A guide to product stewardship and environmental law: essential briefing notes on product regulation Contents

Our environment team 1

Brexit and product stewardship briefing series 2

Packaging and packaging waste 4

Energy labelling 6

Waste Electrical and Electronic Equipment (WEEE) 9

Restrictions on the Use of Hazardous Substances in 12 Electrical and Electronic Equipment (ROHS)

Regulation of batteries 14

REACH 16

Reporting of non-financial information 18

Why Stephenson Harwood LLP? 20

Awards and accolades

• The Legal 500 UK 2016 – Leading firm for environment • Who’s Who Legal Environment 2015 • Chambers UK 2015 – Leading firm for environment • Chambers UK 2015 – Leading individual • The Legal 500 UK 2016 – Leading individual

Ben Stansfieldis the only lawyer to be ranked as a leading individual for both planning and environment by Legal 500 UK 2016

b Our environment team

We offer clear, commercial advice and • litigation: judicial and statutory reviews guidance on a wide range of environmental challenging the grant and refusal of issues including product stewardship, consents and adoption of policy emissions, contaminated land, environmental • tax: landfill taxes and climate change levy permitting and waste. advice We advise a range of international clients • construction: energy performance of including real estate developers, industrial buildings and noise pollution operators and lenders. • renewables: advising on the development, acquisition and funding of wind farms, solar Our team of specialist lawyers cover all farms, biofuel and biomass projects, waste- aspects of environmental law, working to-energy and gas fired power stations closely with our clients’ in-house lawyers, • regulation: defending criminal compliance experts and commercial prosecutions and regulatory enforcement decision-makers to develop clear strategies notices in relation to asbestos and provide robust advice. management and health and safety issues Our expertise includes: • strategic advice: advising on appropriate site surveys and accessing environmental • product regulation: offering practical advice information. in relation to European-based legislation such as REACH, WEEE and ROHS • real estate: advising on the Stay in touch apportionment of liability for known and unknown contaminants, mitigating land Follow us on twitter @SH_EnviroPlan contamination risks and negotiating to keep track of further news and remediation contracts insights into environmental and • planning: advising on permitting and planning law issues in the EU, and environmental impact assessment issues keep watch for our “Top Ten” series such as air pollution, nature conservation #10ThingsSH and noise

“Enthusiastic and incredibly competent” Chambers UK 2015

1 Brexit and product stewardship briefing series

In our experience, there are a core group of rules and regulations that companies manufacturing, distributing, marketing and disposing of products and chemicals within the UK and the EU are concerned about.

This briefing series on product stewardship was originally published and circulated to give some comfort to the product industry in the face of Brexit. However, clients that we’ve spoken to have told us they’ve been crying out for a punchy summary of the key rules and regulations governing the product market.

And so here it is. We have packaged up our product stewardship series into this publication, which sets out the ten key things that Stephenson Harwood’s environment team think you need to know on the following product-related environmental laws: • packaging and packaging waste • energy labelling • batteries • waste electrical and electronic equipment (WEEE) • use of certain hazardous substances in electrical and electronic equipment (ROHS) • obligations on companies to report environmental information • registration, evaluation, authorisation and restriction of the supply and use of chemicals (REACH).

2 “More than ever, environmental and climate change issues are at the heart of law and policy, impacting every business sector. We have experience advising domestic and international product manufacturers on the full range of EU- led, product-based regulations.” Ben Stansfield Partner and head of environment

3 Packaging and packaging waste

If your business has an annual turnover of Does your business: pack or more than £2 million and “handles” over fill products into packaging; 50 tonnes of “packaging” per year, then recondition or import packaging; or, restrictions on packaging and packaging even do as little as affix its name or waste will apply. logo to packaging? If yes, then the business must ensure that:

What does “handles” “packaging” 4. Packaging volume and weight is sufficient mean? to maintain levels of safety and hygiene. 5. Packaging must be manufactured so as 1. “Handles” includes dealing in the raw to permit reuse, recycling or recovery. materials for packaging, converting raw materials into packaging, packaging goods 6. Packaging must not contain more than and selling or importing packaging. maximum permitted levels of hazardous substances, and the use of such 2. “Packaging” is any material that is used to substances must be minimised where hold, protect, handle, deliver and present the packaging is going to be incinerated goods, from raw materials to finished goods. or landfilled. Yes, my business handles 7. Businesses will be exempt from the packaging, so what? above, however, if the packaging manufactured, packed or is filled for 3. A producer (a business that handles direct export outside the EU without packaging) must register with the being placed on the market inside the EU. relevant regulator, certify its recovery and recycling obligations, and demonstrate it has recovered or recycled specified tonnages of packaging waste each year. Or, a business can simply sign up with the National Packaging Waste Database that will take care of the details for you.

