A survey of 150 companies suggests that many SMEs may be unprepared for the supply chain disruption resulting from the final registration deadline for the chemicals regulatory regime, REACH.
The soon-to-be-published research from manufacturers’ organisation, EEF, found that a quarter of respondents do not know if their company is adequately prepared for the future impacts of the REACH regime, which applies to all chemicals manufactured or marketed in the EU.
REACH (Regulation, Evaluation, Authorisation and Restriction of Chemicals) came into force across the EU in 2007 with the aim of ensuring a high protection of human health and the environment from chemical substances. It has been rolled out in phases, and currently only businesses supplying or importing substances in amounts of 100 tonnes per year or more need to have registered.
However, by 31 May 2018 all businesses supplying or importing substances in amounts of one tonne per year or more need to have registered, meaning that it will impact a large number of SMEs and niche, speciality chemicals for the first time.
As a result, the European Chemicals Agency (ECHA) expects up to 70,000 new registrations by the 2018 deadline and estimates that the number of registered chemicals will increase from around 7,000 to between 25,000 and 50,000.
Impacts on manufacturers
While there is a perception that REACH only affects chemicals manufacturers, “nothing could be further from the truth”, according to EEF.
As hazardous chemicals are gradually being restricted in certain uses or being lined up for future bans, REACH has the potential to impact any ‘downstream’ business that uses or imports substances and materials, either alone or in mixtures.
Potential risks include:
- Disrupted supply as a result of some hazardous substances being withdrawn from the market under REACH
- Potential product disruption if substances are subject to restrictions or bans
- Reputational damage with customers by failing to comply with REACH disclosure requirements
- Loss of business and the threat of fines and prosecution if the legal requirements of REACH are not upheld.
Of the 150 businesses surveyed by EEF, a third said that they were already aware of suppliers who will be withdrawing substances from the market in response to the 2018 deadline.
However, nearly a fifth were unaware of the business risks posed by REACH and SMEs are more likely to be ‘taken by surprise’ because they are much less likely to be aware of supplier intentions.
As a result, EEF is set to urge companies to assess whether they have any registration obligations as soon as possible and calculate whether recent growth may have tipped their imports of substances to over one tonne.
Other recommendations include talking to chemicals suppliers to find out if any withdrawals are planned and create a contingency plan for vulnerable substances.
New guidance developed with the Department of Environment, Food and Rural Affairs (Defra) is set to be published in the near future.