Weekly Compliance Digest – UK Supply Chain Provisions, EU Diesel Car Emissions

November 6, 2015 By
In this edition of the Weekly Compliance Digest, we take a look at the Transparency in Supply Chain Provisions in the U.K., which became effective last week, and the EU’s draft proposal for real driving emissions (RDE) tests for diesel cars.

Transparency in Supply Chain Provisions of the U.K. Modern Slavery Act 2015

What is it?

The Modern Slavery Act 2015 became a law in the U.K. in March, 2015. On October 29, 2015, the Transparency in Supply Chain Provisions became effective. Under the provisions, companies must submit an annual statement that confirm the steps taken to ensure that slavery and human trafficking are not taking place in the company or its supply chain. Companies can also declare that no steps were taken to confirm the existence of slavery or trafficking.

Who is affected?

Companies that meet all of the following conditions are affected by the Transparency in Supply Chain Provisions:

  • A company that does business in the U.K., including foreign companies that:
    • Carry on a business, or part of a business, in any part of the U.K., or
    • Are part of a partnership (wherever formed) which carries on a business, or part of a business, in any part of the U.K.
  • A company that has an annual gross global revenue of £36 million (approximately $56 million or €50 million) or more each year.

The obligations apply to all companies that supply goods or services, meaning it is broad and not restricted to specific industries, such as retailers and manufacturers.

What are the requirements?

Affected companies are required to publish an annual slavery and human trafficking statement. The statement should reflect what efforts, if any, a company has made during the previous financial year to ensure that its business operations, and its supply chain, are free from slavery and human trafficking.

In addition, if the company has a website, it must publish the statement on its website, and include a link to the statement in a prominent place on the homepage. If the company does not have a website, it must provide a copy of the statement to anyone who makes a written request for one.

For more details on the requirements, check out the U.K. Modern Slavery Act: New Disclosure Requirements for Companies Operating in the United Kingdom blog post from the law firm Foley Hoag’s CSR practice.

What is next?

The Transparency in Supply Chain Provisions are now effective. However, there is no legal requirement to conduct due diligence on supply chains and there is no penalty or fine for non-compliance. Rather, if there is a failure to comply, British authorities can seek a court order requiring a company to make the required disclosure.

Ultimately, the goal of the provisions is to impact the behavior of consumers and investors if companies fail to comply, or if they state in their annual statements that they are not taking any steps to address the risks of slavery and forced labor in their business operations or supply chains.
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EU Real Driving Emissions Tests for Diesel Cars

What is it?

Last week, European Union (EU) member states meeting in the Technical Committee of Motor Vehicles voted to introduce real driving emissions tests for air pollutant emissions by diesel cars. The European Commission had raised concerns that laboratory tests do not accurately reflect the amount of air pollution emitted during real driving conditions. EU member states agreed that from September 1, 2017, new real driving emissions (RDE) tests will determine whether a new diesel car model is allowed to be put on the market.

Who is affected?

Automakers that manufacture diesel cars.

What are the requirements?

Car manufacturers must reduce the difference between the regulatory limit that is tested in laboratory conditions and the values of the RDE procedure when the car is driven by a real driver on a real road (the so-called “conformity factor”) in two steps:

  1. Car manufacturers will have to bring down the discrepancy to a conformity factor of maximum 2.1 (110%) for new models by September 2017 (for new vehicles by September 2019).
  2. This discrepancy will be brought down to a factor of 1.5 (50%), taking account technical margins of error, by January 2020 for all new models (by January 2021 for all new vehicles).

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To put things in perspective, the current discrepancy is 400% on average, the European Commission says.

What is next?

The agreement by the EU member states is a draft proposal and not yet an official regulation. The draft “comitology” regulation will now be sent to the European Parliament and the Council for regulatory review.

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Categories: EHS

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