Chemical manufacturers view regulations management as a competitive advantage
New survey data shows that regulations are actively redirecting product development and business strategies at most chemical companies.
David Greenfield -- Control Engineering, 11/12/2009
A new survey indicates that, over the next five years, regulatory compliance will advance from being perceived as a small cost of doing business to a major driver of competitive advantage. The survey, conducted by CSC and Chemical Week, queried senior compliance and sustainability officers at leading global chemical companies.
The survey revealed that sustainability programs have helped respondents refocus product development efforts, enhance their brand value, and become more competitive. In fact, approximately 75% of respondents said they are re-tooling their product development efforts in response to pressures from current and expected regulatory programs.
"The most common business area that will be affected by regulatory complexity and change will be in product development. Most companies are gearing up for this challenge and view it as a business differentiator," said Chuck Deise, vice president and chemical sector leader, CSC.
Eighty percent of respondents confirmed the need for a universal set of capabilities to manage the increasing complexities of the regulatory environment. Half of the respondents have already developed a common approach for interpreting and complying with new regulatory programs while 70% are developing common IT capabilities and management structures to comply with the broad set of regulatory programs facing chemical companies. "Given the strategic value, we are beginning to see a major transformation in the industry to an enterprise approach with common business processes and management systems and the IT infrastructure to support this effort," added Deise.
"Akzo Nobel primarily is responding to this increasing regulatory complexity by adapting its product portfolio to greener products. The company currently classifies 18% of its products as ecopremium, but targets an increase to 30% in 2015," said Andre Veneman, director/sustainability for Akzo Nobel, recently rated by the Dow Jones Sustainability Index as the most sustainable major chemicals company. "One of the big challenges is to develop ecopremium products with a lower environmental footprint," said Veneman. Using this strategy, Akzo Nobel is exceeding current regulatory requirements and anticipating future regulations.
The survey also found that most of the respondents (90%) anticipate that Cap and Trade legislation will have little impact on core business functions, such as financial reporting, production levels/costs and supplier costs, through next year. However, 70% of respondents felt that by 2015, Cap and Trade legislation will drive positive outcomes in product innovation, energy cost reduction, and competitive positioning.
With regards to REACH, 60% of respondents are confident that they will complete 2010 REACH registration requirements on time. However, the ability to manage supplier communication regarding substance use registration and Substance Information Exchange Forum (SIEF) effectiveness are major concerns. Additionally, more than half (55%) of the respondents are now reformulating products as a result of this legislation.
"Rather than regulations alone becoming more complex, the chemical industry currently finds itself in a transformational phase as well," says James C. Romine, vice president, regulatory and product stewardship, DuPont. "A change of management processes is required on a number of levels, if chemical companies are to thrive," Romine says. "We'll manage the complexity of regulatory compliance, but it's the change in the business model that will have the most impact," he says.
For plant level media and greenhouse gas (GHG) reporting, most respondents indicated a focus on mandatory reporting of GHG for the EPA, defining a carbon strategy, and actively determining their company-wide carbon governance structure. Sixty-nine percent of respondents believe that their regulatory organizations are prepared to handle potential changes to media reporting and licensing. While nearly 70% of respondents are confident they can achieve compliance with manual reporting using spreadsheets, they report concerns about their ability to manage the resulting operational changes accompanying the regulatory changes.
Access other Control Engineering content on regulations management:
- Textile Manufacturer Closes Loop On Sustainability
- Department of Energy to strengthen enforcement of energy efficiency standards
- Webcast: Technologies for Regulatory Compliance
- Edited by David Greenfield, editorial director
Control Engineering Sustainable Engineering News Desk
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Very interesting article. I couldn't agree more with the statement "While nearly 70% of respondents are confident they can achieve compliance with manual reporting using spreadsheets, they report concerns about their ability to manage the resulting operational changes accompanying the regulatory changes."
A key to the success to these compliance efforts is to handle the spreadsheets and associated emails in such a way that people can remain in their familiar MS Outlook and Office enviroments, but with the ability to operationally track, monitor and manage those spreadsheets and email.
Our ActionBase Compliance.Tracker solution does exactly that.
Jacob Ukelson, CTO of ActionBase - 2009-15-11 10:07:36 CST -
I just loved this article. It's interesting that "60% of respondents are confident they will complete the 2010 REACH registration requirements on time." What about the other 40%?! It will be so interesting, and dare we say, exciting -- to watch this play out.
You're right, regulations management is definitely a competitive advantage. From our corner, we see a many companies jumping on this now. There is no downside to regulation management, including cost, as it can pay for itself in process improvements. Thanks for some great reading!
Kathleen Hurley - 2009-13-11 16:08:05 CST
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