What is REACH?
REACH is ‘a regulation of the European Union, adopted to improve the protection of human health and the environment from the risks that can be posed by chemicals’. REACH stands for Registration, Evaluation, Authorisation and Restriction of Chemicals and it entered into force on 1 June 2007 (echa.europa.eu 2015).
According to the UK’s Health and Safety Executive, ‘A major part of REACH is the requirement for manufacturers or importers of substances to register them with a central European Chemicals Agency (ECHA)’ (hse.gov.uk 2015).
How does REACH affect industry?
Almost any business such as electronics, toys, textiles and tyre, etc, are all affected by REACH. For instance, any company that manufactures or imports goods into the EU have to ensure that any REACH classified material contained in their products does not exceed restrictions defined by REACH. For example, if a company imports foam for use in seating, the manufacturing company is responsible for ensuring all ingredients contained within the foam are registered with REACH.
PwC report that being REACH compliant ensures that your company’s licence to the market is secured. The International Accounting Standards Board published guidelines highlighting that in addition to a registration fee, an entity might have to pay the following costs:
• preparing the technical dossier and the chemical safety report
• performing the chemical safety assessment
• IT costs to track information required for REACH registration and supply chain management (ifrs.org, 2008).
From research, it is evident that one of the biggest impacts REACH will have on industry will be the cost of implementing REACH compliance.
TE Online (2009) reported that the impact of REACH on a textile company is dependent upon the following facts:
Positioning of the company in the supply chain.
The company’s sourcing destinations.
Location of production process – whether based in EU or outside EU.
(TE Online, 2009)
The article further explains that in general, importers and manufacturers of textile and other textile products, will have certain obligations under the following two conditions:
If a chemical is intended or foreseeable to be released from the textile product, for example, it may release some fragrance, then it has to be registered with ECHA (The European Chemical Agency).
A textile product contains “substance of very high concern” (SVHC).
How does REACH affect the upholstery industry?
As the upholstery industry uses many parts from a range of suppliers in a complex web of supply chain management, upholstery businesses will need to look at any piece that is imported from outside the EU and determine if it’s REACH compliant. Likewise, suppliers in the EU need to establish if all ingredients are registered with REACH.
Everything from dyes, paints, fabric, foams and coatings not manufactured in the EU, require registration once over the import threshold of 1 ton per year. The end result of this cataloging will be higher prices for all end users.
Gerald Ondrey reported in Chemical Engineering (2007) that REACH will impose across-the-board costs for registration, testing, and for writing up risk assessments and highlights the costs for the downstream industry, which will need to reformulate its preparations – a very time-consuming affair, assuming that suitable alternatives exist.
Chemical Week also voiced concerns. In a similar report, Alex Scott noted that ‘Chinese companies in particular could gain competitive advantage securing cheaply and quickly chemical safety data required under REACH by joining REACH data consortia at a late stage of REACH registration’ (Chemical Week 2007).
Metal Bulletin in 2011 highlighted that:
REACH regulations are driving us all into the Dark Ages by removing incentives to explore applications for new and exciting materials within the EU. They have a deadening effect on all industry, and catalyse the migration of manufacturing business to East Asia.
(Metal Bulletin, 2011)
However, the positive effects of REACH to date have been published in a report titled ‘Interim Evaluation: Impact of the REACH Regulation on the innovativeness of the EU chemical industry’ 2012. This report notes:
46% of the respondents indicated that there was an overall increase in expenditure on R&D and other innovative activities
49% of survey respondents indicated that provisions within REACH led to a reduction in the need/costs for testing
24% of respondents indicated that compliance has contributed to a better acceptance of their new products and technologies.
42% of those that responded indicated that REACH has signaled a direction for R&D or other innovative practices related to health, safety and environmental protection that would not otherwise have taken place in their firm.
(Centre for Strategy & Evaluation Services, 2012)
The Centre for Strategy & Evaluation Services report also noted that at this stage it is too early to say what and where the net benefits to consumers, markets and society are from REACH.
References:
European Chemical Agency (2015). Understanding REACH. Available at: http://echa.europa.eu/web/guest/regulations/reach/understanding-reach [Accessed 26 March 2015].
Health and Safety Executive (2015). The Registration Process. Available at: http://www.hse.gov.uk/reach/regprocess.htm [Accessed 26 March 2015].
PWC (2015). Impact of REACH on your organisation. Available at: http://www.pwc.nl/nl/reach/impact-of-reach-on-your-organisation.jhtml [Accessed 26 March 2015].
TE Online (2009). REACH – Its Impact on Textile Industry. Available at: http://www.teonline.com/articles/2009/01/reach-its-impact-on-textile-in.html [Accessed 26 March 2015].
International Accounting Standards Board (2008)Compliance Costs for REACH. Available at: http://www.ifrs.org/Meetings/MeetingDocs/Interpretations%20Committee/2008/November/0811-ob3-compliance-costs-for-REACH.pdf [Accessed 27 March 2015].
Ondrey, G. (2007). EU CHEMICALS LEGISLATION EXTENDS ITS REACH. Chemical Engineering, 114(3), 22-27. Retrieved from http://search.proquest.com/docview/194449630?accountid=14507 [Accessed 26 March 2015].
Scott, A. (2007). Reach is likely to challenge EU competitiveness. Chemical Week, 169(19), 29. Retrieved from http://search.proquest.com/docview/222546586?accountid=14507 [Accessed 26 March 2015].
Metal Bulletin (2011). Reach-ing absurdity: EU policy on strategics. Retrieved from http://search.proquest.com/docview/858908173?accountid=14507 [Accessed 26 March 2015].
Centre for Strategy & Evaluation Services (2012). Interim Evaluation: Impact of the REACH Regulation on the innovativeness of the EU chemical industry. Available at: http://ec.europa.eu/enterprise/sectors/chemicals/files/reach/review2012/innovation-final-report_en.pdf [Accessed 27 March 2015]