June 2024
International Organisation of Aluminium Aerosol Container Manufacturers
In this issue, we delve into the latest regulatory requirements impacting manufacturers of aluminium aerosol containers and the broader packaging sector. From stringent regulations governing coatings and printing inks to the upcoming ban on Bisphenol A in food contact materials, the articles highlight the most significant challenges confronting the industry. Additionally, we explore the Corporate Sustainability Reporting Directive (CSRD), a mandate set to overhaul sustainability reporting practices for approximately 50,000 companies across Europe.
Furthermore, we examine the implications of the EU Carbon Border Adjustment Mechanism (CBAM), shedding light on how this mechanism may reshape the landscape of the industry in terms of carbon emissions and international trade. Come along as we navigate the intricate landscape of regulatory compliance, charting the course for the aluminium aerosol container manufacturing and packaging industry's future.
In the midst of regulatory turbulence, coatings and printing inks stand as vital components in packaging, not just for aesthetics but also for product preservation and consumer safety. Yet, their essential role is now under close regulatory scrutiny due to concerns about the health and environmental effects of certain chemicals. This presents a substantial hurdle for the industry as it strives to comply with regulations while maintaining product effectiveness and consumer trust.
Per- and polyfluoroalkyl substances (PFAS), widely used across industries, are facing significant regulatory pressure. Recent proposals from five EU chemical agencies seek to restrict thousands of PFAS-based materials under REACH, which could disrupt industrial production and impact manufacturers of aerosol container manufacturers that rely on PFAS containing coatings and printing inks.
Similarly, proposed restrictions on Polychlorinated Biphenyls (PCBs) pose uncertainty for the European packaging industry. The suggested stringent threshold of 10 ppm for PCBs as Unintentional Trace Contaminants (UTC) under the Persistent Organic Pollutants (POPs) regulation raises concerns, particularly regarding certain pigments used in printing inks. Inks containing chlorinated organic pigments or requiring chlorinated solvents in their production, either struggle to meet a 10 ppm PCB limit consistently or contain PCB levels ranging from 1 to 10 ppm. The sudden enforcement of this threshold could disrupt supply chains, emphasizing the need for collaboration between regulators and industry stakeholders to navigate these complexities effectively and ensure environmental sustainability and resilience in the packaging sector.
The addition of five substances to the list of substances of very high concern (SVHC) further complicates matters for the coatings and printing inks industry, as these materials are often used in the production of coatings and printing inks. Further use of SVHC above 0.1% in products triggers various legal requirements such as:
These regulatory pressures reflect a trend towards stricter regulations in the chemical industry, impacting packaging materials. Adaptation and effective communication between aerosol container manufacturers and their coatings and printing inks suppliers are crucial for assessing potential impacts. Ultimately, meeting these regulatory demands requires collaboration between regulatory bodies and industry stakeholders to ensure compliance without sacrificing innovation and functionality in packaging materials.
In a concerted effort to combat carbon leakage and ensure a level playing field for domestic and imported goods, the European Union (EU) introduced the Carbon Border Adjustment Mechanism (CBAM) Regulation, which took effect on 1 October 2023. This regulatory framework aims to mitigate the risk of carbon-intensive imports undermining the EU's climate goals by imposing charges on the embedded carbon content of select imports. CBAM initially only covers a few sectors considered most at risk for carbon leakage – namely cement, electricity, fertilizers, hydrogen, iron & steel, and aluminium. However, its ramifications extend to businesses reliant on imported aluminium raw materials or articles, such as manufacturers of aluminium aerosol containers.
The CBAM implementation introduces a series of phases, starting with the transitional phase from October 2023 to December 2025. During this period, only reporting obligations arise. Affected EU importers must submit quarterly CBAM reports detailing the imported quantity, the direct and indirect emissions associated with the production of the CBAM goods, and any carbon taxes paid in the exporting country. This requirement poses significant challenges, particularly concerning the determination of emissions and the communication between the EU-importer and their non-EU producers. Failure to comply with the reporting requirements can result in penalties set by each EU member state, depending on the amount of unreported or incorrectly reported embedded emissions.
Starting from January 2026, only registered declarants will be permitted to import CBAM goods, with customs authorities mandated to monitor compliance. Importers must acquire CBAM certificates to cover their imported emissions, with financial penalties for insufficient allowances. From 2026 onwards the CBAM report will be submitted annually. However, CBAM will be gradually expanded from 2026 to 2034. At the same time, free allocations in the EU ETS will be phased out for the CBAM sectors.
In summary, the CBAM requirements include verifying emissions, acquiring certificates, and submitting annual declarations, necessitating meticulous preparation by affected businesses.
For EU-based manufacturers of aluminium aerosol containers, the CBAM presents both challenges and opportunities. As aluminium is among the sectors subject to the CBAM, importers sourcing aluminium from non-EU countries will face increased scrutiny and financial obligations. Companies must accurately assess their supply chains to determine the geographical origins of emissions associated with their aluminium procurement. This entails evaluating suppliers' emissions performance and ensuring compliance with reporting and certification requirements under the CBAM. Moreover, the CBAM may incentivize a shift towards low-carbon aluminium production methods or sourcing from countries with stringent environmental regulations. While this could lead to increased costs initially, investments in sustainable practices may enhance competitiveness in the long term and align with evolving consumer preferences for environmentally responsible products.
