PODCAST TRANSCRIPT:

Interview with Mike Watson – Origins of the R2 Standard

7/15/23

For this episode of Ask the R2 Guru we’ll answer a simple question — where did the R2 Standard come from? Mike Watson was part of the original group that created the R2 standard, and he is our guest on the podcast. From a conversation over coffee 20 years ago to a standard in use in more than 40 countries, this is an interesting story.  I hope you’ll stay tuned to this episode of Ask The R2 Guru.  I’m RG from SERI, Champions of Electronics Sustainability.

Roger (RG) So Mike, Thanks for doing this… let’s begin with your background and how you came to become associated with what eventually became R2.

Mike Watson (MW) Sure ….actually I did not come from the environmental background. I had about 20 years of IT and financial systems background leading into this.  I spent my first ten years at Dell as the director of their IT financial systems. After the WEEE initiative in Europe came about, Dell started to realize that globally, they had some challenges they really needed to get in front of, and they wanted to do it with a business lens on how they would drive their compliance and focus on producer responsibility.

RG:  So with this work at Dell, what was then your involvement with the US Environmental Protection Agency?

MW:  After I came back on board with Dell (I had been retired) and they convinced me that coming back and working through the environmental space was a great idea.  So once I got there, I realized there really wasn’t a strong validation of their vendors and how they audited them. They did an EH&S type audit but they really didn’t do a deep dive into the big risk areas like data and chain of custody and disposal. So working with the Dell legal team, we built a performance standard for our environmental partners (the term we used for the recyclers) that they used around the world, and we posted that to our website and it caught the attention of the EPA.

Luckily the lady in charge at the time, Thea McManus, had a son here at UT in Austin, and she was in town and reached out to me and asked if we could grab some coffee and talk in general.   During that conversation, one of her key questions was can we use this as a jumping off point for the industry to create some type of an industry standard or a best practices of voluntary certification. We noodled a couple different approaches to it… I went back to Dell and asked if that was a reasonable request, and we jumped in with both feet.

RG: It’s really interesting you would talk about things like chain of custody and data security and production of responsible disposal because that’s exactly what a lot of the R2 standard is still concerned with all these years later .

MW: Yeah, these are the key risks in our industry and there isn’t a priority on any one of those. It’s the trinity of risk that we live with every day — data protection and data security is tightly related to chain of custody, chain of custody is tightly related to proper disposition.  And our ultimate goal was a pound for pound accounting of the material touched by the environmental partners at Dell first, and then as we rolled out the standard for all the certified facilities.  So if a pound of material came in that building, what was its final outcome and being able to trace that pound for pound has been our continuing challenge.

RG:  So one meeting for coffee in Austin, Texas got something going.  What was the next step after that, how did other people become associated with the process of taking the work you’ve done with Dell, and expanding it with some other people’s work other places?

MW: So we had an initial meeting — the EPA served as a convener for a wide stakeholder group and we met on Ave. K in DC.  Some of the folks that are still working in this space were in that room at the time and we had a hard conversation about do we think we could get to a point of compromise on some very widely divided topics in and around this space across a large stakeholder community.   And at the time, we were facilitated by a gentleman the EPA had hired and had used many times — John Lingelbach.

RG: Who eventually became the first Executive Director for R2 Solutions.

MW:  I clearly remember him standing there at the end of our first gathering and saying he had serious doubts whether this group of people could collaborate to a successful outcome, and he also had serious doubts about whether he thought he could actually make that happen. And ultimately he ended up being the Executive Director of SERI and saw it through at least two revisions with a wide cross functional stakeholder team.

RG:  So I want to reset the environment in which this was working then.  Were there any other groups or any other standards that were actually up and running at that time for anything to do with the electronics recycling or refurbishing or repair or anything like this?

MW: No, it was the Wild West…there really wasn’t anything.  Canada was beginning to think about something similar to this.  Europe had something that they began working on but it was across all white goods and certainly did not address the risk in our vertical industry around chain of custody, data and proper disposal, so this was a very unique and very ambitious plan to get a best practices published that could actually be auditable.

