CEO Roundtable

June 2, 2013 | Washington, DC

CHEMICAL RESTRICTIONS
Background/Impact

Executive Summary Key Issues Affecting the Toy Industry

New hazard-based (rather than risk-based) programs to regulate toxic substances in toys and childrens products continue to be introduced. These programs are often redundant and differ enough to result in complex and costly compliance and testing; they could also lead to a ban on materials that have long been used safely in toys. Prevent the introduction of new and/or mitigate the impact of hazard-based legislation and regulation. Work to remove materials/chemicals important to the toy industry from existing concern lists; prevent more substances from being added to existing lists. Align international, national and state chemical requirements. Advocacy. Coalitions. Compliance education resources for companies. Data to contradict the allegations made by hazard-based proponents. Enhanced monitoring (and information sharing) regarding emerging threats. Positive messaging campaigns (e.g., toy industrys commitment to safety) for stakeholders. Invest in the development of improved methods of identifying and selecting safer chemicals/materials. Approve company participation in advocacy and alignment efforts. As appropriate, authorize the sharing of company data to support message development across jurisdictions. Promote industry-wide compliance with all requirements.

Objectives Strategies Tactics and Tools

Suggested CEO Action

ENVIRONMENTAL IMPACT (EPR and Labeling)

Background/Impact Legislation requiring manufacturers to establish take back processes for their products or packages is being proposed and/or implemented in multiple jurisdictions. In the EU, there is also an emerging trend to provide a comparison method (e.g., labeling scheme) for the environmental footprint of consumer products. Both programs could be costly and will likely provide no significant environmental benefit. Increasingly, toys are being specifically included in the scopes of these programs. Prevent the introduction of new and/or mitigate the impact of EPR legislation and environmental labeling schemes. Work to remove toys from existing EPR or labeling requirements; prevent toys from being added to new requirements. Align international, national and state environmental requirements. Develop compliance assurance programs. Advocacy. Coalitions. Compliance education resources for companies. Data to contradict allegations of perceived benefit. Enhanced monitoring (and information sharing) regarding emerging threats. Positive messaging campaigns (e.g., toy industry efforts to protect the environment) for stakeholders. Approve company participation in advocacy and alignment efforts. As appropriate, authorize the sharing of company data to support message development across jurisdictions. Promote industry-wide compliance with all requirements.

Objectives Strategies Tactics and Tools

Suggested CEO Action

CEO Roundtable Executive Summary of Key Issues (revision dated May 14, 2013)

MARKETING TO CHILDREN (M2C)

Background/Impact Marketing to children remains a very sensitive issue. Politicians and consumer advocates are demanding better protection, especially in digital media and where, some argue, children may be less able to distinguish between content and advertising. Stricter rules on advertising, data protection and online privacy particularly in relation to children under the age of 13 are being proposed. Costs and process impacts from new obligations would affect all child-directed websites, online gaming (dubbed by some as advergaming) and mobile apps, as well as overarching privacy policies, information collection practices, etc. Severe penalties for non-compliance could be levied. Protect companies ability to engage in responsible advertising and prevent the introduction of new and/or mitigate the impact of M2C legislation and regulations. Proactively support self-regulation and safe harbor programs (where they exist). Enhance and promote self-regulatory practices by ensuring that they keep pace with emerging technologies. Advocacy in support of self-regulation programs. Coalitions. Compliance education resources for companies. Enhanced monitoring (and information sharing) regarding emerging threats. Positive messaging campaigns (e.g., toy industrys commitment to keeping children safe regardless of where they play) for stakeholders. Champion reliance on credible self-regulation and industry best practices. Promote industry-wide compliance with all existing laws, responsible advertising guidelines, media education and self-regulation programs, including protecting the privacy and online safety of children. Approve corporate participation in advocacy and alignment efforts. As appropriate, authorize the sharing of company data to support message development across jurisdictions.

