For a variety of reasons (e.g., consumer/shareholder demands, laws regulating chemical use, potential liabilities, corporate ESG/sustainability policies), concern about chemicals in the supply chain have increased over the last few years. In response, some businesses have launched product stewardship initiatives, demanding their suppliers confirm compliance with a wide range of state, federal, and international laws – including laws that do not directly apply to the suppliers. Suppliers responding to such initiatives will need to carefully navigate their responses.
One of the more ambitious and publicly available examples of such an initiative is Yeti, Inc.’s Restricted Substances List (“RSL”) Program (“Yeti RSL Program”), which appears on their webpage. (Click here for Yeti RSL Program, May 2022.)
Among other things, the 94-page Yeti RSL Program requires that its suppliers provide declarations of compliance with several environmental laws, including California’s Proposition (“Prop”) 65 and the European Union’s (“EU”) REACH regulation of Substances of Very High Concern (“SVHC”) and restricted substances under Annex XVII (“Annex XVII Substances”). Further, the Yeti RSL Program requires that suppliers identify the concentrations in their products of any Prop 65 listed chemicals, SVHC, or Annex XVII Substances
Both Prop 65 and the REACH regulation are prime candidates for a product stewardship program given the millions of companies that do business in California and within the European market. There may be differences of opinion, however, about what constitutes compliance with these laws, what type of testing and analysis is appropriate to establish compliance, and what information is necessary or appropriate to provide sufficient assurances of compliance.
Certifying compliance with Prop 65 presents some unique challenges because it is primarily enforced by private citizens who often advance creative theories about its interpretation and reach. Because most parties prefer to settle rather than litigate, many of these theories (while arguably beyond the intended scope of Prop 65), have never been addressed by any court but are common targets for private party enforcement actions. For example, some plaintiffs have claimed that products that do not contain or emanate Prop 65 chemicals themselves may nonetheless require Prop 65 warnings– a scenario that, depending on the purpose and mission of a company’s product stewardship program, may have limited, if any, significance to the program.
Suppliers must also consider the legal significance and/or practical ramifications associated with participating in their customer’s product stewardship program. Are these communications provided on a voluntary basis as a courtesy to a customer or could they be construed as, or are they expressly considered, a representation and warranty with contractual remedies for breach? Do suppliers have obligations to update information provided? Do their customers have any obligation to maintain the confidentiality of information provided to them?
Notwithstanding these challenges, product stewardship initiatives also provide an opportunity for suppliers to cement relationship with their customers, boost their own sustainability profile, and improve their own environmental compliance program. Suppliers will, however, need to map out a plan for response, engage with the appropriate technical and legal professionals – and seek to collaborate with their customers to meet program objectives without creating unnecessary liabilities and burdens for either customers or suppliers.
Environmental General Counsel PC is a California environmental law firm and a member of IR Global’s Working Group on ESG, a domestic and international network of attorneys and financial professionals providing ESG and sustainability services.
 According to Wikipedia, Yeti Inc. is a publicly traded American manufacturer of coolers and associated products with revenue of $1.41 billion. See Yeti RSL Program https://www.yeti.com/on/demandware.static/-/Library-Sites-YetiSharedLibrary/default/dwfdb632b6/YETI%20RSL%20PROGRAM%20-%20MAY%202022.pdf (May 2022)  Prop 65 is a California law that requires businesses to warn persons about exposures to chemicals identified by the State of California as a carcinogen or reproductive toxicant unless they can prove the exposure is low enough to pose no significant risk of cancer or is significantly below levels observed to cause birth defects or other reproductive harm. California Health & Safety Code § 25249.6 et seq.  Among other things, the EU REACH (the Registration, Evaluation, Authorization, and Restriction of Chemicals) regulation requires notification and registration of SVHC and imposes use restrictions on Annex XVII Substances. EU Regulation No. 1907/2006.  Yeti RSL Program at 83 and 84.  The general theory is that warnings are required if it is reasonably foreseeable exposures could result if the product is used with another product that contains a Prop 65 chemical (e.g., air fryers have been targeted because they are used to cook foods that generate acrylamides – a Prop 65 chemical – when heated).