4 Businesses’ obligations don’t just Could your business be in end there… breach, and if so, what are the consequences? 8. Businesses must keep records of technical specifications of packaging 10. Regularly auditing the practices of evidencing compliance for four years. a business, and using independent 9. If a business’ main activity is to sell advisors where expedient, is essential to directly to consumers, be aware the ensuring compliance with the packaging business must provide information to and packaging waste rules. Failure to consumers about the return, collection comply with the recycling and recovery and recovery of packaging waste. requirements and the packaging standards constitutes an offence and businesses can potentially face an unlimited fine.

5 Energy labelling

The energy labelling rules apply to products What am I required to do as a that consume energy during use, ranging Supplier? from commercial and industrial plant to domestic appliances. The rules also apply 4. Suppliers must freely provide dealers with to the energy-consuming component parts a label and a standard table of information of those products. The rules bind both (a “fiche”) relating to the product. The suppliers and dealers. mandatory contents of the fiche are set out in law. All products must also adhere to a seven-tier classification system with What makes you a “supplier” or a a colour scale from dark green (most “dealer”? efficient) to red (least efficient). 5. Suppliers must maintain records of the 1. A “supplier” includes importers, energy ratings of their products. manufacturers and manufacturers’ agents, and entities that place products What am I required to do as a on the market or into service. dealer? 2. A “dealer” is a retailer or other entity that 6. When a product is displayed, dealers must sells, hires, offers for hire-purchase or attach the label provided by the supplier in displays household appliances to end users. a clearly visible position as specified in the What appliances are included? particular regulation for that product. 7. Dealers must make the fiche available in 3. All energy-using and energy-related the product brochure accompanying the products, e.g. washing machines, electric product when sold to end-users. ovens, and electrical lamps. Each of these appliances has its own respective set of rules with which the product must comply.

6 Could your business be in 9. Company officers can also be guilty of breach, and if so, what are the an offence if their company is found to consequences? have committed the offence with their consent or due to their neglect. 8. Contravention of these rules is an 10. To reduce the chances of breaching the offence and the market surveillance energy labelling rules, business practices authority (in the UK) has a range should be audited regularly. This could of enforcement options, including take the form of an internal compliance investigative / search and seizure team, or through the deployment of an powers, and the power to issue stop independent, external advisor. notices. Finally, there is no limit to the fine that can be imposed.

7 8 Waste Electrical and Electronic Equipment (WEEE)

The WEEE rules govern the receipt and What responsibilities are placed on disposal of products that rely on electricity distributors? to operate to ensure their safe collection, recycling and disposal. 4. Distributors must provide a way for their customers to dispose of their old household EEE when those customers Who does the law apply to? are sold a new version of the same item. This can be done in-store or by joining 1. The WEEE rules apply to “producers” of the Distributor Takeback Scheme (DTS). electrical and electronic equipment (EEE) 5. If a distributor provides its own take back – i.e. entities that manufacture, import service, it will need to fund the storage and sell EEE in the UK and the EU. and removal of WEEE. If a distributor joins 2. If a business provides EEE on a the DTS, it will pay a fee to the DTS to commercial basis directly to consumers cover its WEEE obligations. (e.g. retailers and wholesalers), then it will 6. Distributors must keep records of be deemed a “distributor” and will also be information given to customers about caught by WEEE. WEEE, and also keep records of all electrical and electronic waste collected What is EEE? and disposed of. All records should be 3. EEE products depend on electric current kept for four years. or electromagnetic fields to operate. At 7. Non-compliance with these the moment, only certain categories of responsibilities is an offence and could these types of products are included, but lead to an unlimited fine. from late 2018 / early 2019, the WEEE rules will apply to all products of this general nature.

9 What responsibilities are placed on producers?

8. Producers must register annually. Failure to register is a fineable offence. 9. If a producer creates more than five tonnes of WEEE, the producer must join a Producer Compliance Scheme which, for a fee, will take on the producer’s WEEE collection and treatment responsibilities. Small producers have no responsibilities for financing the collection and treatment of household WEEE, but still have the same financial responsibilities as large producers for the collection and treatment of non- household WEEE. 10. Producers must also label products with a crossed-out wheeled bin symbol and with a producer identification mark, and provide information on reuse and environmentally- sound disposal of the products.

