Investor Initiative on Hazardous Chemicals (IIHC)

Investor Initiative on Hazardous Chemicals (IIHC)

Published on 25 Apr 2023

ChemSec coordinates the Investor Initiative on Hazardous Chemicals (IIHC), an investor-led collaborative engagement initiative involving 60+ participating investors and their representatives with over $12 trillion under management or advice. The 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.

IIHC asks of chemical companies

✔️ Increase transparency
To help investors appraise relevant risks at the company, disclose both the share of revenue and production volume of products that are, or contain, hazardous chemicals. This information should cover all your operations (including subsidiaries) worldwide.

✔️ Publish a time-bound phase-out plan of products that are, or contain, persistent chemicals
The phase-out plan should include a realistic road map with clear KPIs to track progress.

✔️  Develop safer alternatives for hazardous chemicals
Following a robust evaluation, substantially ramp up R&D and investment in the development of safer alternatives. Although a universally accepted definition of safer alternatives is still pending, safer products that substitute the use of hazardous chemicals and support accelerated phase-out are likely to present a significant opportunity for value creation.

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 IIHC, please contact ChemSec’s Sustainable Finance Advisor Patrik Witkowsky.

Members of the investor initiative

  • Aegon Asset Management UK
  • Aegon Investment Management BV
  • Æquo Shareholder Engagement Services
  • Allianz Investment Management
  • Amundi Asset Management
  • AP1 (Första AP-fonden)
  • AP2 (Andra AP-fonden)
  • AP3 (Tredje AP-fonden)
  • AP4 (Fjärde AP-fonden)
  • Aviva Investors
  • AXA Investment Managers
  • BNP Paribas Asset Management
  • Boston Common Asset Management
  • Caisse Des Dépôts
  • Cardano Asset Management
  • Comgest Group
  • Credit Suisse Asset Management, a UBS Group Company
  • DNB Asset Management
  • Domini Impact Investments
  • EdenTree
  • EOS at Federated Hermes
  • Federal Finance Gestion
  • Fisch Asset Management AG
  • Folksam
  • Handelsbanken Fonder
  • Impax Asset Management PLC
  • La Française Asset Management
  • LBP AM
  • Länsförsäkringar
  • Matthews Asia
  • Mercy Investment Services, Inc.
  • Nordea Asset Management
  • PGGM
  • Pictet Group
  • Rathbones Group Plc
  • Resona Asset Management Co., Ltd.
  • Robeco
  • Schelcher Prince Gestion
  • Schroders
  • SEB Asset Management
  • Skandia
  • Stewart Investors
  • Storebrand Asset Management
  • Swedbank Robur
  • Trillium Asset Management
  • Triodos Investment Management
  • WHEB Asset Management
  • Zurich Insurance Group Ltd
  • Öhman Fonder
  • Achmea
  • Adrian Dominican Sisters
  • AkademikerPension
  • AP7 (Sjunde AP-fonden)
  • CommonSpirit Health
  • Congregation of St. Joseph
  • DPAM
  • Ethos Foundation
  • First Affirmative Financial Network
  • Harrington Investments, Inc.
  • KLP Asset Management
  • Legal & General Investment Management Ltd (LGIM)
  • Lombard Odier Asset Management
  • Sisters of St. Francis of Philadelphia
  • Trinity Health
  • Vancity Investment Management
  • Active engagements in bold:
  • 3M
  • AGC
  • AkzoNobel
  • Arkema
  • Asahi Kasei
  • Avery Dennison
  • BASF
  • Bayer
  • Braskem
  • Chemours
  • Corteva
  • Covestro
  • Daikin
  • DIC Corporation
  • Dow
  • DuPont
  • Eastman Chemical
  • Ecolab
  • Evonik
  • Hanwha Solutions
  • Honeywell
  • Indorama Ventures
  • Johnson Matthey
  • Lanxess
  • LG Chem
  • Lotte Chemical
  • LyondellBasell
  • Mitsubishi Chemical
  • Mitsui Chemicals
  • Nan Ya Plastics
  • Nippon Paint
  • Nitto Denko
  • Nutrien
  • PPG Industries
  • PTT Global Chemical
  • Sasol
  • Sherwin-Williams
  • Shin-Etsu
  • Resonac
  • Sika
  • Solvay
  • Sumitomo Chemical
  • Teijin
  • The Mosaic Company
  • Toray Industries
  • Umicore
  • Wanhua Chemical
  • Westlake Chemical
  • Yara

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 push 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”.

