REACH in numbers 2023

The past political cycle has been one of the most prolific ever when it comes to legislation with a clear focus on chemicals. Several legislative initiatives related to the Chemicals Strategy for Sustainability (EU CSS) have either been launched or have come to conclusion.

The main aim of these new regulations and directives is to protect EU citizens and the environment from the adverse effect of harmful chemicals by introducing requirements in several sectors and at different stages of the life cycle of products. This growing number of pieces of legislation come with additional requirements in respect to substance monitoring and reporting.

REACH has always been crucial for the Aerospace & Defence industry. Specific chemicals are key to ensure safety and product performance (e.g. durability, reparability & maintainability, upgradeability, reliability). Sustainability criteria are also a strong driver for innovation in the sector (e.g. circular economy, chemical safety).

In 2023, ASD Europe conducted in accordance with EU competition law, a survey to analyse the resources committed to the work on REACH among ASD members. 

ASD collected and anonymised data from 28 companies from the A&D sector which are either direct or indirect members of the association. Overall, the turnover of the companies that responded to the survey is estimated to be around 135 billion EUR, with an overall number of employees of over 390,000. For reference, this survey covered 51.9% of the overall 2022 turnover of ASD member companies reported to be €260.5bn, and 42,3% of the total number of employees reported to be about 921,400 people. 

Out of the over 390,000 employees working for the responding companies, 642 FTE (full-time employees) are reported to be working on REACH matters.

These 642 FTEs make up 0,16 % of the total workforce reported. On average, companies reported that 0.6% of the employees are dedicated to work full or part time on REACH, with numbers going from 1 REACH expert up to above 100 per company. Due to the specific expertise needed to work on matters related to REACH and other chemical legislation, these roles are limited and covered by highly skilled professionals who are also expected to have an overview on the company’s activities and latest regulatory requirements in the EU.

REACH-related costs

The data collection also covered the costs incurred by the surveyed companies linked to REACH activities. These overall costs include aspects such as costs for impact assessments, authorisations, advocacy and participation to trade associations, REACH obsolescence-management, development of alternatives & project management. A more detailed overview will be provided in the sections below.

The overall REACH related costs and investments were reported to be over 293 million EUR per year between 2020 and 2022, i.e. close to 1 billion EUR for the 3 years period. Moreover, companies reported additional costs for Registrations and Authorisations of above 32 million EUR accumulated until 2022.

In general, surveyed companies observed an increasing trend in costs related to REACH implementation in the years 2020 towards 2022.

Registration

According to REACH, companies are responsible for collecting information on the properties and uses of the substances they manufacture or import above one tonne a year. Companies must also assess the hazards and potential risks presented by the substance.

This information is communicated to ECHA through a registration dossier containing the hazard information and, where relevant, an assessment of the risks that the use of the substance may pose and how these risks should be controlled.

Out of the 28 surveyed companies, only eight have incurred costs related to the registration of substances under REACH, for a total of over 1.5 million EUR, and an average of almost 200K EUR for each of the eight companies. The majority of companies in A&D sector are manufacturer of articles/products (incl. MRO business) and as such downstream users of chemicals.

Applications for authorisation

Once a substance is identified as a Substance of Very High Concern (SVHC) and included in the Authorisation List (i.e. REACH Annex XIV), to be able to use that substance, companies are required to submit an Application for Authorisation to the European Chemicals Agency. Applicants in this case can be manufacturers, importers or downstream users of the specific substance.

Out of the 28 companies surveyed for this report, 11 reported costs related to Applications for Authorisations, for a total of around 31 million EUR, and an average of about 2.8 million EUR for each of the 11 companies.

Value chain communication

Safety data sheets (SDS) are documents used to communicate throughout the value chain and include information about the properties of the substance or mixture, its hazards and instructions for handling, disposal and transport and also first-aid, firefighting and exposure control measures.
SDS should also be continuously kept up to date to ensure accurate information flow across the value chain.

All surveyed companies, except two, reported incurring costs related to SDS in the years 2020-2022; on average, a total of 5.8 million EUR per year was spent by the responding companies; on average, around 206 k EUR per company was spent.

Article 33 of REACH lays down companies’ duty to communicate information on substances in articles; specifically, suppliers of articles containing a substance listed in the Candidate list of substances of very high concern for Authorisation in a concentration above 0,1% weight by weight (w/w) have to provide sufficient information to allow safe use of the article. On request, the information is also to be provided to the consumer of the article (REACH Article 33(2)).

Almost all surveyed companies reported costs between 2020 and 2022 linked to information requests in the supply chain including data verification/ declaration creation and storage as required under Article 33(1) of REACH, for a total of around 8.9 million EUR per year. On average, the yearly expense for each company was reported to be over 315 K EUR. 

