Materiality of chemicals in products is well established in the Sustainable Accounting Standard Board’s (SASB) standards for Consumer Goods, Health Care, and Technology & Communications. These standards reflect rising demand from consumers and institutional purchasers for safer products and growing evidence of the harmful effects of toxic chemicals, including a peer-reviewed study showing that toxic chemicals cost the world 10 percent of annual global gross domestic product, $11 trillion a year in disease burdens. Yet companies in these sectors have been slow to assess and reduce the chemical footprint of their products.

The Investor Environmental Health Network (IEHN) is a community of investors working to reduce the material impacts of toxic chemicals in products and supply chains. IEHN supports investors in engaging companies to reduce their risks by disclosing chemicals management performance indicators in SASB standards and the Chemical Footprint Project (CFP), integrating chemical footprinting metrics into executive compensation proposals, and improving board oversight of the reputational and regulatory risks of selling products that contain toxic chemicals.

Corporations that fail to proactively avoid toxic chemicals in their products, manufacturing operations, and supply chains carry “chemical risks”—financial liabilities that include potential fines, lawsuits, market share decline, lower market value, and loss of trust with consumers.

Chemical risks are trending rapidly upward:

Lumber Liquidators’ CEO resigned and stock price plummeted 70 percent in response to revelations by advocacy organizations of formaldehyde above regulatory thresholds in its products in 2015.
Kaiser Permanente, one of the nation’s largest health care systems and a CFP Signatory, has a set a goal of purchasing 50 percent environmentally preferred products by 2025.
Vizient, one of the nation’s largest group purchasing organizations with $100 billion in purchasing power annually and a CFP Signatory, asks companies in its contracts to participate in CFP as a indicator of the health care sector’s demand for safer products.
The Mind the Store Campaign annually releases a Retailer Report Card that scores the largest retailers on their chemical management practices.
Washington, New York, Oregon, and other states are implementing ambitious regulations restricting toxic chemicals in children’s products.

Proactive companies are demonstrating leadership and moving ahead of advocacy campaigns, customer demands, and regulations by reporting their chemical policies, procedures, practices, and progress to the CFP Survey. It assesses whether companies are aware of their chemical risks, how they minimize these risks, and whether they transform avoidance of these risks into business opportunities. For example, companies participating in more than one year of the CFP Survey reported eliminating 461 million pounds of toxic chemicals. That’s the equivalent of a 30-mile line of Boeing 747s parked nose-to-tail.

Investors, advocacy organizations, and governments are challenging corporations to reduce their chemical footprint and invest in inherently safer chemicals and products through the Chemical Footprint Project.

Mark S. Rossi
Executive Director, Clean Production Action

Alexandra McPherson
Consulting Program Manager, Investor Environmental Health Network