EU’s Sustainability Plan May Cause Problems for Fragrance Industry

Proposed sustainability regulations in the European Union could negatively impact the global fragrance industry. A new study on the business impact of the EU Commission’s proposed Chemicals Strategy for Sustainability put the fragrance industry at a crossroads, with transformations needed to safeguard and promote prosperity of the sector in Europe, according to The International Fragrance Association (IFRA).

The study, conducted on behalf of IFRA, suggests a negative impact on the industry of up to €2 billion ($2.1 billion at current exchange rates) a year resulting from proposals made in the European Union’s Chemical Strategy for Sustainability (CSS).

The study, by independent research consultancy Ricardo Energy & Environment, assessed the impacts against baseline projections for industry growth. It suggests that more than a quarter of the industry’s portfolio in turnover terms would be affected in some way by the proposed changes. This impact would be felt by consumers, says the report, with a reduction in choice of products that people consider important to their mental and physical wellbeing.

The research focuses on how specific proposals within the CSS, launched in October 2020, may affect fragrance companies and the wider industry in Europe. These proposals include an extension of the Generic Approach to Risk Management (GRA) that does not take account of the specificities of fragrances; the addition of hazard classes to classification, labelling and packaging (CLP); and the introduction of a ‘mixture assessment factor’ to assess combinations of chemicals. The impact of “essential use” criteria was also qualitatively assessed.

Data for the report was collected from dozens of companies, large and small, from across Europe. The data will be used as input to the ongoing consultative process on the revision of REACH and CLP regulations as well as on the creation of a Transition Pathway for Chemicals, by which the European Commission seeks to implement the aims of the CSS.

“From the beginning, IFRA has stated its support for the overall objectives of the EU Green Deal, and is ready to contribute positively to the Transition Pathway for Chemicals,” said IFRA President Martina Bianchini. “But the transition can only be successful if it promotes sustainable growth, covering social, economic, environmental and cultural dimensions.

“The study highlights the challenges posed by the current plans to the long-term socio-economic sustainability of our sector, especially for small businesses, which make up half of all companies in the European fragrance industry.

“At a time of uncertainty, we should be wary of the unintended consequences of policies and how they may negatively impact innovation, employment and growth. We want to make sure these important sustainability policies have a positive impact in these areas, as well as enhancing consumer choice, encouraging investment, and reinforcing fragrance’s place as a key part of Europe’s cultural heritage, as well as its future.”

IFRA Chairman Hans Holger Gliewe said that by working together to address some of IFRA's concerns about the proposed rules, and by giving more time to develop and modify portfolios, industry and regulators can achieve an outcome that gives Europeans the high level of consumer and environmental protection they deserve, and the choice and innovative products they desire.

“As an industry, we have already shown willingness to change,” he said. “We have embarked on a green transition through our joint Sustainability Charter with the flavor industry, we invest 8% of net sales in R&D, and green chemistry is an emerging practice in our industry that will contribute toward establishing products that are safe and sustainable by design.”

As well as addressing the potential impact on the fragrance industry, the study highlights a ripple effect on the wider fragrance value chain, from raw materials suppliers, to manufacturers, consumer goods companies and retailers, due to the need to substitute and reformulate products.

IFRA will present the findings of the study to European decision-makers as work progresses on implementation of the CSS. The fragrance industry is keen to contribute to a Transition Pathway that supports value chains, boosts innovation, and has clear and workable implementation mechanisms.

The full report is available at ifra.info/GreenDeal.