How manufacturers can prepare for changing expectations around ESG and compliance in 2024.
By Sue Fortunato-Esbach, Manager, Sustainability, Assent
Regulatory challenges are coming in 2024, and manufacturers will have to work proactively to navigate their new requirements. In this article, we’ll explore developments in compliance and sustainability as well as the forces shaping these changes. We’ll also highlight the important role supply chain transparency will play in staying ahead of the curve and the competition in 2024.
The final rule under TSCA Section 8(a)(7), published in 2023, marked a significant shift in the handling of Per- and poly-fluoroalkyl substances (PFAS). This rule mandates that manufacturers and importers of PFAS in the U.S report detailed data within 18 months. There is no specific list of chemicals; in-scope substances will meet a definition outlined by the U.S. Environmental Protection Agency (EPA) and are thought to encompass 1,462 substances from the TSCA Inventory and Low Volume Exemption lists.
State-level initiatives add another layer to this complexity. Minnesota’s aggressive PFAS legislation, which includes reporting and restrictions, and Maine’s amended reporting rules continue the growing trend of stricter state regulations. For manufacturers and importers, this means heightened scrutiny and increased reporting responsibilities.
Forced labor compliance has become a priority issue worldwide, with significant laws like the German Supply Chain Due Diligence Act and the Uyghur Forced Labor Prevention Act influencing global trade. As of January 2024, Canada’s Fighting Against Forced Labour Act continues this trend. The act requires that in-scope companies perform risk assessments and report on forced labor and child labor risks in their supply chains.
There are more proposed regulations on the horizon to further mitigate forced labor risks in supply chains, including the EU’s proposed ban on forced labor and the Directive on Corporate Sustainability Due Diligence. To protect their bottom line and brand, manufacturers need to start working now to ensure they can meet requirements set out in an already complex and evolving regulatory landscape.
More than ever before, consumers and stakeholders are demanding that sustainability be incorporated into product designs. To that end, the EU is implementing a Digital Product Passport under the Ecodesign for Sustainable Products Regulation (ESPR). The move will modernize the digitization of information related to product composition, allowing consumers and businesses to make informed decisions about products they purchase. The passports will also inform how a product’s end-of-life should be handled and will provide clear information on a product’s environmental impact.
To date, the EU has often led the way in codifying environmental, social, and governance (ESG) principles into law, and they will continue this effort in 2024 with the EU’s Corporate Sustainability Reporting Directive (CSRD). In-scope businesses must conduct supply chain due diligence so they can provide information on material sustainability impacts, risks, and opportunities to the public and enforcement authorities through their websites. This public disclosure raises the stakes for accuracy and authenticity in sustainability claims, creating greenwashing risks like brand damage and lawsuits for companies making unverifiable or outwardly false claims about products.
California’s SB 253, the Climate Corporate Data Accountability Act, also represents a major shift for large corporations doing business in the state. With a requirement for third-party verified emissions reporting, starting with scope one and two emissions in 2026, the act positions California as a frontrunner in mandatory climate reporting.
It’s not only new legislation making waves in 2024 — the regulatory landscape continues to evolve with updates to established regulations as well. California’s proposed Proposition 65 short-form warning would require the name of at least one chemical to be included on the labels of in-scope products. Similarly, TSCA is expanding its restrictions, with 33 substances currently under evaluation by the EPA.
Regulatory requirements are expanding quickly, and your due diligence efforts have to scale alongside them to avoid non-compliance penalties in 2024. To protect business continuity in the new year, it is essential to have the digital tools and expertise needed to identify relevant requirements and meet them proactively.
PFAS are prime examples, presenting scenarios where critical components in products may suddenly become non-compliant, which can lead to costly and time-consuming redesigns and a scramble for alternative parts that are compliant.
However, the consequences of inaction aren’t always this immediate and clear. For instance, if a company is found to be non-compliant and the resulting delays mean they can’t deliver products on time, they may be in breach of their contract. Beyond the obvious and immediate monetary impacts, a contract breach can impact your brand reputation, creating financial losses that are difficult to quantify but nonetheless severe.
Further exacerbating these risks, non-governmental organizations (NGOs) and media are putting more pressure on manufacturers than ever before, requiring greater due diligence from businesses that don’t want to be “named and shamed.”
In this context, working closely with suppliers to meet new expectations is no longer optional but a strategic necessity. While initial supplier outreach may require a long series of corrective actions and educational initiatives, the benefits to manufacturers will be worth the effort. It allows them to turn regulatory challenges into a competitive advantage, establishing themselves as leaders in sustainability.
Still interested in learning more? Assent’s webinar on upcoming regulatory challenges will give you the expert insights needed to prepare for the year ahead.
About the Author:
Sue is committed to helping companies fulfill their legal requirements by translating legal complexity into technical efficiency. Based in Frankfurt, Germany, Sue brings extensive experience in the electronics and industrial manufacturing sectors. She is an experienced all-rounder in product compliance and sustainability, with deep knowledge of regulatory requirements associated with the Restriction of Hazardous Substances (RoHS) Directive; the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) Regulation; the Corporate Sustainability Reporting Directive (CSRD); the German Supply Chain Due Diligence Act (LkSG); the Toxic Substances Control Act (TSCA); packaging; and ecodesign. Before joining Assent, Sue was the head of Heraeus Noblelight GmbH’s product compliance team.
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