Investors with $8 trillion call for phase-out of dangerous “forever chemicals”
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Investors with $8 trillion call for phase-out of dangerous “forever chemicals”

World’s biggest chemical companies turning blind eye to emerging global crisis

Investors with US$8 trillion under management and advice are calling on the world’s biggest chemical producers to phase out persistent chemicals as the annual ChemScore ranking, released today, shows the industry is doing little to halt an emerging global crisis.

The 47 asset managers warn that growing awareness of the dangers posed by so-called “forever chemicals” — known as PFAS — that stay in the environment for generations, has triggered an increasing number of lawsuits against companies and sparked action to tighten legislation around the world.

In a letter to CEOs of the biggest chemical companies coordinated by Aviva Investors and Storebrand Asset Management, they wrote:

“We encourage you to lead, not be led, by phasing out and substituting these chemicals. In addition to the financial risks associated with litigation, producers of persistent chemicals face the risk of increased costs associated with reformulating products and modifying processes, which can have significant implications for company performance.”

The investors, which include AXA IM, Credit Suisse Asset Management (Switzerland) AG, Resona Asset Management and Robeco, called on companies to disclose the volume of all hazardous chemicals they produce and demonstrate action to improve their chemicals management by raising their ChemScore rankings.

“Most companies are taking little or no action to phase out hazardous chemicals despite the risks”

“As investors, we believe that companies’ licence to operate is dependent on the public understanding of risks and impacts,” they wrote.

ChemScore ranks the world’s largest chemical companies based on their environmental impact and treatment of hazardous chemicals. Only four of the 54 it assessed have a public strategy to phase out hazardous chemicals from their portfolio: Indorama (Thailand), SABIC (Saudi Arabia), Yara (Norway) and Solvay (Belgium). BASF (Germany) and DSM (Netherlands) have stopped publishing phase-out plans, signalling weakening commitment.

Sonja Haider, Senior Business and Investor Advisor at ChemSec, the independent non-profit that compiles ChemScore, said:

“The global chemical industry is turning a blind eye to the unfolding chemical pollution crisis. Most companies are taking little or no action to phase out hazardous chemicals despite the risks to public health, the environment and shareholder value.” 

“Chemical manufacturers are still lagging behind expectations when it comes to transparency and accountability”

Scientists warned earlier this year that chemical pollution has crossed a safe limit for humanity and threatens the biological and physical processes that underpin all life on Earth.1 The crisis is so severe that global leaders are setting up a UN scientific body to advise governments on managing chemicals and waste and prevent pollution, similar to the Intergovernmental Panel on Climate Change.2

There is particular concern about PFAS, often found in cosmetics, furniture, carpeting, non-stick pans and waterproof jackets, which accumulate in the environment and cause health impacts for generations. They are linked to cancer, lung disease, diabetes, reproductive abnormalities and learning difficulties.3

Growing awareness of these risks has triggered a surge in lawsuits, which could cost chemicals companies as much as US$30 billion.4

Eugenie Mathieu, Earth Lead at Aviva Investors, said: “Chemical manufacturers are still lagging behind expectations when it comes to transparency and accountability. Investors are rightly pushing for better disclosure on the volume of substances being produced globally, which can inform better investment decisions and identify the corporations leading the transition towards a more sustainable and responsible future”.

Liudmila Strakodonskaya, ESG Analyst at AXA IM shares these thoughts: “The importance of the chemical industry for protection of biodiversity and natural capital is crucial. As an investor, AXA IM is convinced that sound management of chemicals throughout their life cycle at each point of the related value-chains will help the industry to minimise adverse impacts on the environment and human health. We are ready to work with companies to further promote chemical safety, increase awareness and disclosure as well as accompany transition towards more sustainable solutions”, she says.

ChemScore sets the benchmark for a sustainable chemicals industry, providing investors and the public information about which companies have strong chemicals management strategies and which do not.

The third annual ChemScore rankings reveal a global industry dragging its feet. Few companies have made significant improvements and nearly half have scored worse than in 2021.

The average score across all 54 companies is unchanged at 13.3 out of 48 — revealing just how inadequate most companies’ strategies are. European companies have the highest average score, which has improved slightly, driven by tough EU REACH legislation and progressive investors.

“Although Indorama Ventures tops the table overall with a score of 30, the average across Asian companies is down”

In North America, the average score has fallen. In the US, Sherwin-Williams has increased the number of hazardous SIN (Substitute it Now) chemicals5 it produces from 18 to 24 and Westlake from five to 12. DuPont, which has been named in more than 6,100 PFAS lawsuits, has now removed all details of its portfolio from public view, which pushes it into bottom place.

Although Indorama tops the table overall with a score of 30, the average across Asian companies is also down and they lag Europe and North America. Twelve of the 15 worst performing companies are Asian including six from Japan.

A growing number of companies in Europe and North America now recognise the importance of reporting on their chemical footprint. Only Bayer (Switzerland) and Mosaic (US) did not actively engage with ChemScore. Transparency is much weaker in Asia where only eight of 23 companies provided information.

ChemScore assesses companies’ performance in four key areas: hazardous chemical portfolio; development of safer chemicals and circular products; chemical management and company transparency; and controversies.

Where companies fail to provide information, ChemScore assesses them using information in public sources such as annual and sustainability reports and corporate websites. Authorities in the EU and US also gather and publish information on the production and sale of hazardous chemicals in their markets, but this is not required elsewhere in the world.

For further information and to arrange interviews, please contact:

Philip Krook
philip@chemsec.org
+46 739 559 153