Featured report

Why should investors care about chemicals?

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 for investment analysis

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 is it and which companies are producing them? The following ChemSec tools can answer these questions:



A sustainability ranking of the world’s largest chemical producers

Visit ChemScore
SIN Producers List

SIN Producers

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

SIN List

The SIN List

Learn which chemicals your company should avoid

Visit the SIN List

Questions for chemical companies

Here are some examples of questions that investors can ask companies when engaging with them. Some of the questions only apply to certain companies. When a question relates to a specific criterion in ChemScore, the criterion is stated in parentheses.

  • – At what level has your ChemScore rating been discussed in your company?
  • – Have your company set any targets or aspirations for improving your ChemScore rating?
  • Your question:
  • – Solvay has a target to phase out all substances of very high concern (present in marketed products at a quantity of more than 0.1%) by 2030. In addition, Indorama, Sabic and Yara have announced various phase-out plans. What steps are you taking to phase out products that are or contain hazardous chemicals?
  • > Probable answer 1: We evaluate all our substances continuously and make sure they do not pose a risk to the users during their intended use.
  • – Follow-up question/statement: Even if you perform risk assessments for the intended uses, the intrinsic hazards of such substances pose a risk to downstream users further down the supply chain, where you lack the necessary control over the products. Products that are or contain hazardous substances also hamper a circular economy, because at end-of-life they are difficult or impossible to recycle. This is particularly the case for persistent substances. How are you factoring in these variables in your phase-out strategy?
  • > Probable answer 2: Our products that are or contain hazardous substances are essential to the functioning of society and/or to facilitate the green transition.
  • – Follow-up question/statement 1: What is your definition of “essential” and how does your definition align with what is currently being discussed by regulators? Do you have an estimate of the share of your current uses/sales that are not essential?
  • – Follow-up question/statement 2: It might be that some of your chemical products can be considered “essential”. But it is questionable if that is the case for the majority of your products. For example, looking at the fluoropolymer market in the EU, a sub-category to PFAS where you find a majority of essential uses, only about eight per cent of the total production volume goes towards the often-cited examples of renewable energy, semiconductors and pharmaceuticals. Furthermore, for many applications alternatives to PFAS and other harmful substances exist. And if there are safer alternatives available, then the essentiality argument can no longer justify the continued production of the hazardous product. What steps are you taking to reduce your reliance on non-essential products where alternatives exist? And do you have a set limit of the quantity of hazardous substances that you find acceptable in essential products?
  • Your question:
  • – There is a global regulatory tightening, litigations mounting and increased public awareness around persistent chemicals like PFAS. 3M has announced a time-bound phase-out plan for all their manufactured PFAS. What is your strategy and timeline to phase out products that are or contain PFAS and other persistent chemicals?
  • – Same answers and second questions as above)
  • Your question:
  • – Companies have very different definitions of a “safer product”. What is your definition of a safer product?
  • > Probable answer 1: All our products are safe to use, as long as they are used as intended, and we follow all applicable laws and regulations in the markets where they are sold.
  • > Probable answer 2: We perform extensive “product stewardship” or risk assessments of all our products. If we encounter a product with unacceptable risk, we will take measures.
  • – Follow-up question/statement (to both replies): For us, equating “safer” with regulatory compliance or a risk assessment is problematic because regulations are often weak and there are a lot of unknowns in the real world. Do you conduct a pure hazard assessment to ensure your products are inherently safe?
  • >Probable answer: We do not believe in the hazard-based approach, but a risk-based approach.
  • – Follow-up question/statement: How will you ensure your products are eligible for recycling in a circular economy?
  • Your question:
  • – Lanxess and Ecolab have a cut-off criterion (criterion 2.3) for Substances of Very High Concern (SVHCs) in their newly developed products. Do you have similar plans to develop and implement a cut-off criterion?
  • > Probable answer: We are working continuously with the development of our product portfolio but do not have any plans of altogether removing all SVHCs since many of them are needed, we manage the risks safely and many of them are for essential use.
