Hand In Hand - Compliance with regulations implemented to protect humans and the environment has been a top priority for chemical companies in Europe in the recent years. On the other hand, sustainability is gaining in importance in all industries.

Brandi Schuster caught up with Prof. Dr. Martin Hill, vice president of sustainability EMEA at SAP, to talk about the correlation of the two topics. Hill has many years of experience in chemical compliance consultancy and sustainability. He also teaches entrepreneurship and sustainability at the University of Siegen, Germany.

CHEManager Europe: Martin, in your opinion, what are the biggest challenges for European companies regarding chemical compliance?

Prof. Dr. Martin Hill: The biggest challenge is to comply with the Reach regulation. This EU regulation aims to centralize and simplify chemicals legislation throughout Europe. The declared objective was to improve the level of knowledge about dangers and risks that chemicals may pose. Companies are expected to assume even more responsibility for the safe use of their products. As a consequence, Reach brought about a plentitude of tasks the European chemical industry had to fulfill during the past years. And it still keeps them busy.

Now the chemical industry has all the necessary knowhow about the requirements. What is crucial now is that companies must integrate their Reach processes in their supply chain communication and in their IT environment. Reach is not a one-time effort; the real challenge is to stay compliant. It will be vital to include compliance checks e.g. into procurement and sales processes. By doing so, they secure the transparency and efficiency of their compliance processes connected to Reach.

What steps can companies take to make sure they are compliant?

Prof. Dr. Martin Hill: Firstly, they need to understand the Reach requirements applicable to them, based on the role they have in the Reach context.

A second step would be to translate those requirements into process requirements and to reorganize business processes accordingly. Finally, they need to implement those business processes with IT solutions. For example, a company has to detect its role or roles under Reach. Most of the companies will not only have one role, for example as a downstream user.

For some substances or products they might have the role of an importer. So they have to check those products and substances first and then initiate the next steps, including registration etc.
The crucial point again is not to do it one-time and then being in a position "Hurray, we are compliant!" This would be a mistake. The important thing is to install processes to observe the product and substance portfolio and detect your obligations. It might be that the change of an International Commercial rule could already change your position in a supply chain.

The European Chemicals Agency (ECHA) recently said that after screening over 400 registration dossiers for intermediates, 86% of them seem not to contain sufficient information to demonstrate that these conditions are fulfilled. Where do you see the major hurdles in compliance: In companies who don't have the proper workforce to deal with compliance issues such as Reach; or inside the watchdog organizations, who might not be clear on their requirements?

Prof. Dr. Martin Hill: ECHA said that 86% of the dossiers were insufficient in terms of some data were missing. That does not necessarily mean that the dossiers were totally wrong and not justifiable. I am sure the chemical industry has the right people on board to deal with Reach and other compliance topics.

I think we have to grant a period of time were such issues caused by lack of clarity or different interpretations can happen. And this is a real hurdle. We have to remind ourselves what Reach means for companies and within what timeline they have to fulfill these obligations. I am sure some of the issues concerning the dossiers were caused by evolving and not always finalized interpretations and discussions.

Does compliance give Western chemical companies a competitive advantage over their Asian counterparts?

Prof. Dr. Martin Hill: Fulfilling the regulatory requirements for things such as Reach also brings about an innovation process. For example, chemical producers develop new substances that are less hazardous or new production processes. And they learn more about the substances they have been using in the past. We also have to consider the dynamic evolvement of, let's say, "Reach-like" upcoming regulations especially in the Asia/Pacific region. These regulations will set the same level playing field for all companies and this is good. The still outstanding Toxic Substances Control Act (TSCA) reform in the U.S. can already be a disadvantage for U.S. companies.

Using an integrated IT system that involves all locations and production sites worldwide enables them to react quickly to new and changing compliance requirements - no matter from which world region they derive. This definitely means a competitive advantage. From our experience, more and more countries put regulations into practice, despite the efforts to harmonize regulations worldwide. In 2009, there were more than 2000 Environment, Health and Safety (EHS) regulations worldwide, that was a rise of 72% compared to 2007.