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July 14, 2016
By: Sean Milmo
European Correspondent
Compliance with sustainability legislation, both at the European Union and national levels, has been tough for small and medium entetrprises (SMEs) in Europe’s coatings value chain. Compliance with sustainability legislation, both at the European Union and national levels, has been tough for small and medium enterprises (SMEs) in Europe’s coatings value chains stretching from the raw materials suppliers and coatings producers to distributors and users. It has been easier for the larger players but difficult for companies with fewer financial and human resources to deal with regulations aimed at protecting the environment and human health. As a result differences in attitude to sustainability have opened up in the coatings and related industries, especially with regard to the implementation of the EU’s controversial legislation on REACH – the registration, evaluation, authorisation of chemicals, including their application in products like coatings. For many SMEs sustainability is a necessity but at times is an unnecessary strain which imposes on them higher costs and alternative products with poorer levels of performance. “Rules seem to be been made with just large enterprises in mind,” said Gerhard Huemer, economic policy director, European Association of Crafts, Small and Medium Sized Enterprises (UEAPME), Brussels, which has a large number of members who are producers, distributors and, above all, users of coatings. “SMEs comprise the vast majority of businesses in the EU,” he added. “Meeting their needs should be the first principle when drawing up, reviewing and implementing legislation. There is some progress but it is not enough.” Nonetheless there are now signs that the EU and national governments are taking much more notice of the regulatory requirements of SMEs. The European Commission is giving them a priority in a current drive to improve existing regulations. “The Better Regulation strategy of the Commission includes specific guidelines for assessing the impacts of EU initiatives on SMEs,” said Vincent Navez, executive director, legal affairs for the European Chemical Industry Council (Cefic). “In fact, impacts on SMEs must be included in all Commission Impact Assessment reports. It is important that this dimension is looked at because, due to their size and limited resources, SMEs can be affected by the costs of regulation proportionately more than their bigger competitors. SMEs make up a significant share of chemical companies operating in the EU.” The European Commission, together with the European Chemicals Agency (ECHA), responsible for administering REACH, has, for example, been trying to reduce costs of compliance with the legislation, which has a final deadline for registration of chemicals in two years. “There is a focus on addressing the concerns of SMEs, particularly in view of the final REACH registration deadline in mid-2018 that is predicted to affect SMEs the most,” said Pete Walters, technical advisor, REACHReady, a London-based consultancy. The authorization process, regarded as being at the core of REACH because its objective to remove the most hazardous chemicals from the market, has become a bigger hurdle for companies wanting to keep chemicals, considered a high risk, on the market. “The process for applying for the authorisation of a substance is complex and expensive,” explained Walters. “This can deter companies from making authorization applications for substances and instead they are withdrawing them from the market.” This can work against some SMEs. For small companies making potentially hazardous chemicals, authorization become a bigger barrier because of its high costs. Also, it can mean that chemicals essential for the businesses of coatings producers, distributors and users will no longer be available. However, companies are being relatively successful once they decide to apply for authorization by providing evidence that the risks of exposure to their chemicals are adequately controlled or that the social and economic benefits of their remaining on the market outweigh these risks. NGOs are even complaining that authorizations are being given too easily. A current contentious application for authorization by Dominion Colour Corp., a Toronto-based medium-sized pigments manufacturer, involves two lead chromates– lead sulfochromate yellow pigment (PY. 34) and the lead chromate molybdate sulphate red (PR. 104), both classified as carcinogenic and toxic to reproduction. After being supported by ECHA, the application for a 12-year authorization looked highly likely in mid-June to be endorsed, after much deliberation, by the European Commission, which takes the final decision on authorizations. The agency’s backing of the application had been criticized by some coatings trade associations in Europe as well as prominent multi-national pigment and coatings producers supporting a voluntary ban on the use of lead pigments. However, ECHA’s two specialist committees dealing with authorizations – one covering health and environmental risks and the other socio-economic issues – both recommended that the lead chromates be authorized for 12 years with a review after seven years of data from health and environmental monitoring of the products. The two committees concluded that the alternatives to the pigments, mainly comprising inorganic pigments such as bismuth vanadate and organic pigments like azo diarylides, could not achieve the same levels of technical performance as the lead chromates. They were also more expensive – some as much as 6-10 times. Since they were exclusively for industrial coatings applications, consumers were not exposed to the pigments, while risks to workers could be adequately reduced with the aid of protective clothing, the committees decided. The authorization application was, furthermore, sent out for public consultation, which showed that it was strongly supported by both coatings producers and by coatings users. “Some may have the impression that the coatings industry did not support our application,” said Mark Vincent, DCC’s vice president for sales, marketing, technical. “In fact, there was overwhelming support. Of the 384 responses received during the public consultation process on our application, the vast majority – 70 percent – concurred that there are no alternatives for the uses applied for. Of the remainder, 20 percent were technical/legal remarks and just 10 percent were opposed, which included two coatings companies” “These pigments are still required by our customers – small and medium sized plastics and coatings manufacturers who in turn provide technical solutions to their customers,” he continued. “Our application is all about these smaller companies who have a need for these pigments in their niche industrial and professional applications.” DCC argues that the authorization is being consistent with longer-term objectives, backed by large and small companies according to trade association surveys, to phase out lead-based coatings. “We fully support the work of (regulators, NGOs and parts of the coatings industry) to push for a worldwide prohibition on lead-based paint for consumer and decorative purposes and encourage restrictions on lead use in decorative paints in countries where none exist today,” explained Vincent. “This goal is not incompatible with the continued use of our two pigments because – as the Commission states in its decision – the uses applied for do not concern consumers. Furthermore, we have policies and procedures in place to both control the sale of the products and ensure they are handled safely.” The big challenge is to successful develop alternatives to pigments like lead chromates which provide the same quality, performance or durability required by coatings users, most of whom are SMEs operating in niche, industrial markets.
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