ChemSec coordinates the Investor Initiative on Hazardous Chemicals (IIHC), an investor-led collaborative engagement initiative involving 75+ participating investors and their representatives with over $23 trillion under management or advice.

The investor initiative aims to reduce the adverse impacts of hazardous chemicals and thereby its members’ exposure to the financial risks to which they are linked. The members engage in ongoing dialogues with the world’s largest publicly traded chemical companies.

What do we mean with hazardous chemicals?

By hazardous chemicals, the IIHC means (A) substances meeting the Substances of Very High Concern (SVHCs) criteria, as defined in Article 57 of the REACH regulation; (B) substances meeting the criteria as Substances of Concern (SoCs) as defined in Annex 2 of the Corporate Sustainability Reporting Directive (CSRD); and (C) persistent chemicals. By persistent, the IIHC means organic substances meeting the persistence criteria in Article 57d of the REACH regulation.

If you have any questions regarding the Investor Initiative on Hazardous Chemicals (IIHC), please contact ChemSec’s Sustainable Finance Advisor Romeo Veciunca.

Members

Quotes from IIHC members

Rachel Crossley, Head of Stewardship for Europe at BNP Paribas AM:
”We hope that by working cooperatively with other institutional investors we can persuade the world’s major chemicals producers to be more transparent about which chemicals they produce and the steps they are taking to ameliorate the associated risks”.

Eugenie Mathieu, Earth Lead at Aviva Investors:
”We believe that a growing part of the chemical industry welcomes investor pressure in this area and relishes the opportunity for systemic change toward greater sustainability”.

Victoria Lidén, Senior Sustainability Analyst at Storebrand:
”We have reached significant goals when engaging with several companies during the past year and are looking forward to continuing the movement to encourage the chemical sector in a more sustainable direction as part of the Investor Initiative on Hazardous Chemicals”.

Sebastien Thevoux-Chabuel, Head of Responsible Investment at Comgest:
“I have been participating in collaborative engagements for 15 years and, to be honest, the quality and quantity of support provided by ChemSec through the IIHC are second to none. On such a critical but technical topic, knowing these folks have your back makes engagements more efficient and, quite importantly, much more impactful”.

IIHC: Outdoor & Sports Edition

During the coming two years, ChemSec will coordinate an investor campaign that pushes 11 world-leading outdoor and sports brands to phase out PFAS, address hormone-disrupting chemicals in their products and significantly lower their microfiber footprint.

Why? Because the outdoor and sports sector markets itself around health and nature, yet many of their products drive significant microfiber pollution and contain toxic chemicals that are harmful to both people and planet. 

Three concerns stand out: 

• PFAS forever chemicals, which are subject to extensive environmental and health concerns since they are toxic and do not degrade in nature, are still widely used in the industry. This, despite mounting bans in California, New York and the EU. 
• The use of hormone-disrupting chemicals (EDCs) such as phthalates and bisphenols is still poorly restricted by the companies, even though these chemicals are increasingly acknowledged as a reason for worldwide increased infertility. 
• Sports and outdoor products generate significant amounts of microplastics and other microfiber pollution. So far, companies disclose very little on this and few have any serious commitments.

Featured report

A Profitable Detox: Why safer chemistry makes financial sense

Read more

Why care?

It has been estimated that 95 per cent of all manufactured goods rely on some form of industrial chemical process. However, exposure to a large share of these chemicals has been linked to adverse impacts on human health and wildlife. For example, in the European Union, 75 per cent of the almost 300 million tons of chemicals used annually are considered hazardous to human health or the environment. The harmful impacts encompass a range of health issues, including cancer, birth defects, obesity, and weakened immune systems. Chemical pollution is also a key driver of the decline of species and biodiversity globally. Moreover, the chemical sector is a significant contributor to climate change.

Chemical production has increased 50-fold since 1950 and is expected to triple by 2050 compared to 2010 levels. Yet, some scientists believe that our production of chemicals already now exceeds the environmental limits within which humanity can safely operate.

