Here are the best and worst performers in the chemical industry
Today, ChemSec releases its new sustainability ranking for investors – ChemScore. For a while now, ChemSec has dug deep into the world’s 35 largest chemical companies, scrutinizing their hazardous product portfolios and looking into their efforts to move towards safer chemicals. But ChemScore not only captures and ranks the companies’ performance, it also serves to boost investments in safer and greener alternatives.
“The main goal of ChemScore is to show investors the best and the worst performers in the industry, and drive them towards investing in frontrunners and divesting in laggards”, says Anne-Sofie Bäckar, Executive Director at ChemSec.
Even though the chemical industry is one of the world’s largest industries, it often flies under the radar. And so does the aspect of chemicals in discussions on sustainability. The truth is that over 70% of all the chemicals in Europe are hazardous to human health and/or the environment.
With this in mind, it’s strange that chemicals are so often overlooked in terms of sustainability. At ChemSec, we see the chemical issue as a blank spot on the sustainability map that needs to be filled and taken into account if companies are to be truly sustainable.
“Many chemicals are not only hazardous, they also threaten the return of an investment”
For investors, understanding the hazardous chemical production of a company 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.
Persistent chemicals, such as PFAS, are a good example. These chemicals have been building up in humans and nature over decades and the levels in many places around the world are now critical. It’s not a coincidence that the market value of companies producing these chemicals have taken a nosedive.
“By using ChemScore, investors can foresee issues like these before they happen”
“Investors should understand that the production of harmful chemicals poses a serious risk of future liabilities for the companies they invest in. By using ChemScore, investors can foresee issues like these before they happen”, comments Anne-Sofie Bäckar.
But ChemScore isn’t only meant to guide investors to safer and greener investments, it is also meant to function as a benchmark tool within the chemical industry itself. By seeing how others score, the chemical companies are pushed to perform better than their competitors.
With an annual ChemScore ranking published each year, investors will have a useful tool to move away from the laggards and invest in the frontrunners. Hopefully, this will make chemical companies future-proof their businesses and move the entire industry in a more sustainable direction.
About the ranking
ChemScore has been developed with input from chemical industry representatives and Aviva Investors, a global asset manager with £356 billion in assets under management. The 35 largest stock-listed chemical companies (based on their 2018 revenue) are ranked in four different categories:
- Hazardous Product Portfolio – the total production of hazardous chemicals by each company, weighted on the basis of the company’s total revenue.
- Development of Safer Chemicals – the strategy towards safer products right from the design stage, marketing of safer products, R&D and green chemistry.
- Management & Transparency – the companies’ transparency to product ingredients, as well as public commitments to phase out certain substances.
- Controversies – the companies’ track record of accidents and controversies such as fines and liability cases.
All companies have been given the opportunity to give feedback on their respective score to potentially raise it. Over half of the 35 companies replied.