10 11 Restrictions on the Use of Hazardous Substances in Electrical and Electronic Equipment (ROHS)

ROHS is similar to WEEE in that it applies to What are the key obligations under EEE. However, ROHS applies further up the ROHS? supply chain and focuses on the chemicals contained within products. 4. Economic operators may not place on the market EEE containing lead, mercury, cadmium, hexavalent chromium, When does the law apply? polybrominated biphenyls (PBB) and polybrominated diphenyl ethers (PBDE), 1. The law places obligations on in amounts exceeding maximum manufacturers, importers and concentrations. distributors of EEE (known collectively 5. A manufacturer must not place EEE on as “economic operators”). the market unless it: 2. Obligations are imposed on economic • complies with the rules on design and operators at different stages in the manufacture supply chain, but if a business fulfils more • carries out a conformity than one role (e.g. is both an importer assessment and draws up technical and a distributor), then it will need to documentation, which must be kept comply with both sets of regulations. for a period of ten years after placing What is EEE? the product on the market • draws up an EU declaration of 3. EEE products depend on electric current conformity and affixes the ‘CE’ marking or electromagnetic fields to operate. This • identifies the EEE and the includes household appliances, computers, manufacturer using information, and electronic tools (but not large-scale such as a name and serial number industrial plant / tools). • keeps a register of the EEE.

12 6. An importer must take care that the Could your business be in breach manufacturer has complied with the law. of ROHS, and if so, what are the 7. A distributor must ensure that the consequences? manufacturer and importer have complied with their obligations. 9. In the UK non-compliance can lead to a 8. All economic operators are required to potentially unlimited fine. take appropriate corrective measures if 10. Economic operators can take a variety they become aware that EEE placed on of steps to ensure that ROHS is being the market is non-compliant and to co- complied with, including working closely operate with the National Measurement with other economic operators in the and Regulation Office (NMRO), which is supply chain. Some businesses appoint the regulatory body in the UK. internal compliance teams to comply with ROHS and WEEE, while others may adopt independent advisors.

13 Regulation of batteries

If your business places batteries on the UK 1. Producers of batteries are required to or EU market, it will need to comply with finance the collection, treatment and the rules and regulations set out in the EU recycling of its products. Batteries Directive 2006. The Batteries 2. Distributors must take back waste Directive applies to all batteries sold in the portable batteries free of charge, UK and the EU. whether or not purchased from them, unless they are a ‘small distributor’.

The majority of the product stewardship Experienced producers and and environmental rules governing batteries distributors will know that there relates to the collection and disposal of used are a series of rules regarding the batteries or battery waste. The rules bind (a) design and contents of batteries. “producers” – businesses that place batteries on the market; and (b) “distributors” – 3. Batteries placed on the UK and EU businesses that provide consumers with market must conform to the following batteries on a professional basis. maxima: 0.0005% of mercury by weight; 0.002% of cadmium by weight; and 0.004% of lead by weight.

14 4. Batteries must also be labelled with the Could your business be in breach symbol of a crossed-out wheelie bin, and of the Battery Directive, and if so, show the chemical symbols of contents what are the consequences? that are hazardous. 8. The legislation is enforced in UK by the Special controls apply depending NMRO, which has the power to visit on the type of battery being premises for inspection purposes, and produced or distributed. may also seize batteries or records.

5. Producers of portable batteries 9. Failure to comply with collection and must register with the appropriate recycling requirements may result in statutory environmental regulator (the prosecution and a potentially unlimited fine. Environment Agency in England). 10. Producers and distributors should take 6. If a business places on the market more steps to ensure that the rules relating to than one tonne of portable batteries batteries are being complied with. Some annually, it must subscribe to a battery businesses have adopted an internal compliance scheme, which will arrange review process to ensure that these for the collection, treatment and important product stewardship rules are recycling of the waste batteries. being complied with. Other businesses have preferred to appoint external, 7. Special controls will also apply to Producers independent advisors. of vehicular and industrial batteries.

15 REACH

REACH (the set of rules controlling the manufacturing those chemicals are registration, evaluation, authorisation primarily responsible for registering and restriction of the supply and use of these chemicals. chemicals) is a European Regulation and 3. However, from 1 June 2018, all chemicals therefore does not need to be transposed (not just those at point 2) used at an EU- into UK domestic law for it to apply. wide rate of over 1 tonne per year must However, once the UK has left the EU, all be registered with the ECHA. For this European Regulations (including REACH) will reason, the ECHA has predicted an influx cease to apply. Therefore, the UK will need of registrations by small and medium- to adopt the same (if not very similar) rubric sized enterprises (SMEs) over the next in relation to chemicals regulations, so that year before the 2018 deadline. UK-made products can continue to be sold on the EU market, which is the UK’s biggest Is it only those businesses that export market. import or manufacture substances that are caught by REACH?

What types of businesses currently 4. No. It is also the downstream users of fall within the REACH framework? substances in the course of their own industrial or professional activities. 1. Suppliers that import into the EU or As part of standard practice under manufacture more than one tonne per REACH, downstream users must year of a chemical must register that provide information about the uses of chemical with the European Chemicals the product that contain the controlled Agency (ECHA). substance to the supplier, and comply with any safety and risk management 2. Chemicals that are used across the procedures issued by the supplier, as EU at a rate of over 100 tonnes per well as passing on any safety and risk year must be registered with the information to the consumer. ECHA. Carcinogens, mutagens or reproductive toxicants used at an EU-wide rate of over one tonne per year must also be registered with the ECHA. The businesses importing or

16 5. If a supplier of a substance fails to register the substance, the downstream user will consequently face restrictions on its operations in connection with the use of that substance. This could mean that if the manufacturer or importer of a substance does not register that substance, any downstream users may be restricted from using that substance.

