Why Pension Fund Managers Should Consider Chemicals

News 2018 / February

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Why pension fund managers should consider chemicals

As you undoubtedly already know, non-financial topics – such as sustainability – are getting more and more recognised in the investment arena. The topic of sustainability goes hand in hand with pension funds. When handling money for several decades before it’s paid out to pensioners you need to plan ahead, and sustainability is key for healthy profits with longevity.

When following the developments in the financial area it is obvious that 95 per cent of sustainability discussions revolve around climate change issues. Climate change is indeed important and a lot needs to be done. Nevertheless chemicals are an important issue that need to be taken into account in investment analysis.

And not only that – I believe investors can help push companies to stop using toxic chemicals in its products and make healthy profits at the same time. Please bear with me, and I’ll explain how.

 

The chemical challenge

Over the last 50 years, millions of tons of chemicals have been discharged into the environment, exposing the global population to a variety of very hazardous chemicals. Evidence is mounting that everyday exposure to chemicals could be playing a significant role in the onset of health problems like diabetes, infertility, obesity, cancer and lowering of IQ.

Solving the problems is not as difficult as one might think. Only about 150 major stock exchange-listed companies produce these chemicals of very high concern for the European market, which then find their way into industrial processes and consumer products. If these companies replaced the chemicals of very high concern with safer alternatives we would be a lot closer to a sustainable world.

 

The solution: The power of investors

You as investors are influential. You influence the future development of corporations through your demands. Investors can demand that a company declares what risks their production portfolio contains. Investors can demand a phase-out of chemicals of very high concern to reduce the risks for their clients and themselves. You can demand investments into research on and production of safe alternatives, as this is where the future profits will be.

The debate about climate change shows the power of investors. Abstaining from investments in projects that drive climate change has had a real and tangible impact. The same principles can be applied to toxic chemicals, which can be the trigger to finally getting rid of these dangerous substances in everyday products.

ChemSec has developed a host of tools and regularly produce information that can be used in investment analysis, or to keep you up to date with the chemical world, such as:

  • The world’s largest database of chemical producers with toxic portfolios’, completely free of charge. The SIN Producers List is a powerful tool for investment analysis of chemicals.
  • We collaborate with RobecoSAM and the Dow Jones Sustainability Index, which from now on considers toxic chemicals in its evaluations.
  • We regularly produce articles and reports intended to help investors, the latest being the Look Ahead report which details how to identify investment opportunities in chemicals.

Among many other things.

If you would like to get regular updates about what’s happening in the chemical world, including emerging legislation, and how it relates to investors, sign up for our newsletter.

 

Sonja Haider
Sonja Haider
Business & Investors Advisor, ChemSec