Objectives Strategies Tactics and Tools

Suggested CEO Action

CEO Roundtable Executive Summary of Key Issues (revision dated May 14, 2013)

CEO Roundtable

June 2, 2013 | Washington, DC

ISSUE BRIEF: Chemical Restrictions Background/Impact

ISSUE BRIEF Chemical Restrictions

Non-governmental organizations (NGOs) worldwide are making strong, increasingly coordinated pleas for new regulation of allegedly toxic chemicals that are reported to negatively impact human health and the environment. These initiatives have been structured to fundamentally remake the way chemicals and products are both designed and used, and to move to a precautionary-based approach to chemicals management. Some have sought to ban specific chemicals (e.g., Bisphenol-A (BPA), cadmium, flame retardants, lead, phthalates, polycyclic aromatic hydrocarbon (PAHs), etc.) while others seek reform of how ALL chemicals and products are regulated for health and environmental impact (e.g., green chemistry, precautionary principle, safer alternatives, general bans of chemicals considered to be or labeled as carcinogenic, mutagenic or toxic for reproduction (CMR) endocrine disrupters, etc.). The proposals often include requirements for ingredient disclosure and public notice of chemicals of concern contained in products, as well as mandates to conduct alternatives assessments. Efforts by governments to regulate substances in childrens products are often considered to be politically motivated and may be precautionary (without regard to sound science and risk). These requirements can result in costly, complex compliance procedures and additional testing, though they often do not significantly enhance safety. Individual country chemical restriction proposals are being monitored in Asia, Europe, Latin America and North America. In Europe, chemical regulations have been implemented under the European Unions REACH regulation, the RoHS directive for electrical equipment, the Cosmetics Regulation and the EU Toy Safety Directive. In the U.S., federal chemical regulation policy debates focus on reform of the statute regulating chemicals in commerce, Toxic Substances Control Act (TSCA). More than 20 additional states are considering proposals ranging from individual chemical substance bans to broader disclosure and phase out/alternative assessment requirements. While some of these bills would affect all consumer goods, many focus on childrens products. Four (4) states have already passed such laws; disclosure in Washington State began in August 2012 for the largest companies.

Objectives

Prevent the introduction of new and mitigate the impact of existing hazard-based legislation and regulations.

Strategies

Work to remove materials/chemicals important to the toy industry from existing concern lists; work to prevent more substances from being added to existing lists. Work to align international, national, and state chemical regulations for childrens products.

Tactics and Tools

(As needed) Commission research to contradict allegations in hazard-based requirements and/or evaluate the risk of chemicals under scrutiny. Develop or enhance programs to facilitate industry-wide compliance with existing requirements.

Issue Brief on Chemical Restrictions | Last Update: May 14, 2013

Tactics and Tools (continued)

Enhance capabilities to identify emerging threats and share information (advocacy messages, best practices, data, etc.) among industry stakeholders worldwide. Secure third-party experts to assist in delivering key toy industry messages. Engage networks of: scientists, toxicologists, etc.; chemical and components suppliers; and others in supporting science-based chemical policies.

Leverage participation in (or leadership of) cross-industry coalitions.

Develop positive messaging to educate NGOs, consumer advocates, policymakers and other stakeholders about the value of play, existing toy safety requirements, and the industrys long-standing commitment to keeping children safe from harm. Quantify costs and resources associated with compliance with chemical regulatory programs and the impact these costs have on toy businesses, particularly SMEs. Suggested CEO Action Invest in the development of improved methods of identifying and selecting safer chemicals/ materials. Approve corporate participation in advocacy and alignment efforts. Authorize the appropriate sharing of company data to support message development and sharing across jurisdictions. Promote industry-wide compliance with all requirements. Encourage coordinated activity by national associations to promote and protect riskbased chemicals management policy.

KEY MESSAGES Sound science-based chemical policies: ensure a risk-based approach when prioritizing chemicals for review; rely on authoritative, credible data that demonstrates actual harm; balance precautionary and proportionality principles; consider existing chemical safety requirements; evaluate practical approaches to information and data development; create workable programs that ensure chemicals are safe for their intended uses; avoid unnecessary burdens, especially for SMEs; and allow companies to remain innovative and globally competitive as they develop and use safe chemicals and materials.

