“Understanding which companies are leading on sustainable management of chemicals, or lagging behind their peers, is a very important part of the larger sustainability puzzle…”
Environmental NGO ChemSec has unveiled a new corporate benchmarking tool that measures the chemical footprint of 35 of the world’s largest chemical companies and found that European countries topped the sustainability list.
The new tool is called ChemScore.
Through ChemScore, investors can access data on the best and worst performers in the chemical industry based on the amount of hazardous chemicals they produce and their efforts to transition to safer, greener alternatives, ChemSec said.
The 35 largest publicly-traded chemical companies are assessed based on four key criteria: 1) total production of hazardous chemicals; 2) efforts to develop and market safer chemicals; 3) level of transparency and public commitments to phase out certain substances; and 4) track record of accidents and controversies such as fines and liability cases.
More than 70% of all chemicals used and manufactured in Europe are hazardous to human health and/or the environment, according to Eurostat. Despite this, investors and other stakeholders have very little information about the production and use of these chemicals.
“For investors, a better understanding of companies’ involvement in hazardous chemical production is crucial. Many of these chemicals not only pose a threat to human health and the environment, they also threaten the return of an investment,” said Anne-Sofie Bäckar, Executive Director at ChemSec.
Persistent chemicals, such as PFAS, are an illustrative example. These chemicals have been building up in humans and nature over decades and the levels are now critical at many places around the world. In the US, several chemical companies producing such substances are now facing litigation with estimated costs ranging from $25 billion to $40 billion.
“It’s not a coincidence that their stock prices have taken a nosedive compared to the industry average,” Bäckar said.
According to ChemSec, its top performer in this year’s ChemScore is Dutch chemical company DSM (@DSM).”I’m very proud that DSM has topped the ChemScore ranking. This resonates strongly with DSM Resins & Functional Materials’ ambition to phase out all chemicals of high concern from our finished products by 2025. This ranking reflects the importance of chemical safety as one of the many aspects of sustainability. Chemical safety is taken very seriously by our industry and this ranking encourages us to maintain our focus on this topic. Moving forward, we must work together to accelerate the sustainable transformation of our industry and create brighter lives for all!” said Helen Mets, Executive Vice-President of DSM Materials.
ChemScore has been developed with input from chemical industry representatives. It has also consulted the investment community, including Aviva Investors, a global asset manager with £346 billion in assets under management.
“Understanding which companies are leading on sustainable management of chemicals, or lagging behind their peers, is a very important part of the larger sustainability puzzle and we are proud to take the lead in this issue within the investment community. ChemScore broadens our understanding of how companies are managing the risks involved in manufacturing chemicals. These include litigation, lack of preparation for new regulation and reputational risk. ChemScore also gives us valuable insight into how we can encourage companies to improve,” concluded Eugenie Mathieu, Senior ESG Analyst with Aviva Investors.