The need to address persistent chemicals is particularly urgent. A large newsroom investigation, led by Le Monde and Watershed Investigations, revealed that 17,000 sites in Europe are contaminated with PFAS, a well-known group of persistent chemicals. These chemicals, many of which are hazardous and very slow to break down, are now so widespread as to be found in the blood of almost every human. It can even be found in the snow within the most pristine regions of Antarctica. ChemSec has estimated that the annual social costs of PFAS worldwide, from remediation and increased healthcare costs, is €16 trillion.

The investor case for addressing this issue is straightforward. Individual companies that continue to rely heavily on hazardous chemicals face significant and likely material regulatory, reputational, insurance and liability risks. At the same time, hazardous chemicals present systemic risks to universal owners, such as pension and sovereign wealth funds, and large investment management firms. These chemicals fuel various human health and environmental crises and force countries and municipalities to devote their scarce resources to remediation and managing higher healthcare costs.

Tools

To help asset managers better assess the financial risks linked to hazardous chemicals and engage constructively with the industry, ChemSec provides three free tools: ChemScore, SIN Producers and the SIN List.

What kind of substances are they, and which companies are producing them? The following ChemSec tools can answer these questions:

ChemScore

A sustainability ranking of the world’s largest chemical producers

Visit ChemScore

SIN Producers

The only searchable database of companies producing or importing the most hazardous chemicals in Europe and USA.

GO TO SIN PRODUCERS

Members only

Disclaimer

The IIHC does not require or seek collective decision-making or action with respect to acquiring, holding, disposing and/or voting of securities. IIHC participants are independent fiduciaries responsible for their own investment and voting decisions. The use of particular engagement tools and tactics, including the scope of participation in IIHC engagements, are at the discretion of individual IIHC participants. IIHC participants may not claim to represent other participants or make statements referencing other participants without their express consent. Any decision by participants with respect to acquiring, holding, disposing and/or voting of securities shall be at their sole discretion and made in their individual capacities and not on behalf of the IIHC, its networks of investors and their representatives or their otherparticipants or members.

The IIHC and its investor and their representatives’ networks do not act or speak on behalf of each other or IIHC participants. They also do not seek directly or indirectly, either on their own or another’s behalf, the power to act as proxy for a security holder and do not furnish or otherwise request or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent or authorization. In addition, the IIHC does not provide investment or voting recommendations.

IIHC and its investor participants do not provide investment, legal, accounting or tax advice, nor do participants necessarily endorse or validate the information contained herein. IIHC participants are committed to comply with competition laws. IIHC participants do not consent to IIHC-led meetings, their organisation or name, either directly or indirectly, to be used for any illegal or anti-competitive purposes. It is the duty of each participant to ensure that their participation in the IIHC does not contravene or assist any other party in the contravention of applicable competition laws or any other applicable international or domestic statute or regulation and participants shall take all due care to ensure that no infringement occurs as a result of their IIHC participation.

IIHC participation shall not require any participant to adopt, follow, implement or obey any decisions, rules, terms of reference, recommendations, policy positions, discussion points or any other form of concerted activity, written or oral, of the IIHC or other member company insofar as it might limit the commercial freedom of the participant and in particular the level of premiums and settlements or other terms and conditions that such participants might choose to apply.

Nothing in this discussion should be construed as requiring any company to adopt specific measures or policy changes that are inconsistent with how the management and Board set the business strategy in line with their fiduciary duties.

By participating in the IIHC, participants shall not disclose to other participants commercially confidential or sensitive information. Participants commit to respect confidentiality and legal boundaries, while engaging in constructive dialogue that may include non-public but non-material information, such as forward-looking strategies, engagement requests, or exploratory discussions not yet disclosed in the public domain. Where IIHC participants wish to use information that is not publicly available to support media releases, lobbying or other legitimate business activity through the IIHC they shall only do so after receiving legal advice and ensuring that the activity is fully compliant with applicable law (including, without limitation, competition law). The terms of engagement, responsibilities, rights, and other information contained elsewhere herein are intended to be interpreted in a manner consistent with the foregoing.

This disclaimer has been adapted from the CA 100+ disclaimer, with reference to the UK competition laws. Source: Investor Initiative on Hazardous Chemicals (IIHC)