PwC survey

Especially businesses outside the chemicals sector are insufficiently aware of the obligations that REACH introduces, as is shown by an international survey by PricewaterhouseCoopers. This gives rise to major risks, whereby even a ban on trading cannot be ruled out.

The European REACH regulation has major strategic implications for business. An international survey by PricewaterhouseCoopers of 241 companies in six different sectors reveals that as many as two-thirds of the businesses surveyed have had no contact whatsoever with customers or suppliers regarding the impact of REACH on product labelling. Businesses that are inadequately prepared for REACH run the risk that they can no longer market their products after 1 December 2008.

No registration, no market

Manufacturers that bring products onto the market are responsible for fulfilling all the requirements imposed under the REACH regulation. The complexity of many modern products in combination with the general multiplicity of suppliers means that REACH gives rise to risk whenever, say, a supplier fails to comply with the REACH requirements.
The expectation is that REACH will result in a rationalisation of suppliers. Whenever a supplier falls short of the REACH requirements, a manufacturer may choose to switch suppliers where that is possible. The aforementioned survey by PricewaterhouseCoopers reveals that nearly half (49 per cent), of the businesses questioned fear that their suppliers will not fulfil their REACH obligations in time.

Where a manufacturer or supplier fails to comply with the obligations, this has a knock-on effect throughout the production chain. Problems of continuity can arise because businesses are no longer able to trade in the substances or in the articles that incorporate them. This can be a costly matter, for instance due to loss of turnover further to a product recall or loss of market share owing to damaged reputation.

Power of differentiation

Many businesses are blind to the strategic consequences of REACH and look more to the compliance side of the issue. The survey reveals that over half the businesses surveyed that are familiar with REACH see the cost aspect and time investment as the greatest menace.

Alongside the dangers, businesses can also differentiate themselves from the competition by being transparent on the extent to which the company meets its REACH obligations. REACH also offers the possibility of conquering new market share. It is expected that a number of non-European producers will withdraw from the European market, put off by the quantity of regulations that they do not want to or cannot comply with.