Issue Brief on Chemical Restrictions | Last Update: May 14, 2013

CEO Roundtable

June 2, 2013 | Washington, DC

ISSUE BRIEF: Environmental Impact Background/Impact

ISSUE BRIEF Environmental Impact (EPR and Labeling)

Environmental and waste management issues continue to surface globally in legislative, regulatory and commercial arenas, including among retailers. Although toys and other childrens products typically make up only a fraction of the total household waste stream, they are often the focus for attention due to the widespread view that toys are overly packaged, low utility products that provide good publicity value for lawmakers. Extended Producer Responsibility (EPR) A number of jurisdictions have implemented (or are considering implementing) EPR requirements whereby manufacturers must either take back certain products or packages at the end of their useful life or subscribe to a collective arrangement to do so. Such mandates appeal to local governments as a way to shift solid waste collection costs elsewhere and to recyclers as a way of increasing revenue and/or the amount of material available for recycling. In practice, the incremental benefit is often minimal. Industry has argued that any such EPR scheme must apportion costs fairly to all participants in the supply chain (manufacturers, importers, retailers, consumers) and that a legitimate environmental goal must be achieved rather than simply shifting disposal costs from municipalities to manufacturers. In Europe, EPR compliance schemes are active in 33 European countries (EU member states plus EFTA and EU candidate countries); 26 of these recognize the Green Dot collection process for packaging materials. In North America, the Canadian Province of British Columbia included a specific reference to electronic toys in its legislation; mandated collection began July 1, 2012. Also, the Province of Ontario requires a fee on battery-operated toys whether or not the toys include batteries when sold; the Province of Quebec is now considering a similar proposal. In the U.S., there is currently no federal EPR requirement but dozens of states are considering product take back legislation. Labeling The toy industry is most affected by requirements being introduced in the European Union (specifically France) that call for manufacturers to carry out costly and complex analyses to evaluate and document the environmental impact of toys at every single stage of a products life. Although these initiatives are aimed at better informing the consumer, the comparative data and resulting information about the environmental footprint of products is expected to be too complex for the consumer and could be misleading.

Objectives

Prevent the introduction of new and mitigate the impact of existing EPR legislation and environmental labeling schemes.

Strategies

Work to remove toys from existing EPR or labeling requirements; work to prevent toys from being added to new requirements. Work to align international, national and state environmental requirements. Develop compliance assurance programs.

Issue Brief on Environmental Impact | Last Update: May 14, 2013

Tactics and Tools

Commission research to contradict allegations of end-of-life concerns for toys and to quantify the costs and resources associated with EPR and labeling mandates for toy businesses, particularly SMEs. Develop or enhance programs to facilitate industry-wide compliance with existing requirements. Promote industry innovation in environmentally-friendly design, manufacturing and end-of-life practices. Enhance capabilities to identify emerging threats and share information (advocacy messages, best practices, data, etc.) among industry stakeholders worldwide. Secure third-party experts to assist in delivering key toy industry messages. Leverage participation in (or leadership of) cross-industry coalitions and like-minded partners to broaden impact of advocacy efforts and development of best practices for compliance (e.g., The Product Management Alliance regarding U.S. state mandates, and the electronics industry regarding e-waste programs). Engage networks of scientists, toxicologists, environmental experts, and others regarding industry product stewardship best practices. Develop positive messaging to educate NGOs, consumer advocates, policymakers and other stakeholders about the toy industrys product stewardship practices, the minimal impact of toys in the total household waste stream, and the value of play.

Suggested CEO Action

Promote industry-wide compliance with all environmental impact requirements. Approve company participation in advocacy and alignment efforts. Authorize the appropriate sharing of company data to support message development and sharing across jurisdictions. Encourage coordinated activity by national associations to promote and protect riskbased chemicals management policy.

