North American Companies in Jeopardy of Missing EU Legislation Deadline

March 14, 2008
Awareness of REACH regulations is low and could cause significant business disruptions.

Two-thirds of North American organizations have limited knowledge of the operational impacts the EU legislation called REACH (Registration, Evaluation and Authorization of Chemicals legislation) could have on their business, according to a a survey by PricewaterhouseCoopers. Despite a November 30 deadline, business leaders appear lax about taking steps to comply with REACH, according to the survey, titled "Waking up to REACH." The survey shows that two in five companies appear to have limited awareness of the regulation and one in four executives feels Europes newest rules on chemicals and their safe use will have no impact on their business.

On June 1 companies can begin REACH pre-registration, which provides manufacturers and exporters of chemicals to Europe six months to complete the process. REACH became law on June 1, 2007, to streamline and improve the former legislative framework on chemicals in the EU. REACH places greater responsibility on the industry to manage the risks that chemicals may pose to health and the environment. It applies to all chemicals -- those used in industrial processes as well as in products such as cleansers, paints and appliances -- meaning upstream and downstream in the chemicals supply chain.

"REACH ensures that the industry maintains some accountability in improving the protection of human health and the environment from the risks that can be posed by chemicals," said Saverio Fato, global leader of PricewaterhouseCoopers Chemicals practice. "That being said, U.S. companies that are facing these new regulations do not appear to be on track for compliance, which may lead to operational problems down the line."

Large companies have greater awareness of the legislation than smaller ones and the survey found that European companies are best prepared for REACH. Among industries, chemical companies lead the way on awareness followed by pharmaceuticals; industrial manufacturing; forest, paper and packaging; retail and consumer; and automotive.

The survey found that not only is REACH awareness low among North American companies, but most survey respondents had not discussed the European law with customers or suppliers to determine the impact on their supply chains. In comparison, half of European companies surveyed said they've initiated contact with suppliers concerning REACH.

This apparent lack of action to contact suppliers and engage in discussions with downstream companies and customers could negatively affect business. The European Chemicals Agency (ECHA) estimates between 10% and 30% of classified chemicals that are listed with the ECHA will disappear as a result of REACH.

Those executives surveyed who are in the know about REACH said there would be risks to implementing the law. Most (54%) cited the cost and time involved, followed closely by supplier risk (49%). Only 14% of executives surveyed feel REACH will have a positive impact on their businesses; the majority is withholding judgment until the legislation goes into effect.

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