RG:  That’s the crucial part … the third party verification of what’s going on with these various companies, right?

MW: Yeah …there’s a lot of interest in doing the right thing but there’s very little interest in proving in a very auditable way that this stuff can be accounted for, and the routes that it took were proper, and met all the regulatory obligations.

RG:  Without naming names, what groups were around this table when this was first being formulated?

MW: Sure… I always break it down into there’s really three key groups.  One is the customer — the most important is the customer.  So the customer, from my perspective, has always been a machination of an OEM.  So you know, over time the big box stores have ended up being OEM ‘s, but at the onset of this work, the traditional OEM’s were the Dells, HP’s, Lenovos, Acers of the world.  Then separately, there was the recycler group…those that would be certified to this standard and had to operationalize the standard.  And then finally the other group is just as critical, and that was the “other interested parties group”…that would be the regulators, NGO’s and academics.  So that ended up being one group of the regulators, NGO’s and academics; then we had recyclers; then we had OEMs.

RG: Which parallels very closely the structure of the current Technical Advisory Committee for the R2 standard.

MW: That’s correct, and in the Others group there’s also the audit community.  So we get some phenomenal input from the recyclers on “Is this feasible?”  We get some phenomenal input from the customer group on “I need this — this is my critical risk area.”  And then from the others group we get “Is it auditable — is it enough, does it meet our regulatory requirements?”  Again, these are the same discussions that we have now with the Technical Advisory Committee.

RG:  So when was this, Mike –2006? 2007? 2008?

MW: 2004 was the initial gathering in DC and from there we met for about 2 1/2 years on a very regular basis. I would say and at one point I think we started on an optimistic “we’ll meet every other week and see what we can get accomplished” and then we had to increase the frequency to weekly. Within 2 1/2 years we came up with a somewhat of a final version to be field tested — and I have my fingers up in quotes — to be field tested in multiple facilities.

RG: This would be then 2006 or 2007?

MW: 2007 and multiple facilities, meaning we wanted multiple — we wanted different audit firms and different facilities to see what kind of results you’ve got from the audit activity.

RG:  And how did that go?

MW:  In my opinion, it went phenomenally well . It was auditable, it produced the audit program, produced great results and the facilities that were audited were up to the task.  It fundamentally changed their business practices in a significant way. It didn’t change them to a more expensive way of doing things, they just made better decisions.

RG:  The first version of the R2 Standard did not require a management system like ISO 14001 for instance — was that a conscious decision or result of compromise?

MW: I believe that was a compromise. That was a while back, but we tried building in enough of a management system into the language so that it didn’t have to — we didn’t have to call out another certification for it to stand alone.  Again, this was best practices so we thought we could embed enough of a management standard language into it so it’s basically a light version – is what we were trying to accomplish.

RG:  So Mike, which came first  — the R2 Solutions group as a nonprofit organization or the work of your committee being sent to ANSI for some sort of official validation of the standard as a thing?

MW: Sure… so as we reached the end of creating the standard we realized we had a real challenge on our hands and that was what do you do now that you have it written on a piece of paper? What’s the next step and how do we keep this in perpetuity? So how do we make this thing last? And we looked at other standards, realized that we needed ANSI accreditation.

RG:  What’s ANSI?

MW:  ANSI is an accreditation body for just standards in general — on how they’re built, how they’re created,  how they’re overseen in a global environment. So other ANSI standards would be 9001 which is the quality standard, 14001 is an environmental standard  — there’s environmental health and safety standards — all of those are ANSI-accredited standards.  They’re all developed and managed and improved on an ongoing basis; they’re all created with the understanding that the goal is constant improvement, so they’re all built and improved upon in a very specific way.  And ANSI oversees the standards development activities for credible standards.  We went through the ANSI standards process and passed it with flying colors — the work that we had done was definitely well within the framework of the ANSI Standards Board.