Issue Brief on Environmental Impact | Last Update: May 14, 2013

CEO Roundtable

June 2, 2013 | Washington, DC

ISSUE BRIEF: Marketing to Children Background/Impact

ISSUE BRIEF Marketing to Children

Issues related to responsible marketing and advertising to children have become key areas of discussion among policymakers in a number of countries. Considerations are being given to a wide range of issues: advertising restriction, commercialization of childhood, gender stereotyping, obesity (relationship between the toy and food industries), and online privacy/data protection. The general appropriateness of targeting someone who, some argue, may be less able to distinguish or understand marketing also continues as a recurring discussion point. An increasing number of regulatory and self-regulatory bodies (including the International Chamber of Commerce and the Childrens Advertising Review Unit in the U.S.) are now focused on protecting the privacy of children primarily those under the age of 13 when they are online. Privacy policies, child-directed apps, and consumer data protection (e.g., Do Not Track and other Online Behavioral Advertising (OBA) issues) are priority topics. With respect to data protection, most activity is taking place within the United States and the European Union; some additional consideration is being given to the topic within the Asia-Pacific Region. In the U.S., the Federal Trade Commission recently revised guidelines for compliance with the Childrens Online Privacy Protection Act (COPPA); non-compliance is expected to result in severe penalties. U.S. and EU policymakers, for example, are also considering changes in how companies can interact with children on their corporate websites and mobile apps. Additionally, the use of a brand (e.g., character or other recognizable mark) in an online or mobile game that is in close proximity to an ad or other requested consumer purchase decision is being dubbed by some as advergaming and therefore subject to additional criticisms potentially leading to new rules and difficult-to-achieve requirements for parental consent. The International Chamber of Commerces Commission on Marketing and Advertising is currently considering a possible revision to the United Nations Guidelines on Consumer Protection and possible activity by the World Wide Web Consortiums (W3C) Do Not Track Working Group. These and other global efforts to further regulate childrens online activity could have a pervasive impact on all youth-directed marketing and advertising, and could make it increasingly difficult to develop relationships with the key target audience youth under the age of 13.

Objectives

Protect companies ability to engage in responsible advertising and prevent the introduction of new and/or mitigate the impact of M2C legislation and regulations. Proactively support self-regulation and related safe harbor programs (where they exist) for child-directed communications. Enhance and promote self-regulatory practices by ensuring that they keep pace with emerging technologies.

Strategies

Issue Brief on Marketing to Children | Last Update: May 14, 2013

Tactics and Tools

(In close cooperation with self-regulatory bodies) Proactive advocacy to policymakers and other stakeholders about the toy industrys commitment to responsible advertising and marketing practices, and the effectiveness of current self-regulatory guidelines and safe harbor programs. o As appropriate, engage other industries (e.g., food, entertainment) and third-party spokespersons for message development and delivery.

Bolster industry education programs to ensure industry-wide awareness and help toy companies, retailers and brand owners better understand how to comply with existing laws and self-regulatory requirements. Enhance capabilities to identify emerging threats and share information (advocacy messages, best practices, data, etc.) among industry stakeholders worldwide. Leverage participation in (or leadership of) cross-industry coalitions and like-minded partners to broaden the impact of advocacy efforts: o o o o World Federation of Advertisers (WFA) Responsible Advertising and Children Programme (RAC) EU European Advertising Standards Association (EASA) Asia-Pacific Economic Cooperation (APEC) Committee on Trade and Investment (CTI) National self-regulatory bodies and advertisers associations

Develop positive messaging campaigns to educate NGOs, consumer advocates, policymakers and other stakeholders about the industrys commitment to responsible communications to children, programs such as Media Smart that teach children to think critically about advertising in the context of their daily lives, toy industry philanthropy, and the value of play. Suggested CEO Action Champion reliance on credible self-regulation and industry best practices. Promote industry-wide compliance including third-party agencies and vendors supporting toy businesses with all existing laws, responsible advertising guidelines, media education and self-regulation programs, especially those that protect the privacy and online safety of children under 13. Approve company participation in advocacy and alignment efforts. Authorize the appropriate sharing of company data to support the continual alignment of self-regulatory guidelines with emerging technologies, as well as advocacy message development and sharing across jurisdictions. Encourage coordinated activity by national associations to assure well-informed arguments and decisions.

Issue Brief on Marketing to Children | Last Update: May 14, 2013