This article is part 3 of our series on regulatory compliance where we look at environmental compliance. In our previous articles, we’ve gone over product safety, shipping, and health and safety compliance.
Part 1 – Labelling and packaging regulations
Environmental regulations are developed by governments and organizations to protect their environment, not only related to offshore or contract manufacturing, but also for product and packaging disposal. As a result, manufacturers must pay attention to the environmental impact of their operations.
Environmental regulations vary from country to country and from product to product. For example, a phytosanitary certificate is often required when importing or exporting agricultural products. This is an official document issued by the plant protection organization of the exporting country to the plant protection organization of the importing country that certifies that the plants or plant products being shipped have been inspected and are considered to be free from quarantine pests in conformance with the current phytosanitary regulations of the importing country.
Similarly, the performance of the agri-food sector is closely related to the environment. Common issues relate to pesticide and herbicide use, discharge of chemicals into rivers, recycling of a certain percentage of products and storage of hazardous waste. Environmental packaging regulations present food companies with challenges because existing health standards already impose strict constraints, and changes to packaging mandated by regulations can make the product less convenient for consumers, which can affect sales. Infractions of environmental regulations are much more important to the general public, especially in developed countries. Consumer awareness and purchasing power ensures that organizations are more responsive to making changes to products, packaging and processes to ensure that environmental issues are acted upon—even if they are not regulated.
Microbeads in Soaps Facing Bans Due to Great Lakes Pollution
In 2013, the Marine Pollution Bulletin published a paper that described how the Great Lakes were under threat by tiny plastic microbeads found in popular facial scrubs. One bottle of facial scrub could send as many as 330,000 microbeads down the drain, where they are too small to be filtered out by wastewater facilities and so they eventually make their way into the lakes.
Once in the lakes, the microbeads settle at the bottom and choke out plant life and attract hungry creatures that mistake them for fish eggs. Once ingested, the animals cannot digest them due to the plastic and ultimately the animals starve to death. The plastic accumulates in animals along the food chain. Furthermore, plastic acts as a sponge for pollutants like motor oils and pesticides. These toxins work their way into bloodstreams of animals throughout the food chain, including fish consumed by people.
Environmentalists say there is not much that can be done about the plastic that is already in the lakes so they are focusing their efforts on prevention more plastic from entering the water. In the United States, many states discussed bills that would ban the sale and distribution of soaps, toothpastes and other products containing microbeads.
Manufacturers put up little resistance and agreed to the deadlines to phase out microbeads. Unilever, which owns soap companies including Noxema, Dove and Axe, completed the phase out of microbeads in their products in 2015. Companies like L’Oreal, Colgate-Palmolive, Procter & Gamble and Johnson & Johnson all agreed to stop using microbeads in their products.
To continue learning about the different regulations and requirements for selling products in international markets check out the Fittskills course Products & Services for a Global Market
Since the 1970s, environmental protection and sustainability—and their perceived barriers to competition and trade—have been hot topics in industrialized countries. Industries are concerned that initiatives to reduce the impact of industrial air pollution and regulated waste disposal would put them at a competitive disadvantage with adversaries in countries not subjected to the same initiatives.
Nations are also concerned that countries with lax environmental regulations will encourage companies to move and set up manufacturing facilities there, as opposed to operating in nations that have implemented regulated environmental policies.
In 1972, the Organisation for Economic Co-operation and Development (OECD) published Guiding Principles Concerning the International Economic Aspects of Environmental Policies Among its recommendations was the proposition that industries be forced to pay for all required upgrades to meet environmental regulations.
This recommendation was made with the goal of obtaining uniform practices while addressing subsidy concerns. The fear was that some governments would reimburse businesses for equipment or facility upgrades as an incentive to conform to regulations, which would amount to an unfair competitive advantage for those in nations that did not do the same.
In both the General Agreement on Tariffs and Trade (GATT-Article VI) and the General Agreement on Trade in Services (GATS-Article VI), the WTO reinforces sustainable development as a guiding principle. It provides member countries with the option of implementing environmental trade policies and regulations necessary to protect human or animal life or health. However, these measures must not be implemented purely as a disguised form of restricting international trade.
At the international level, there have also been significant moves between countries to address environmental concerns, including the conventions on climate change signed at Kyoto in 1997 and in Paris in 2015. The Paris Agreement was considered a landmark and was adopted by 196 parties (mostly countries) with a goal of achieving a climate neutral globe by mid-century.
Manufacturing and marketing in countries with less stringent environmental regulations may be a cost advantage for organizations, but given the rise of consumer awareness, corporate social responsibility, and the use of the Internet for social commentary, it is important to be aware of the reputational damage that could occur if they are operating in countries that are out of step with this global trend. Increasingly, free trade agreements are also adding environmental provisions, so there are fewer and fewer jurisdictions remaining where environmental regulations are still weak.
Keep an eye out for step 4, where we go over establishing regulatory compliance practices.