EU manufacturers of aluminium aerosol containers should prioritize readiness for CBAM compliance, beginning with fulfilling reporting obligations and understanding the impact on their supply chains. Collaboration with suppliers, utilization of available tools and resources provided by the EU Commission, such as webinars and e-learning modules, and proactive engagement with regulatory developments will be instrumental in navigating the complexities of the CBAM.
As the EU plans to expand the CBAM's scope to encompass additional sectors by 2030, including downstream products, aluminium aerosol container manufacturers must remain vigilant and adaptable to evolving regulatory requirements. By embracing sustainability initiatives and leveraging the CBAM as a catalyst for positive change, businesses can mitigate risks, drive innovation, and contribute to a greener, more resilient economy.
The European Commission has recently adopted the CSRD, a directive aimed at redirecting investments towards sustainable endeavors. This revision of the Non-Financial Reporting Directive (NFRD) seeks to ensure that companies provide reliable and comparable sustainability data demanded by investors and other stakeholders. By doing so, it aims to curtail unnecessary costs arising from uncertainties surrounding the relevance and quality of reported information.
Significantly broadening its predecessor's scope, the CSRD extends its reach to nearly 50,000 organizations, encompassing all large enterprises from 2025 and stock market-oriented Small and Medium-sized Enterprises (SMEs) from 2026. This expansion marks a departure from the NFRD, which only applied to approximately 11,700 companies and groups designated by national authorities as public interest entities.
In an effort to ensure uniformity across the EU market, the EU Commission has released the initial iteration of the European Standards for Sustainability Reports (ESRS). These standards comprise 2 cross-cutting standards and 10 thematic standards, covering governance, social, and environmental aspects. Additionally, specialized standards tailored for SMEs are slated for release in 2024. Sector-specific standards, including those for large non-EU companies, are also on the horizon before July 2026. All these standards emphasize rigorous criteria and quality and mandate external audits, which may pose a substantial burden for affected entities.
To comply with the CSRD, companies must undertake a comprehensive materiality assessment. This entails a risk-based analysis of the value chain, followed by the identification and evaluation of impacts, opportunities, risks, and relevant stakeholders. Subsequently, companies can determine the requisite information for reporting. Moreover, they should conduct a gap analysis and establish an action plan to align CSRD requirements with their current sustainability status. This involves defining internal adjustments, such as processes, metrics, and controls. Furthermore, companies need to refine reporting processes, finalize controls, enhance information reliability, prepare for third-party audits, and gear up for implementing the Electronic Single European Format (ESEF) for digital tagging of reports.
In conclusion, companies falling under this new legislation are expected to publish a sustainability report adhering to ESRS requirements, encompassing data collection, content drafting, third-party verification, and digital publication as part of the management report.
For years, Bisphenols have been integral to both inner and outer coatings of packaging containers, offering versatility across a wide range of applications. However, growing health concerns surrounding these compounds have prompted the European Food Safety Authority (EFSA) to reassess the use of Bisphenol A (BPA) in Food Contact Materials (FCMs).
In April 2023, EFSA released a revised opinion, drastically reducing the provisional tolerable daily intake (TDI) for BPA from 4 micrograms per kilogram of body weight per day to 0.2 nanograms per kilogram of body weight per day. Consequently, in May 2023, the European Commission (EC) announced the prohibition of BPA in FCMs.
The draft regulation was unveiled in February 2024, initiating a public consultation period until 8 March 2024. Under the proposed plan, intentional BPA use in FCMs will be banned 18 months after the regulation takes effect. Longer transition periods are granted for specific applications, allowing manufacturers of aluminium aerosol containers to explore alternative options. For instance, outer coatings of containers and other packaging formats will have a 36-month transition period, twice the standard duration. A similar extended transition period will apply to packaging for high-acidity foods. Additionally, brand owners must notify at least nine months in advance of the transition's end, indicating the cessation of BPA use in FCM packaging. Compliance declarations, along with pertinent documentation, must accompany the product during all marketing stages.
Industry stakeholders acknowledge the challenges of finding suitable alternatives for all applications, despite efforts over the past decade to replace BPA in food packaging. There is criticism over the dismissal of opinions from organizations like the German Federal Institute for Risk Assessment (BfR) and the European Medicines Agency (EMA), which advocate less stringent measures. Furthermore, counterparts such as the Food and Drug Administration (FDA) in the United States continue to permit BPA usage within reasonable limits. Given the varying regulatory stances globally, the ban's repercussions extend beyond the EU, impacting export-oriented companies’ competitiveness and hindering importers' ability to bring packaged foods into the EU without compliance.
After revising the draft text and considering the comments received during the open consultation phase, the commission have formulated the final version of the draft regulation, which will be discussed by the Member States during the Standing Committee on Plants, Animals, Food, and Feed (SCoPAFF) meeting on 12.06.2024. Once approved, the measure will be transmitted to the European Parliament and the Council starting from July 10, marking the next phase in the regulatory process. As manufacturers of aluminium aerosol containers prepare for this regulatory shift, they acknowledge the significant transformation underway. Despite challenges, the industry remains committed to prioritizing consumer safety and sustainability in packaging practices.