When regulatory pressure requires you to renew your equipment

A change in regulations can make professional equipment obsolete and hence force a company or a community to replace it. This risk is called regulatory pressure. To cope with the potential costs involved, but also to capitalise on it to increase productivity or reduce the carbon footprint, it is necessary to understand this phenomenon.

Regulatory pressure: an opportunity in disguise?

Regulatory pressure must be viewed seriously by any company, as they may involve equipment replacement costs. Especially since all sectors of activity are concerned: equipment as varied as lighting, security, telecommunications systems or even transport can be impacted by changes in standards or legislation.

However, regulatory pressure should not be perceived only as a constraint. By forcing companies to modernise their equipment, a new regulation can be an opportunity for a business to increase its productivity, reduce certain expenses and contribute to energy transition.

This is the case with the Worldwide Harmonized Light Vehicles Test Procedure (WLTP), a procedure that measures vehicles’ fuel consumption and CO₂ emissions. In Europe, this international standard came into effect on September 1^st , 2018, for all new vehicles registered on the territory. Its impact is not limited to car manufacturers: companies possessing a fleet of cars are also affected.

Because the CO₂ emission measurements make it possible to determine a bonus-malus, it may result in a tax hike for the fleet. Faced with this new situation, fleet managers are encouraged to upgrade their fleet by choosing vehicles that consume less fuel. In this sense, introducing this standard for ecological purposes can push companies to make decisions that will ultimately end up reducing their expenses.

Another example is the European “F-Gas” regulation which, by 2030, aims to prohibit a number of refrigerants. The consequence: companies and businesses using coolers, cold rooms or even air conditioners must change their equipment for newer equipment that uses less polluting fluids.

Anticipating regulatory pressure

Regulatory changes need to be anticipated, considering the costs they may incur. This is, however not a cause for concern:  changes in standards and prohibitions are generally announced several years in advance by the authorities, well before their actual implementation. To keep abreast of such changes, companies may periodically visit government websites or refer to the specialised, business or economic press.

Another way to adapt to new regulations more smoothly, at least financially speaking, is through leasing. Therefore, when it becomes necessary to replace professional equipment, all one needs to do is anticipate the upgrade to a new equipment before the due date stated in the lease contract.