Green Environment Support: 2024 will be the most challenging year yet for the environmental consulting services market. It makes considerable changes to the legislation

The environmental consulting services market will register an advance in 2024, amid increased interest in outsourcing reporting obligations to environmental authorities to avoid fines and reduce costs. At the same time, 2024 also comes with new obligations for companies, it will be the year of rapid compliance with legislation, for fear of sanctions and possible business losses, according to the forecasts of Green Environment Support, one of the main environmental consulting companies in Romania.

Here are the main trends defining 2024 in the environmental consultancy activity:

1. More and more companies want to outsource reporting to environmental authorities

Against the background of numerous legislative changes, the number of economic agents that outsource the activity of environmental responsibility will increase, preferring to turn to a specialized company to ensure that they fully fulfill their reporting obligations to the authorities.

At the same time, if at the beginning of 2023, some companies preferred to hire a manager, towards the end of 2023 and the beginning of 2024 we see an increasing interest in outsourcing this activity due to higher employee costs. Entering a contract with a consulting firm represents a cost between 10% and 50% of a company’s costs with an employee.

"If a company opts for an internal environmental officer, the main risk is related to his expertise, as his activity will be limited to the specifics of the company, he is a part of and he will not be able to have an overview of all legislative matters. Moreover, if there are sanctions because this person did not perform his job duties properly, the company will have to bear the costs. Working with a consulting company offers much greater security regarding compliance with the law, as environmental obligations are managed by a whole team of specialists, and the experience of controls helps in the correct interpretation of obligations and risks. Also, in most cases it is a much better solution from a financial point of view, and through the contract, the consulting company assumes responsibility in the event of an audit, if the non-compliance found by the audit bodies is due to it", explains Daniela Dobre, CEO of Green Environment Support.

Defective waste management attracts fines of at least 40,000 lei, and if companies do not correctly declare the quantities to the AFM and do not meet their recovery targets for the entire quantity placed on the market, the penalties and interest are 0.03% per day late fees applied to the amount owed to the AFM.

2. Companies increasingly want a double check

Although some companies have a solid team of specialists in the environmental department, many of them turn to a specialized company for consulting and environmental audit on specific cases for an extra certainty that they comply with the legislative norms and do not risk fines. This pattern took off in 2023 and will become the norm in 2024, as companies want to protect their budget from potential fines.

3. Companies focus on cost reduction

The focus of 2024 for companies is to reduce expenses to be able to allocate budgets to essential business investments.

The fees and targets related to the year 2024 vis-à-vis the obligations to the Environment Fund Administration are as follows:

• for packaging, the recovery target is 65%, and the fee for not achieving the target is 2 lei/kg for 65% of the amount of packaging placed on the market
• for electrical equipment, the recovery target is 65%, and the tax is 2 lei/kg, less for LEDs where the tax is 4 lei/kg for 65% of the quantity placed on the market
• for tires the target is 80%, and the tax is 2 lei/kg

"Costs are calculated according to each contribution. For packaging, equipment, batteries, and tires, a recovery target is established and if this is not reached, a tax per kg is due depending on the quantities placed on the market. Companies need to know that they can check and calculate in advance what costs they will pay to the state, so that they have predictability on the budget and can make their investment plan. For example, in January, the declaration of December for the previous year is drawn up, which includes the taxes that must be paid for that year by January 25. What companies need to know is that these costs can also be verified throughout the year if they pull a packaging/equipment/batteries/tires calculation from the AFM app. They can also look at their declarations and payment slips or tax certificate to make sure they have no outstanding debts. These tools are especially useful for financial forecasts of the last quarter", explains Daniela Dobre, CEO of Green Environment Support.

4. Continuous adaptation to SGR will be required

With the launch of the SGR system on November 30, 2023, citizens, traders, and manufacturers have started to familiarize themselves with the new requirements. Although the initial impact has been subtle, the changes are expected to become more apparent from January onwards as significant quantities of SGR-compliant products enter the market. This transition requires continuous adaptation by all actors involved, while also promising significant benefits in terms of more efficient collection of beverage packaging waste.

5. There is an alignment with European legislation

At the same time, 2024 also comes with new legislative obligations. Here is what Romanian companies need to know:

• Romania must adapt to the European Regulations that are to be implemented uniformly in the member countries. Regulation no. 1542/2023 on batteries and battery waste, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC, which entered into force in the summer of 2023, brings significant changes one of them being the modification of the battery collection objective from 45% to 63%.
• Companies with more than 500 employees are obliged to draw up the sustainability report according to the methodology for sustainability reporting - the Romanian Sustainability Code published in 2023. The sustainability report covers three components of a company, namely: environmental protection, social protection, and the strategy part of the company that also integrates process management. These non-financial reports will be made public by the companies.
• For certain goods introduced into Romania (for example, iron and steel, mineral products, fertilizers, etc.) the calculation of greenhouse gas emissions at the border will be mandatory according to Regulation (EU) 2023/956 of the European Parliament and of the Council European of 10 May 2023 on the establishment of a carbon border adjustment mechanism, Implementing Regulation (EU) 2023/1773 of the European Commission of 17 August 2023 laying down the rules for the application of Regulation (EU) 2023/956 of the Parliament European and Council regarding reporting obligations for the carbon border adjustment mechanism during the transition period. Until 2026, there will be a transition period in which the companies concerned will have to make a series of reports.

"We are confident that in 2024 Romania will take the next steps in recycling waste and protecting the environment. The effort for a greener country must be supported by all actors involved, and economic operators try to adopt responsible business practices. Moreover, companies can recover up to 80% of the waste generated, thus obtaining additional income, and developing the circular economy in Romania. We are taking small steps in a good direction, but we are far from the objectives set by the EU. In companies, responsibility increases in this field because, in addition to legislative pressure, there are also requests from customers outside Romania that the activity of its suppliers has as little impact on the environment as possible", concludes Daniela Dobre, CEO of Green Environment Support.