What substances must be registered with the ECHA? 8. Failure to register a substance means 6. “One substance, one registration” – if the substance cannot be supplied or multiple parties have registered the same used within the EU. The enforcement substance, those parties are required to of REACH is up to individual Member participate in a Substance Information States, and therefore penalties for non- Exchange Forum (SIEF), and collaborate compliance vary. However, by way of with other companies also supplying or example, it is an offence to fail to register using the same substance. It is possible a substance in controlled volumes in for businesses to opt out of the SIEF the UK under the REACH Enforcement process if the business is concerned Regulations 2008. about sharing commercially-sensitive information with other businesses. Important considerations when 7. Some substances are exempt from registering substances: REACH altogether (for example radioactive substances); other substances are exempt 9. Businesses are able to transfer from the registration requirements of registrations of substances by various REACH (for example substances used in means, including via merger, share sale foodstuffs); and others again from supply or asset sale. Depending on the exact chain information requirements (for nature and structure of the transfer, the example cosmetics). These substances ECHA may need to be informed of the are covered by other EU Directives - to transfer and a fee may need to be paid. find out whether a substance falls under 10. The registration of a substance will REACH, or whether a substance falls under usually incur a fee. Standard fees under a different regime, drop us a line. Article 6 are €1714 for a substance under 10 tonnes/year and €4605 for a substance between 10-100 tonnes/year. However, significant discounts on the above fees apply for SMEs.

17 Reporting of non-financial information

Businesses located in the UK and the EU are What must these businesses required to publish non-financial information do in order to comply with (including environmental information) under the Information Directive’s the ‘Information Directive’, EC Directive requirements? 2014/95/EU. As with large businesses across the EU, businesses importing, 4. PIEs must disclose environmental manufacturing, selling and disposing goods information in their annual reporting. within the UK product market will be bound 5. These policies should focus on current by the Information Directive. and foreseeable impacts on the environment and health and safety, the use of renewable and non-renewable What businesses are caught by energy, greenhouse gas emissions, water these reporting requirements? use, and air pollution. 6. If a business does not have any 1. The Information Directive only applies environmental policies, then it must to large public interest entities, or explain why not. PIEs: publicly traded companies, credit institutions, insurance undertakings, and any other designated undertakings of significant public relevance. 2. To be caught, PIEs must have more than 500 employees, and an annual balance sheet of greater than €20 million, or annual turnover of greater than €40 million. 3. Within the EU, around 6,000 entities will be classed as a PIE.

18 While the Information Directive Is your business complying, and if goes further than previous not, what are the consequences? attempts to ensure environmental reporting by large PIEs, it is not 9. In the UK, these rules have now been incorporated into the Companies Act, something for businesses to be and failure to report non-financial afraid of: information can lead to director liability. 7. It is estimated that the new reporting 10. PIEs should take steps to ensure they are requirements will cost each PIE less than meeting their reporting requirements. £5,000 per year. Speak to Stephenson Harwood’s 8. As well as fairly benign reporting Environment Group in order to find out requirements, PIEs are given some what is the best option for your business. flexibility in the reporting process. For example, instead of supplying environmental information as part of the PIE’s yearend financial report, the PIE may issue a separate report during the year containing the requisite environmental information.

19 20 Why Stephenson Harwood LLP?

Stephenson Harwood is a law firm with over 1000 people worldwide, including more than 170 partners. Our people are committed to achieving the goals of our clients - listed and private companies, institutions and individuals.

We assemble teams of bright thinkers to match our clients’ needs and give the right advice from the right person at the right time. Dedicating the highest calibre of legal talent to overcome the most complex issues, we deliver pragmatic, expert advice that is set squarely in the real world.

Our headquarters are in London, with ten offices across Asia, Europe and the Middle East. In addition we have forged close ties with other high quality law firms. This diverse mix of expertise and culture results in a combination of deep local insight and the capability to provide a seamless international service.

21 GET IN TOUCH

Ben Stansfield Lorrae Hendry Christina Achkarian Partner Senior associate Associate T: +44 20 7809 2500 T: +44 20 7809 2602 T: +44 20 7809 2113 M: +44 7584 515 251 M: +44 7711 347 439 E: [email protected] E: [email protected] E: [email protected]

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© Stephenson Harwood LLP 2018. Any reference to Stephenson Harwood in this document means Stephenson Harwood LLP and/or its affiliated undertakings. Any reference to a partner is used to refer to a member of Stephenson Harwood LLP.

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