Notifications to authorities

According to Article 7(2) of REACH, producers and importers of articles are required to notify the European Chemicals Agency in case a substance on the Candidate list of substances of very high concern for Authorisation is present in those articles in quantities totalling over one tonne per producer or importer per year, and the substance is present in those articles above a concentration of 0,1% weight by weight (w/w).

In the context of this notification, the producer/importer will need to provide information on both the substance properties and the use(s), as well as on the tonnage range of the substance.

In parallel, Article 66 of REACH requires downstream users, using a substance with a granted Authorisation, to notify the European Chemicals Agency within three months of the first supply of the substance.

Over 78% of the surveyed companies reported costs linked to notification requirements under both Article 7(2) and 66 of REACH between 2020 and 2022. The total yearly average is reported to be above 1.5 million EUR, while on average each company has spent around 55 K EUR each year.

Specific exemption

Article 2(3) of REACH clarifies that Member States may allow for exemptions in specific cases for certain substances, on their own, in a mixture, or in an article, where necessary in the interests of defence.

Eight out of the 28 companies surveyed have reported costs linked to the management of this exemption for an average total of about 580 K EUR per year between 2020 and 2022.

Implementation costs

Substance scrutiny is continuously ongoing, which often leads to requirements in terms of substitution of restricted or banned substances in articles and mixtures.

Over 90% of the surveyed companies reported costs linked to Obsolescence Treatment & Substitution effort (R&T to replace substances respectively products impacted by REACH regulation incl. Qualification and Industrialisation (up to TRL9) resulting from the REACH Regulation. These expenses have been reported for a total yearly average of around 219 million EUR between 2020 and 2022; with a yearly average per company amounting to about 7.8 million EUR.

Moreover, companies reported investments/CAPEX linked to shopfloor infrastructure & worker protection (i.e. "workplace safety") related to REACH authorisation and restriction conditions for years 2020 to 2022 of over 29 million EUR per year across companies.

External costs

To ensure compliance with REACH, often it is necessary for companies to rely on external support, both in terms of consultancies and IT services and infrastructure.

For years 2020 to 2022, the surveyed companies reported a total yearly cost for external services of over 29 million EUR. Specifically, consultancy services were reported to have costed each company on average over 620 K EUR each year, while the cost of infrastructure was reported to be on average over 415 K EUR per company per year.

Investments

Looking at the future, the surveyed companies reported their average investments planned linked to R&T to replace substances affected by REACH authorisation and restriction requirements, including Qualification and Industrialization (up to TRL9). 

Overall, the additional investment expected by companies for the next 3-5 years is reported to be around 157 million EUR each year with an increasing trend in the amount of investments required on a yearly basis. For reference, for 2022, the overall investment in R&D of all ASD member companies was reported to be €23.2 billion EUR. Based on extrapolated REACH investments from the surveyed 28 companies to the entire A&D sector, the REACH related share is above 1% of the total R&D investment.

Conclusion

The data reported in this document is summarised below with focus on the costs incurred by companies in the years 2020 to 2022. The vast majority of the costs revolve around the efforts towards substituting hazardous chemicals whenever required and possible. 

The lowest amount reported, instead, relates to the costs connected to the defence exemption under REACH; this is likely due to the fact that this type of expense did not impact all companies, but only around 30% and is considered as last recourse only e.g. if an authorisation is not granted. 

Based on the averages extrapolated from the reported data, here is an overview of the estimated REACH-related costs incurred by each company yearly between 2020 and 2022.

In conclusion, the reported data shows significant overall expenses connected to REACH, varying from information sharing costs to substitution costs. Most of the considerable costs, as shown above, are connected to the substitution processes for substances that have been either restricted or subject to the REACH Authorisation. These substitution costs can also be considered as efforts towards innovation to move towards technologies that do not rely on chemicals that are hazardous to human health and the environment while still ensuring the level of safety required by the strict standards of the Aerospace & Defence sector. 

Companies reported an overall increase in the REACH related expenses over the period between 2020 and 2022, with 64% of the surveyed companies reported either an increase or a significant increase. 

Outlook of A&D sector

In the context of this survey, companies also reported their expected spending trends for the next 3-5 years. Results show that 64% of the surveyed companies expect an overall increase in REACH related costs and the main drivers of this increase have been indicated to be the expected additional operational requirements and substitution efforts linked to the upcoming EU legislation covering both Chromates and PFAS (per- and polyfluoroalkyl substances). 

Both these groups of substances are widely used in the A&D sector due to their properties that allow materials to withstand extreme conditions, such as high temperatures, pressure, and environmental exposure.

The data in this report are a result of a mix of statistical methods and estimations that leverage the internal data compiled, as well as relevant publicly available information. It should be noted that some of the data included in this report is based on estimation and could be reported differently in future editions.