Several key regulations changed in 2017, and companies have many new requirements to be aware of in the year ahead.
Throughout the year, governing bodies showed they would continue to enhance and expand regulations that ensure companies source materials and manufacture their products ethically. Meanwhile, countries such as France and the Netherlands introduced new human rights legislation, demonstrating that companies will need to prioritize due diligence to do business in the EU.
There were significant changes to the corporate social responsibility landscape, as well as several high-profile updates to product compliance regulations, which are always evolving to include new substances, uses, rules and exemptions.
Here are some of the biggest regulatory changes of 2017.
Several Updates to EU REACH
In 2017, the scope of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation was expanded to include many new substances on its Candidate, Authorisation and Restricted lists. Furthermore, the European Chemical Agency released guidance on the Court of Justice’s “Once an Article, Always an Article” decision that had many companies scrambling to accommodate the ruling.
There was a spate of authorisation requests when various chromate substances hit their sunset dates. REACH list updates included six new substances of very high concern (SVHCs), 12 authorisations, and two restrictions.
U.S. Toxic Substances Control Act Begins Implementation
In June, the Environmental Protection Agency (EPA) began implementing amendments to the U.S. Toxic Substances Control Act that make it mandatory for the organization to evaluate existing chemicals with clear and enforceable deadlines, and to increase transparency into their activities.
The EPA’s first steps to implementing the amendments included new guidance on risk evaluations, reporting rules for chemicals processed or manufactured in the U.S. and processes to evaluate high-priority chemicals.
Download our eBook, Budgeting for Compliance in 2018, and find out how your company can prepare for the year ahead.
Corporate Social Responsibility
French Corporate Duty of Vigilance Law
Passed in March, the French Corporate Duty of Vigilance Law obligates French companies to ensure their activities, as well as those of their suppliers, don’t have adverse human rights and environmental impacts.
This legislation affects any supplier that sells products to in-scope companies, giving it global significance. Those in scope must establish, publish and implement an action plan to mitigate any identified negative impacts, and perform due diligence with suppliers to accomplish this.
EU Conflict Minerals Regulation
The EU signed its own conflict minerals legislation into law in May. Similar to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the law requires in-scope companies to investigate and report whether their supplies of tin, tungsten, tantalum and/or gold (3TGs) were sourced from the Democratic Republic of the Congo. Any company dealing with European businesses should be prepared to comply with requirements associated with the regulation, giving it worldwide influence.
Dutch Child Labour Due Diligence Bill
The Dutch Child Labour Due Diligence Bill, adopted by Dutch Parliament in February, further establishes a global mandate for human rights due diligence. If approved by the Senate, the law will require you to identify incidences of child labor in the extended enterprise, and to develop a vigilance plan to address any negative findings. In order to avoid possible fines, companies will also need to submit a statement to regulatory authorities declaring they have carried out due diligence.
EU Non-Financial Reporting Directive
2017 was the first reporting year for the EU Non-Financial Reporting Directive. The Directive has far-reaching global implications, requiring those in scope to report on implementation of any policies associated with social responsibility, treatment of employees, human rights, anti-corruption and bribery, diversity on company boards, and environmental protection.
In June, the European Commission published guidance on how this information should be disclosed, which may cause companies to modify the way they respond to these requirements.
UK Modern Slavery Act
In 2017, companies in scope of the UK Modern Slavery Act (MSA) began completing their first public statements outlining their due diligence activities to combat human trafficking and slavery in their operations. The UK Home Office published an updated guidance, which may affect reporting processes and guidelines in the coming years. In August, the Australian government announced its intentions to pass legislature similar to the UK MSA.
What We Learned from These Regulatory Changes
With new and updated regulations in 2017, there are strong takeaways to consider. Several new pieces of human rights legislation were passed in the EU, and companies need to understand that due diligence requirements associated with human rights will continue to grow, and corporate practices will be increasingly scrutinized by NGOs, media and the public.
While more and more companies are obligated to create public disclosures and statements, they also need to be prepared to defend them from critique, making a strong compliance program essential for success.
As the product compliance landscape continues to evolve, companies need to anticipate future changes. That means regulatory expertise will be even more crucial in the coming years. Assent Compliance has gathered the most comprehensive Regulatory team in the industry, who are actively involved in the development of industry data collection standards such as IPC-1754 — ensuring you know what’s coming, and how to prepare.
Compliance isn’t going anywhere. Even if some regulations are repealed, more will pop up in their place. For companies that do business internationally, the need for a robust compliance program will only increase, making it imperative that your due diligence strategy scales with an eye toward cost-efficiency and regulatory updates on the horizon.
Let’s turn compliance into a competitive advantage for your brand. For more information about how Assent can help your compliance program grow in the coming year, contact us at firstname.lastname@example.org.