We also knew that we needed some way of housing it [the R2 Standard] because while it was done,  just having it written didn’t mean that the third party oversight or the third party certifications would just happen magically. So we had to create an organization that really owned the standard, the standard development process and the quality of the certification process. And this all happened all at the same time as we’re coming out of this.  We knew we wanted certifications; we knew we wanted to build and build off of those audits, and improve the standard as we got audit results back.  So we knew we had to strike while the iron was hot, if you will, and capture the quality activities and build those into the next version of the standard.  So it’s an iterative process — all of these people that were part of this process were doing this as not necessarily their first job — it was probably their seventh or eighth job —  it was a part of everybody’s role within their companies. They were all subject matter experts at wherever they worked and this was one part of their role, so we knew we couldn’t continue to absorb their time and we needed professionals to manage and own the process going forward.

RG: So the process was to write the standard itself — the requirements and things –reaching consensus among these three big groups, and then make sure it’s approved and good with ANSI, and then find a place to actually house the standard for its administration. How do you then take it to a group of people to audit this standard when they’ve never audited it before?

MW:  That’s a great question.  So there were environmental auditors, there were very few at the time data forensic auditors, or risk management auditors.  And there was an education required to the audit community. We started with multiple firms that were well-versed in the environmental aspects and we had to build a level of expertise within those environmental firms on data and chain of custody and logistics.

RG:  And how did that go?

MW:  It’s always a struggle and we see that today in our certifying bodies.  The certifying bodies typically have well-trained environmental auditors that end up going through training classes to audit to R2, but there is a variety of risks that they have to audit to that they’ve never been exposed to even in school.  So they traditionally are educated in environmental risk but this brings in data risk. Sometimes you have to go to a different audit community for some of the data expertise, but the training that R2 developed over the course of time has spun these environmental auditors into a multifaceted audit community that is able to handle the wide variety of risks that our recyclers experience on a daily basis.

RG: So when was R2 officially released as a standard?

MW:  2008 which is why we named it 2008 —  it helped me remember when we released it.  And that’s also why we named the next version 2013, and it was released in 2013 as well.

RG: when were the first facilities certified to R2 then after this was released in 2008?

MW:  2008, 2009…by the time we hit 2010, we were up to about 16 facilities that were certified to this standard.  And then we had exponential growth once the customer base —  the OEM ‘s as we talked about earlier —  as the customer base realized that they could avoid doing their own audits by going with certified facilities.  It began showing up in the OEM ‘s procurement requirements when they were onboarding recyclers, so they knew that if they had a certified facility, the cost to them of internal groups doing these audits — spinning them up and educating them in and around all these risks and sending them all over the world — these certified facilities were a risk management activity for them.

RG: Again, the same argument used today to promote R2v3 in more areas than just recycling. When I was a compliance manager, our first audit in the summer of 2011 was to a standard that was up and rolling and no one knew how big it was. It was rapidly growing,  I believe we were the 110th or 112th company,  I can’t remember exactly what it was but it was early on.  But after it had been established somewhat and R2 Solutions was the name of the company that was the administrator for it . Were you involved in the creation of that?

MW: Yeah, so we had to create a place for the standard to live, and we had to create a staff, and we had to fund the staff, and we had to it with minimal funding — we had to come up with how do you afford to do all of that.   So we had to build a business from scratch, and that was R2 Solutions.  R2 Solutions was created I think somewhere in 2009 and like I said, we had we had about 16 facilities by 2010 ,and to your point we had well over 100 by 2011, and fast forward to 2023 where we have over 1000 certified facilities globally. It was clear we needed to do this properly and manage the quality and the certification process and the evolution and improvement of the standard. It needed to have a home.

RG:  Let’s talk about that evolution of the standard. (R2)2008 was for recyclers and did not include a management system in the requirements.  (R2)2013 was a really different version of that standard. Having been audited to both for my companies  — the 2013 was a real eye opener because there was a lot of emphasis on reuse of equipment and data security as section really called out with a lot of requirements —  and we had to have ISO 14001.  So, were you in the group that that made this change?

