Pro-Active Insights for Navigating Environmental Regulations and the Cost of Non-Compliance

Environmental regulations aim to protect people and the environment from industrial pollution and the improper use, handling, storage, and disposal of hazardous materials. These laws have evolved with our understanding of environmental hazards and their negative impacts on human health and ecosystems.

Actalent's chemical regulatory compliance team takes a multidisciplinary approach to compliance. The team's backgrounds range from chemistry to software to materials sciences and engineering. Past projects involved working with clients' supply chain, R&D, design, and materials departments. The team's current focus is on environmental regulations, including the REACH program in Europe, as they pertain to the automotive and aerospace industries, among others.

In this interview about environmental regulations, team member Alison Fraser, a chemical engineer, answers questions about the following topics:

• Strategies and tactics that ensure compliance
• Implications of non-compliance
• Complexity of compliance & skill requirements

Q: What is compliance?

A: The short answer is, compliance is making sure you're not breaking the law. The reality is much more complicated than that, since regulations are always changing, and different jurisdictions (states, countries, etc.) have different regulations. Also, compliance isn't something you do once, it's something every business has to devote resources to on a permanent basis. We like to use the analogy of taxes: compliance is inevitable! And, like taxes, compliance is much easier to deal with when you're working with the right expert partners.

Q: How can manufacturers ensure they're making safe products that comply with environmental regulations?

A: For manufacturers, understanding the life cycle of their products – how and where they are manufactured and assembled, what they are made of, and where they are sold -- is essential to mitigating their impact on human health and the environment and maintaining compliance with environmental regulations.

Q: What happens if companies don't follow the regulations?

A: Companies that fail to comply should be prepared for fines, recalls, claims and lawsuits, loss of market share and reputational harm, which will greatly exceed the cost and effort to comply.

Q: What kind of skills-sets do manufacturers need on their teams to ensure compliance?

A: Typically this requires people with knowledge of chemistry, material sciences, supply chain, and environmental laws generally. Technical writing, data capture and documentation skills are also important. Not all companies have people with these abilities. It's important to identify what people and policies you have in place to address environmental safety and compliance. Often, it's more effective, both qualitatively and financially, to outsource compliance for REACH and similar regulations rather than install permanent members to your team, since the required skillsets are typically not part of an organization's core business needs. If looking outside your company for an external partner to handle compliance, it's important to verify they have people with the proper skills and experience.

Q: How complex and expensive is the compliance process?

A: The scope and cost associated with compliance varies (of course, compliance is always much more cost effective, overall, than non-compliance). It will depend on many factors, including the chemical make-up of the product and its components, the make-up of any materials and chemicals used in production, number of tier two and three suppliers and the quality of their communication, the number of manufacturing and assembly sites; handling, storage, and delivery procedures; and whether the product is sold nationally and/or internationally.

Another key factor is a company's existing level of compliance. The less familiar or committed they were historically to compliance, the heavier the initial lift will be when they have to start making changes, especially if they have to alter a product's design and/or their supply chain.

Q: How do companies prove they're compliant?

A: Typically the process will require the company to provide documentation that supports their compliance. Suppliers would usually communicate this information to the OEM. OEMs typically would provide documentation to an authorized representative of the regulatory body.

Q: How often do environmental regulations change?

A: Regulations evolve to keep pace with society, technology, politics and medicine. Some laws, like REACH in the EU, change every six months. How regulations are enforced also varies by jurisdiction and is not always clearly defined in some places. For example, every EU member country has its own set of legal and financial penalties for non-compliance with REACH. Our advice: be prepared and don't assume your company is under the radar. Enforcement and controls are going to be more widely deployed.

Q: Is REACH just in Europe or do other regions have the same regulations as well?

A: There are copycat regulations in other jurisdictions as well (for example, Korea). Also, Europe is such a big market that inevitably other countries follow suit. A great analogy is California's air quality regulations. California's are much stricter than other states, but car companies don't sell different cars in different states! If you buy a car in Texas or Ohio, it's the same car sold in California and complies with California regulations. European regulations have a similar impact, but on a global scale.

Q: What's unique about Actalent's approach to compliance?

A: Often in compliance, the focus is on finding problems and (maybe) fixing them. It's a reactive approach of putting out fires. We are more focused on proactive solutioning, in close collaboration with our clients. An ounce of prevention is worth a pound of cure! Think about it: when you go to the doctor, do they just tell you you're sick and then send you on your way? Of course not! They'll treat the illness you have now and, most importantly, tell you how to prevent getting sick again (when possible). And unlike in medicine, it's always possible to prevent future compliance issues.

Q: What kinds of projects have you worked on in the past?

A: Our past projects included transforming a client's existing regulatory program to protect revenue. We also collaborated with multiple departments to make sure the client's products are compliant now and in the future. We helped our client identify where they can spend money now (redesigning products proactively, avoiding using chemicals that might be banned in future), to save them a lot of money down the road. We also updated their internal design review processes to avoid the introduction of non-compliant products and processes. So, even after the project concluded, their engineers follow procedures that we created and implemented that ensure they make the right choices. We wanted to make sure there will be no disruption to our client's supply chain, for example if a paint is banned in Europe, since that would be incredibly costly.

Q: What projects do you have coming up?

A: We can't discuss details of course, but we're excited to find new ways of bringing value beyond just compliance. We want to add more value than compliance alone; our goal is a solution that is compliant and cheaper, better, safer. We're also looking forward to expanding into new industries, in collaboration with Actalent's domain experts in those industries. Actalent has strong expertise in medical devices, pharmaceuticals, industrial products, consumer goods, and more.

Q: What kinds of projects can your team take on?

A: We empower clients to enter new lucrative markets by building compliance programs from the ground up and protect our client's revenues in their current markets by future-proofing their existing compliance programs. We can also help companies build a brand image focused on sustainability, to help them stand out from their competitors and improve market share by appealing to consumers' increasing concerns about health and the environment. Our focus is on solutioning, no matter the industry or location. There's a positive impact for us to make with a wide variety of clients across different industries.