Governments are tackling the challenge of hazardous materials in electronic equipment, focusing not only on our shared environment but also on the health of workers who build products and dispose of them.

Cisco supports regulatory development to restrict hazardous materials and has worked with regulators, customers, and suppliers to help ensure that our products adhere to European Union and worldwide substance restrictions. Further, we are working on solutions beyond the stated regulatory compliance, focusing on alternative materials where they do not adversely affect our customers' safety and the reliability of our products.

Reducing hazardous substances in our electronic equipment is complicated, requiring products to be redesigned, tested, and then requalified to Cisco's rigorous standards for quality and reliability. Cisco has systematically engaged its supply chain to ensure a successful transition to alternative materials. Not only is it a complicated process with many stakeholders, but we have been working with a constantly evolving set of regulatory standards.

We established a global taskforce that includes representatives from product engineering, regulatory affairs, manufacturing, and other departments across Cisco to:

• Track the regulations
• Set design requirements
• Establish design, engineering, and product management documentation systems

Of the substances restricted by regulations, lead has emerged as the most challenging material to substitute. Lead is universally used for soldering metal parts together for conductivity in electronic products. Banning lead triggered many technical and cost challenges for the entire electronics industry.

Network infrastructure products are particularly vulnerable, having a much longer life in installed use than most electronic products, so quality and reliability issues are paramount. Cisco is presently relying on exemptions available for minimal lead content in networking equipment, but will transition to lead-free products as soon as safe and reliable alternatives are available. Cisco has already developed lead-free solder qualification guidelines for components, interconnects, and printed circuit boards. In parallel, we are working with industry leaders in the International Electronics Manufacturing Initiative (iNEMI) consortium to develop environmentally sound lead-free solutions.

During FY2006, Cisco focused on meeting the requirements of European Union's directive on the Restriction of the Use of Certain Hazardous Substances (RoHS) in electrical and electronic equipment. As of the deadline of July 1, 2006, our products sold in the European Union are compliant.

Progress and Future Plans

In FY2006, we targeted environmental stewardship progress and specifically:

• Assessed all components for RoHS compliance
• Resolved all technical issues resulting from conversion to compliant materials
• Required our suppliers to use compliant parts and to demonstrate RoHS compliance at the component level

Now that the deadline for compliance with the RoHS directive is past, we are shifting our focus to address the next set of global product-related substance restrictions. Cisco is committed to:

• The development of balanced regulatory and voluntary guidelines that protect the environment while fostering innovation and growth
• Public policy formulation and industry dialogue about product stewardship as they relate to restrictions of hazardous substances
• Using regulatory compliance as a platform for materials innovation

As a result of our cross-functional efforts to comply with the RoHS directive, we now have a deeper understanding of our own manufacturing processes, and how to share information across business units to improve not only business practices but also how we audit our progress. Cisco is now better prepared to respond to future materials restrictions and deliver both the most technically advanced and the most environmentally sound products to our customers.