  • – Follow-up question/statement: Could you specify what you mean by saying “needed”?
  • – Follow-up question/statement: There is a clear regulatory momentum toward products that are or only contain safer alternatives (where for example PFAS and SVHC substances are excluded). What is your strategy to stay competitive in this changing market? Do you have one particular product segment that would be a low-hanging fruit for change? Timeline?
  • Your question:
  • – Many of your peers offer safer alternatives (criterion 2.4) and market those on independent third-party platforms like ChemSec’s Marketplace (criterion 2.5). This indicates that those companies are taking steps to develop a portfolio of safer alternatives if tougher regulations kick in. Why aren’t you?
  • > Probable answer 1: We use our regular, well-working sales channels to communicate with our customers and we do not want to promote a set of products that are of low-demand when there are other more high-demand products in our portfolio.
  • > Probable answer 2: We work closely with our customers to tailor our products to their needs. We don’t market “one size fits all” products, which is the case on, for example, ChemSec’s Marketplace.
  • – Follow-up question/statement (to both answers): Often, safer alternatives are specifically requested by downstream users, but they are not always aware of the available products. By promoting your portfolio of safer products more actively, both specific and generic solutions, you can broaden your market presence and attract new customers within this segment. Currently, there are significant first-mover advantages to be seized.
  • Your question:
  • – Over the last decade, circularity has become increasingly prioritized by policymakers and regulators globally. Companies reliant on hazardous chemicals and non-recyclable materials are therefore exposed to significant transition risks. Do you have strategies in place to increase your circular products portfolio (criterion 2.6)?
  • >Probable answer: We are working continuously with the development of our product portfolio and circular products are part of that development.
  • – Follow-up question/statement: Circularity is a vague concept. Can you please explain how you concretely work to develop, produce and increase the share of circular products in your portfolio? Do you have any specific targets?
  • Your question:
  • – Do you have plans to increase the use of biobased, renewable or mechanically recycled feedstocks in your production (criteria 2.7 and 2.8)?
  • >Probable answer 1: There is a limited supply available of these materials, hence making it difficult to scale up.
  • – Follow-up question/statement 1: Do you work, and if so how, with your suppliers to overcome this lack of materials?
  • – Follow-up question/statement 2: Since there is a lack of materials, are you taking steps to create closed loops with your own products? So that your products are fully circular and recyclable? Are you developing take-back schemes, such as AkzoNobel has done with some of their paints?
  • >Probable answer 2: We are primarily investing in chemical recycling which we consider to be the best way forward to increase the supply of recycled feedstocks.
  • – Follow-up question/statement 1: Chemical recycling is still an unproven technique with high energy demand. It competes with the same plastics as that used for mechanical recycling. In many cases, the chemically recycled materials are of such low quality that you need to add virgin fossil feedstock in the end. Can you ensure that your chemically recycled feedstock has not “crowded-out” plastics that could be used for mechanical recycling? And can you ensure that your chemically recycled products do not contain virgin fossil-based feedstock?
  • – Follow-up questions/statement 2: Further, “mass balance” and “credit transfers”, material accounting techniques, are often used in a way to claim the content as “recycled” when it, in fact, is not. How do you ascertain that the claimed chemically recycled feedstock has actually been recycled? Is there a physical connection between waste input and recycled output or is it dependent on a mass balance calculation and credit transfers?
  • Your question:
  • – What share of your R&D and investment are spent on the development of safer alternatives?
  • >Probable answer: We do not separate the R&D specifically targeted for the development of safer products.
  • – Follow-up question/statement: We believe that safer products that substitute the use of hazardous chemicals and support accelerated phase-out are likely to present a significant opportunity for value creation. Therefore, it is important for us to get hard facts about your medium- to long-term ambitions to develop a portfolio of safer alternatives. What would it take for you to publish a clear definition of products that are, or contain “safer alternatives”? And then publish a yearly KPI that tracks your progress in developing such products?
  • Your question:
  • – Seven companies disclose, in some form, their revenue connected to substances of very high concern. For example, Johnson Matthey, LG Chem and Arkema all disclose percentage of sales derived from products containing hazardous substances. Do you have plans to do the same?
  • > Probable answer: It has not been legally required to report it but we will do so as soon as mandatory.
  • – Follow-up question/statement: It is not mandatory yet, but starting in 2025, EU’s Corporate Sustainability Reporting Directive (CSRD) will require companies to disclose the total amounts of hazardous chemicals (“substances of concern” and “substances of very high concern”) that they generate or use. The information should be split into main hazard classes. We think it is appropriate to disclose similar information at plants outside of the EU. Do you have plans to do so?
  • Your question:
  • – 36 out of 50 ChemScore companies did actively engage with ChemSec in 2023 (criterion 3.5). Will you be providing upfront information and/or feedback to ChemSec on your ChemScore in the coming iteration?
  • > Probable answer: We have chosen not to, due to time/resource constraints.
  • – Follow-up question/statement: By engaging with ChemSec you will gain a deeper knowledge of ChemScore, how to improve and what criteria to focus on. It is one of the best and easiest ways to improve your scoring.
  • Your question:
  • – Sabic, Lanxess and Eastman all disclose their global portfolio of hazardous chemicals. This means that they’ve declared that they don’t manufacture any additional hazardous substances outside the EU/US compared to what they make within these regions. Braskem publishes the volumes and sales of a large part of its product portfolio, for example, ethylene, benzene and PVC (criterion 3.6). Similarly, Sabic publishes their production capacity for a wide range of their products – for example, styrene, benzene, MTBE – which provides stakeholders with a good understanding of the risks and opportunities of their portfolio. Do you have plans to disclose the volumes and sales of your global hazardous product portfolio?
  • > Probable answer: Regrettably, we’re unable to share this information due to competitive reasons. Disclosing such details could expose proprietary aspects of our formulas. And it would be a competitive disadvantage for us to disclose information about the chemicals that we produce at some of our global plants.
  • – Follow-up question/statement 1: For us as investors, it is important to understand how exposed your business is to, for example, upcoming regulations and potential litigations linked to hazardous chemicals. If you do not disclose such information, while others are, that forces us to make assumptions about the reasons behind you not being equally transparent. Stating in public what hazardous products you produce, and the share of revenue that you derive from each, is important for conducting a proper risk/opportunity assessment of your company.
  • – Follow-up question/statement 2: If you cannot at present disclose information about each individual substance, then what would it take to share the number of hazardous substances that you manufacture and their aggregated share of your revenue? Preferably divided by hazard category (for example, CMRs, Endocrine disruptors and Persistence).
  • – Follow-up question/statement 3: If your chemicals are considered CBI, how can your customers find them? They must be public at least to some degree. And if so, can you please provide an overview to help us accurately assess risks and opportunities concerning your portfolio?
  • Your question:
  • – Eleven companies have clear KPIs to assess their progress on circularity related to their chemical products (criterion 3.8). Do you have plans to develop similar indicators to track your progress in a transparent way?
  • > Probable answer: We have several indicators of how to reduce CO2 emissions and water consumption in both the short and long term.
  • – Follow-up question/statement: Those indicators, while important, are not measuring the circularity of your products. Do you have KPIs that relate to, for example, the phase-out of products containing hazardous substances? Or the use of recycled or renewable feedstocks?
  • How do you use your experiences from previous incidents to develop your health and safety policies?
  • Are you actively engaged in remediating pollution and minimize human exposure to hazardous chemicals, beyond legal requirements?

Dr Emma Berntman, Senior Engagement Specialist at the FAIRR Initiative, has played a crucial role as an advisor during the establishment of the IIHC. Her expertise and guidance have been invaluable in shaping the structure of the initiative.

Featured report


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 other participants 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 shall not allow 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.

By participating in the IIHC, participants shall not disclose to other participants commercially confidential or sensitive information. Participants commit to refer to publicly available information only at meetings. 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

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