NEW YORK, March 11, 2008 (PRIME NEWSWIRE) -- Despite a November 30 deadline, business leaders appear lax about taking steps to comply with the Registration, Evaluation and Authorization of Chemicals legislation, or REACH, according to a survey released today by PricewaterhouseCoopers, titled "Waking up to REACH." Two-thirds of North American organizations have limited knowledge of the operational impacts the European Union (EU) legislation could have on their business. There is also concern that North American companies will miss important REACH deadlines, consequently suffering significant business disruptions.
The clock begins ticking on June 1 for companies to begin REACH pre-registration, which provides manufacturers and exporters of chemicals to Europe six months to complete the process. In anticipation of this looming deadline, PricewaterhouseCoopers surveyed 241 senior executives across six industries in 29 countries to gauge readiness and reaction to REACH. The survey shows that two in five companies appear to have limited awareness of the regulation and one in four executives feels Europe's newest rules on chemicals and their safe use will have no impact on their business.
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, as they are most aware of the legislation. 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 percent and 30 percent of classified chemicals that are listed with the ECHA will disappear as a result of REACH. Early communication with downstream companies and suppliers, whose businesses may be adversely impacted by the disappearance of these substances, is essential to maintain supply chains.
Most organizations said they have not yet completed risk assessments on how REACH will impact their businesses. Only 10 percent had completed a detailed assessment; 30 percent completed some risk assessment and 31 percent had no risk assessment. North American and Asia-Pacific companies are the worst offenders in terms of not carrying out the necessary level of risk assessment to measure the impact of the REACH legislation.
Those executives surveyed who are in the know about REACH said there would be risks to implementing the law. Most (54 percent) cited the cost and time involved, followed closely by supplier risk (49 percent). Only 14 percent of executives surveyed feel REACH will have a positive impact on their businesses; the majority is withholding judgment until the legislation goes into effect.
When asked what action companies were most likely to take as a result of the REACH legislation, an overwhelming 66 percent said they were ensuring suppliers adhere to REACH compliance deadlines, otherwise known as supply chain assurance. Another 46 percent said they would take action to help suppliers comply with REACH, and 45 percent said the legislation would require them to renegotiate or modify their supplier contracts.
"While an 11-year timeline to register chemicals may seem like a long time, it will certainly be a huge undertaking to register the 30,000 or so existing chemicals for REACH compliance. Only those companies that meet pre-registration deadlines for REACH will truly capitalize on the legislation. This includes continuing to operate business as usual and qualifying for an extended timeline to register existing substances used in the European market," said Fato.
"The pre-registration process is not very time-consuming, but it is required in order for companies to secure access to the EU market," added Dr. Hans Schoolderman, director of sustainability & climate change services for PricewaterhouseCoopers. "If handled properly, the legislation can enhance the bottom line by increasing the customer confidence in product safety. Consumers have little to no tolerance for chemicals that are a risk to human health and the environment. It is good practice and good governance for companies to be transparent to their customers regarding their products and the safe use of the products -- and REACH will help get us there."
For more information and to access the full report, visit: www.pwc.com/chemicals
Note to Editor:
Dr. Hans Schoolderman, director of sustainability & climate change services for PricewaterhouseCoopers, will discuss the findings of the report, "Waking up to REACH," in further detail during his presentation today at DCAT Week '08 in New York.
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About PricewaterhouseCoopers Global Chemicals Practice
PricewaterhouseCoopers' Chemicals practice is a global network of professionals who provide industry-focused assurance, tax and advisory services to more than 200 public and private chemical companies.