MW:  Yeah I was, and a lot of our intent as we created the language around the improvements in 2013 were based on audit outcomes.  So we have great feedback loops — feedback from the audit community, feedback from the recycling community and feedback from the customer set.  And one of the questions that we asked  hard was what will it take for the customer to rely solely on the certified facilities rather than doing their own audits of these facilities so these facilities aren’t constantly in audit mode. So you get certified once and people leave you alone until they do spot audits or they’re on to the next thing. In 2013 represented many of the things that we had or many of the inputs that we got over a five year period.   After the first release, refurbished equipment was one of the biggest loopholes so everybody tended to classify their material as refurbished and there was no industry best practices around proper management of the refurbished material.  So we were trying to not only close a gap, but also provide guidance on the proper next steps for and encourage reuse — reuse is the highest form of recycling —  so we wanted to drive it up the pyramid to the highest level of recycling which is reuse. And to do that we had to put a hard focus on that reused material.

RG: What do you see as the push toward the creation of a new version of the standard which became R2v3?

MW:  It really was industry growth. So this industry has changed dramatically since the first version and one of the things that we quickly learned was — quickly over a 10- year period (laughs)–  was one size does not fit all.  So there are refurbishers, there are brokers, there are scrap recyclers —  there’s a wide variety and it was hard to audit all of them with the same language,  so we had to put on our lenses to the different business models that were out there in the recycler community — and I’m using recycler as kind of the higher level because there are many different types, many different business models within the recycler community  — and we wanted a standard that wasn’t one-size-fits-all.  We wanted to be able to adapt to a wide variety of business models so version three has put us on the pathway to evolve with the industry

RG: When you were on the TAC, releasing and developing R2V3, you were one of a very small group of people that had been through both previous versions of the standard and it provided some perspective on it. And shortly after the release of the standard R2V3, you were asked to join the Board of Directors of SERI — how did that make you feel?

MW:  It made me feel like I was actually going to be a part of this for a longer period of time than being either employed by a customer like an OEM or a recycler. It gave me more balance in how I looked at the content so that it was a more balanced input from me since I’d both been on the recycler side and the OEM side.  But this being on the board allows me to have a balanced input into the content in general.

RG: So now as a member of the Board of Directors of a standard that’s now in use in facilities in more than 40 countries around the world, how do you view R2 now evolving into a world where there are concerns for sustainability and circular economy and ESG reporting and a bunch of new things that are supporting the very idea of responsible management of electronic materials, be it recycling or refurbishing and reselling or whatever. You have a unique perspective on this, so how do you see things right now?

MW:  That’s the great evolution of the R2 Solutions company that was focused just on R2 as a standard and SERI as a larger standards development organization where our focus is on the circular economy and evolving best practices and standards beyond just the recycling community, to the electronics industry and the life cycle of the electronics industry. We have a great opportunity going forward to be engaged in a wide variety of circular economy activities and we’re well-positioned as an organization with a history of successful evolution of best practices standards and third party certifications. I do see — we as an industry, raising the bar every year and I am so excited about the future potential of what we can do at SERI as we raise the bar not just with the recycling standard but as we evolve into other parts of the circular economy and help turn the Wild West that still exists out there in other areas of the life cycle, and turn it into a more manageable activity.

RG: Thank you so much Mike Watson for taking the time to talk with me about this today.  It’s nice to have historical perspective combined with the vision of the future for what we all do here.

MW:  And Roger thank you very much for having me — I appreciate it.

That’s it for this episode of Ask the R2 Guru. Thanks for listening, thanks again to Mike Watson, and as always, thanks to the SERI team for their assistance in producing this podcast. You can find a complete transcript of  this podcast in the Podcast Library section of the R2 Knowledge Base on the SERI website. You’ll find that at sustainable electronics.org.