Four Mistakes SMEs Make with Reach - and How to Correct Them
5:18 AM MST | January 31, 2012 | By CHRIS EACOTT
By Chris Eacott, managing director of Stewardship Solutions (Rossendale, U.K.), a Reach and CLP consulting firm
The European Union's (EU) Registration, Evaluation and Authorisation of Chemicals (Reach) regulation has been in force since June 2007, but still most companies are confused about how to comply with it; it doesn't help that some of the legal text and official guidance is unclear on some key issues.
Small and medium-size enterprises (SMEs) are especially vulnerable since they do not usually have in-house regulatory specialists able to grapple with the many volumes of Reach-related information that exist (and which continue to grow in number and size). Consequently, SMEs are more likely to make mistakes than large companies when attempting to comply with Reach, and in some cases, these may have catastrophic effects on their businesses.
These are some of the mistakes that SMEs make, with guidance how to avoid or correct them:
Mistake 1: Ignore Reach (and hope it will go away)
Even now, many SMEs appear to believe that they can avoid Reach by ‘keeping their heads down’, hoping they will go unnoticed because they are (hopefully) too small for the enforcement authorities to bother about. Alternatively, some SMEs are so anxious or resentful about Reach that they simply refuse to engage with the legislation at all, or expect their suppliers or customers to sort things out for them.
Clearly, this is hardly a sound Reach compliance strategy, and sooner or later these companies risk being caught out by becoming non-compliant with Reach; if not by the Reach enforcement authorities, then by their customers who will not accept the risks to them of non-compliance in their supply chains, or perhaps by ‘whistleblower’ competitors who will seize the opportunity to gain business advantage.
What should SMEs do? Stop prevaricating! Face up to the fact that Reach is not going away, and is already having a major impact on almost every industry sector in the EU, as well as global supply chains. Start by accessing and reading some basic literature, talk to your trade association about how they can help you, and make enquiries to your competent authority Reach helpdesk, or other commercial help desks. Take time to evaluate the information you gather, but do ensure that you take decisive action to move forward on your Reach compliance journey.
Mistake 2: The ‘Just Say Yes’ approach to compliance
An alternative to ignoring Reach is to adopt the ‘Just Say yes approach’. SMEs understandably feel overwhelmed by the amount of legislative compliance obligations they face nowadays, and in their frustration some can be tempted to provide the bare minimum of compliance information to their customers. They may not even bother to check if the information is accurate or potentially misleading to their customers.
While this approach may work in the short-term, concerned customers will inevitably gain experience in differentiating between those suppliers which make genuine attempts to provide accurate information - and comply with REACH - and those that do not. Watch out also for the rise of specialist REACH compliance audits (and REACH auditing services) that will increasingly be commissioned by concerned customers and other downstream users in relevant supply chains.
What should SMEs do? First, take REACH seriously. Make every effort to understand how Reach applies to your business, and what your specific obligations are. If necessary, communicate with supply chain partners and clarify each other’s obligations. This is an important step, and e.g registration failures are known to have occurred because one party thought the other was responsible for registration. At a basic level, ensure you have a complete understanding of the substances contained in your products, what their concentrations are, and the volumes of each substance that are placed on the EU market (at the exporter /EU importer interface). Then, implement systems to maintain ongoing, accurate records, since these could be required at any time by your customers as evidence of Reach compliance
Mistake 3: Consider REACH compliance a one time effort
SMEs often believe that the main point of Reach is to achieve a registration of relevant substances by relevant ‘actors’ in relevant supply chains. While registration is indeed a critical aspect of Reach, it is often forgotten that the main objective of the legislation is the enhanced communication of chemical-product safety information all the way through supply chains from chemical manufacturers to the point of sale to consumers. As this information changes in the light of new evidence, there is a continual need to keep registration dossiers updated and ensure that any modified safety guidance is communicated effectively and in a timely manner through the aforementioned supply chains.
Thus, Reach must be appropriately addressed and planned for on an ongoing basis. Until at least 2018 (the end of the phase-in period by which all relevant pre-registered substances must have been registered), there is a massive amount of work to do with respect to undertaking registrations, authorizations , implementing restrictions, and communicating the results of chemical safety assessments via chemical safety reports and exposure scenarios.
What should SMEs do? ‘Someone’ in the organisation needs to own a well-constructed Reach compliance plan, preferably one which is sanctioned and reviewed by the senior business team on a periodic basis; no less than once per annum, and preferably two-to-three times/year. External help may be needed to construct the initial plan, which must be tailored to the precise needs and Reach obligations of the business. For some SMEs, the plan might be quite complex, having to cover many facets of REACH compliance, especially if the business has many products and responsibilities for aspects including registration, authorization, reporting of Substances of Very High Concern (SVHC) and so forth. For a downstream user, the plan would probably be much simpler. Without some sort of structured Reach ‘lowest-cost’ compliance plan, there is a distinct risk of falling into non-compliance, or unnecessarily exiting the EU market altogether, as Reach evolves and key elements are implemented.
Mistake 4: Overlook the competitive impact of Reach
The possibility that competitive business advantage can be gained - or lost - through Reach is often overlooked by SMEs. At the same time, large companies are very much aware that Reach offers them potential business opportunities, and many have adapted their business strategies accordingly. Large company tactics range from alerting Reach competent authorities about the non-compliance of competitors - with the consequence that their competitors’ products may be quickly forced off the EU market - to changing their product portfolios in favor of those substances and products that are perceived to have better chemical safety profiles, and a more profitable future.
What should SMEs do? SMEs should take time to think about their long-term business and product strategy, overlaying it with key future Reach milestones such as registration and authorisation deadlines. If the costs of maintaining a marginally-profitable substance are outweighed by Reach registration/authorisation costs then the substance should possibly be abandoned by a given date. Alternatively, a higher-priced substance which has been struggling to make headway in the EU market, will be given a significant boost by the withdrawal by a competitor of a cheaper, toxic substance. Only by taking a broad and long-term view of the likely consequences of Reach on the EU marketplace, will SMEs know if there are potential business gains to be had as a consequence of Reach implementation.
Clearly there is an enormous quantity of Reach legal text and guidance that needs to be sifted through, interpreted, and then applied to individual business situations. Then, there are the all-important technical tasks of registration, authorisation, preparing Chemical Safety Assessments and Reports and Exposure Scenarios etc that may also fall to SME companies.
When relevant in-house regulatory/technical specialists are lacking, it is virtually impossible to expect an SME business to properly comply with all aspects of Reach without having access to at least some form of external expertise. SMEs may resent having to acquire external assistance with Reach, but in the long run, sound professional advice should actually save them time and money compared with trying to do it all themselves. At some point in time, each SME business should therefore investigate its support options carefully.