17/01/2005 As the European
Parliament kicks off its debate on new EU
chemical law – REACH – WWF reviews two financial
market reports that take an upbeat view of
the impact of REACH on business.
In a separate initiative several top companies
demand a strong REACH in a report published
by the Swedish-based International Chemical
Secretariat.
The two investment reports, one based on
chemical companies’ own assessments of REACH,
predict that it is unlikely to damage the
industry’s investment potential.
A report by ING Financial Markets reassures
investors that REACH will not threaten the
chemical industry’s profitability.
"We see the REACH issue as being very
unlikely to pose a threat to the EU majors."
In its view the EU’s proposals are "a
broadly sensible approach to a problem that
clearly needs to be addressed."
In a second report, the asset manager of
the Halifax Bank of Scotland (HBOS), Insight
Investment, polled 17 chemical companies to
find out how REACH would impact on them financially.
Major companies did not foresee that REACH
would have a great material impact.
ING Financial Markets
The ING Financial Markets report, Pan European
Chemicals, issued in October 2004, puts the
implementation costs in the context of industry
turnover.
"The estimated costs (EU estimate) do
not represent a structural problem for the
chemicals industry" and compares the
€2.3bn cost over 11 years to the "industry
turnover in that period of c.€5,000bn".
It also predicts that "pass through to
customers is likely to be successful."
The ING Financial Markets analysis concludes
"we expect the pan-European majors to
take REACH in their stride, there may be winners
and losers among the smaller players in the
industry." Its view of the impact on
SMEs is that "Product withdrawals might
be difficult for some SMEs but offer opportunities
for others."
Significantly when assessing costs of REACH
ING chose to use the "EU’s own estimates
as being the best available."
Chemical companies – confident that REACH
would not have material impact
Insight Investment the asset manager of the
Halifax Bank of Scotland (HBOS), polled 22
chemical companies to find out how REACH would
impact on them financially including big names
such as BASF, Bayer, BOC Group and ICI.
Insight Investment found that "Most
seem not to be in a position to estimate the
likely financial impact of REACH on their
businesses, though many expressed confidence
that the impact would not be material – in
stark contrast to the statements being made
by some of their own industry associations."
"Many do not appear to have recognised
the opportunity available to them to establish
new market share by developing substitute
chemicals for those noted by the EU to be
of greatest concern."
A report "What we need from REACH",
featuring arguments from several leading companies
– including H&M, Electrolux, Boots and
M&S – in favour of a strong REACH is published
today by the International Chemical Secretariat.
