Electrolux 2004 Annual Report Download - page 104

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100 Electrolux Annual Report 2004
Environmental Activities
companies are responsible for take-back, logistics, recycling and
administration in Germany, Italy, Poland, Austria, France, UK,
Spain, Portugal and Ireland.
Recycling systems have been in place for some years in Sweden,
Denmark, Belgium, the Netherlands, and the non-EU countries
Norway and Switzerland. In most of the other EU countries, trade
associations are leading the development of such national recycling
systems.
Cost of compliance
Annual sales of Electrolux include approximately 20 million prod-
ucts that are covered by the WEEE Directive. These products
include large and small household appliances, floor-care equipment
and electrical outdoor equipment.
Electrolux will incur costs for managing and recycling historical
waste, and also intends to make provisions for future waste. The
extent of the cost will depend on a number of factors, including:
• Collection cost per unit for each country
• Collection rates for each country
• Recycling and treatment costs, including market price of
scrap metal
• Disposal costs for non-recyclable material and components of
equipment
• Administration costs
At present these factors cannot be accurately quantified. For
example, the WEEE Directive stipulates a collection target of at
least 4 kg of EEE per capita and year from private households in
each EU member state. The collection rates have reached approxi-
mately 10 kg in certain countries where producer responsibility is
already established. Collection rates may initially be lower than the
collection targets in several countries.
Over time, Electrolux expects the future cost for recycling, includ-
ing transportation from collection centers, will probably decline in
the future. At present, the average recycling fees in countries that
already have introduced producer responsibility are more than
twice as high as internal estimates derived from information sup-
plied by waste management companies.
The following assumptions have been made in order to enable
preliminary calculations of annual costs for Electrolux, despite
uncertainty regarding the basic factors. Preliminary estimates of the
annual cost for Electrolux involve the following assumptions:
• The producers’ responsibility for management of waste starts at
collection facilities.
• The average collection rates in EU member states are 70% for
refrigerators and freezers, and 50% for other large household
appliances. However, these rates are highly uncertain.
• Projected future fees for recycling, including transportation from
collection facilities, are based on internal estimates derived from
information supplied by waste management companies.
On the basis of these assumptions, the estimated annual cost of
historical waste for Electrolux when the Directive is fully imple-
mented will be approximately SEK 600m. The Directive does not
require producers to provide financial guarantees for historical
waste. No provisions related to recycling of historical waste are
made in the balance sheet.
Electrolux intends to make provisions for the anticipated cost of
future waste on the basis of estimates of future recycling costs, dis-
counted over anticipated product life-cycles.
Using the same assumptions as for historical waste, and assum-
ing an average lifetime of 12 years as well as a discount rate corre-
sponding to prevailing market interest rate, the estimated annual
cost for future waste is approximately SEK 600m.
The above cost estimates are highly uncertain and could vary
considerably. Electrolux participates in the European Recycling
Platform and thus has access to more efficient recycling systems,
which is expected to reduce these costs. Product development
that enables more efficient recycling will also contribute to cost
reductions.
Compensation for WEEE-related costs
Electrolux intends to achieve full compensation for costs incurred
under the WEEE Directive. Costs related to recycling of both histori-
cal and future waste will be added to the price of products.
The Directive allows producers to show the recycling cost for his-
torical waste separately as a visible fee. It is expected that this will
improve the potential for off-setting the cost.
Experience of the introduction in Sweden in 2001, of a similar
requirement of producer responsibility, shows that there was no
effect on overall demand or the profitability for Electrolux products.
Consumers did not appear to forego purchases in response to
price increases intended to compensate for the increase in cost.
However, it is too early to tell whether consumers and purchasing
patterns across the EU Member States after implementation of the
Directive will resemble those in Sweden in 2001.