper handling and disposal of e-waste can lead to severe environmental damage, including soil contamination, water pollution, and air pollution. Hazardous substances from e-waste can leach into the soil, disrupting plant growth and ecosystems; when e-waste is disposed of near water sources, toxins can seep into groundwater or flow into rivers and lakes, impacting aquatic life and drinking water supplies. Moreover, burning e-waste releases toxic fumes, contributing to respiratory issues and air pollution.

Given these impacts, companies committed to ESG principles must take responsibility for managing their e-waste in ways that minimize environmental risks.

E-Waste Regulations in Malaysia: A Checklist for E-Waste Compliance

As companies commit to being more ESG-responsible, addressing e-waste has become an unavoidable priority. In Malaysia, the disposal, treatment, storage, and labelling of e-waste are regulated by the Environmental Quality (Scheduled Wastes) Regulations 2005. We will simplify this complex topic into a checklist of five straightforward questions that all companies should ask themselves when it comes to e-waste management:

1. How is e-waste being disposed of? When it comes to the disposal of e-waste, companies may often choose efficiency or convenience over compliance, such as using illegal landfills, unregulated recyclers, or unauthorized locations like rivers, forests, or vacant land. Legally, e-waste must only be disposed of at licensed facilities, including licensed land treatment facilities, landfills, or waste incinerators. It is crucial to ensure that these facilities are properly licensed, as disposing of e-waste at unlicensed sites is illegal.
2. How do companies store e-waste? Some companies may store e-waste in non-specialized locations such as regular storehouses, basements, or parking lots, which will lead to potential fire hazards and toxic leaks. Proper storage of e-waste requires containers that are compatible with the nature of the e-waste, designed to prevent spillage and leakage.
3. Is e-waste being properly labelled? It is essential for companies to label e-waste containers clearly with the name, address, and telephone number of the generating company. Labelling not only facilitates tracking the lifecycle of electronic products but also ensures that companies remain accountable for their products from production to disposal.
4. Is there an inventory of e-waste? Companies should maintain an accurate and up-to-date inventory of e-waste, including details on the quantities generated, treated, and disposed of, and keep these records for at least three years from the date the e-waste was generated. An inventory not only ensures compliance with environmental laws but also aids in efficient waste management by identifying reusable, recyclable, or specially disposable components.
5. Are training programs organized about e-waste? Companies must ensure that their employees attend training programs that cover e-waste identification, handling, labelling, transportation, storage, and spill response.

Conclusion

Given the growing focus on ESG, companies can no longer afford to ignore e-waste. Proper management and disposal of e-waste are not just about compliance but also about corporate responsibility and minimizing environmental impact. By following the checklist above, companies can ensure they are on the right path toward responsible e-waste management. For further guidance, companies are encouraged to work with external legal counsels familiar with the technology industry and ESG compliance.

If your company is interested in learning more about responsible e-waste management, ESG compliance, or requires legal guidance in addressing any related concerns, please don’t hesitate to reach out to our team of experienced lawyers. We are well-versed in regulations governing e-waste and can provide tailored advice to ensure your company aligns with the latest ESG standards. Contact us today to discuss how we can support your sustainability journey and help you navigate the complexities of environmental compliance.

About the authors

Ong Johnson
Partner
Head of Technology Practice Group
Transactions and Dispute Resolution, Technology,
Media & Telecommunications, Intellectual Property,
Fintech, Privacy and Cybersecurity
johnson.ong@hhq.com.my

Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications, Intellectual
Property, Corporate/M&A, Projects and Infrastructure,
Privacy and Cybersecurity
ky.lo@hhq.com.my.

Tan Zhen Chao
Associate
Real Estate, Project Development, Strata Management & Dispute Resolution
zctan@hhq.com.my.