Treading lightly with chemicals
A new tool, the Chemical Footprint Project (CFP), aims to establish meaningful measurement of overall corporate performance towards safer chemicals in products and supply chains. Dr. Mark Rossi, project lead and co-founder of NGO Clean Production Action (CPA), says the CFP provides the first-ever common metric of its kind for publicly benchmarking corporate chemicals management and profiling leadership companies.
The CFP works by evaluating four areas of a company:
management strategy: measures the scope of corporate chemical policies and their integration into business strategy, accountability, and employees’ incentives for safer chemical use, as well as support of initiatives and public policies for safer chemicals;
chemical inventory: measures a company’s level of knowledge about the chemicals used by its suppliers in products, components, and manufacturing processes; and its systems for managing chemical data and ensuring supplier compliance with its reporting requirements;
progress measurement: measures the goals set to reduce chemicals of high concern, progress in establishing a baseline corporate Chemical Footprint and reducing chemicals of high concern, and the degree to which alternatives are assessed, identified and implemented; and
public disclosure: measures whether a company publicly releases the chemicals in products and manufacturing, whether it discloses participation in CFP and its answers to these questions, and whether the answers have been independently verified by a third party.
Once evaluated, a company receives a score which can be shared with customers and investors, with the main objective being to measure continuous improvement in chemicals management.
Hopes for the project are high. The format is based on the now widely used Carbon Disclosure Project Index (CDP), which ranks companies in terms of carbon emissions performance and disclosure. The 2014 CDP index saw nearly 2,000 companies have their climate disclosures independently assessed and ranked against CDP’s scoring methodology. Dr Rossi is keen to see the CFP reach these numbers. “The CFP is modelled on the CDP in terms of the type of questions asked, and like the CDP, it speaks to different audiences.” He says chemical footprinting can apply to any business sector. “Retailers, health care organisations, governments and investors all see value in a comprehensive measure of business progress to safer chemicals.”
Participating companies, who have been trialling the new tool, believe it could fill a void in chemical disclosure. “Encouraging transparency and material health in products and supply chains supports the overall sustainability initiatives of a company,” says Roger McFadden, vice president and senior scientist at the world’s largest office supply company, Staples. He says it will add a level of transparency and help companies reduce reputational and regulatory risks and reveal opportunities for moving to safer chemicals. “CFP can be a driver for market differentiation, competitive advantage and innovation,” he adds
While business sectors can take advantage of the competitive aspect of the CFP, it is the investment community that is likely to benefit most. Susan Baker of US investment firm, Trillium Asset Management, says the CFP fills a gap in sustainability data and will give investors a better understanding of if and how companies are managing chemical use in their products and/or supply chain. “We learn of poor chemical use management after an accident occurs or toxic chemical is found,” she says.
A fully operational CFP will give investors metrics around the extent to which chemical use and reduction of chemical hazards are prioritised and could help reduce uncertainty in the marketplace, she says. “Data service providers track chemical spill and release data, and companies report following chemical directives issued by regulatory bodies, but investors are not getting adequate disclosures around if or how companies are managing overall chemical use in the manufacture of their own products or those they contract to manufacture them” she says.
Investors may start to better understand that, because chemical exposures are linked to billions of dollars in healthcare costs, this could impact economic growth, she says. “This speaks to the ‘Universal Owners’: large institutional investors hold a slice of productive capital in the economy, so drags on the global economy – such as higher healthcare costs and lost work hours from exposure to harmful chemicals – impact financial returns.”
Procurement is another area where the CFP could improve decision making around chemicals, says Dr Rossi. “For those who procure – from those in governments, retail or health care organisations – it gives them a framework to evaluate companies on their overall performance,” he says.
Success and scalability
The first stage of the project involved working with the piloting companies, which were entering data into the tool. Over the next year, the project will work on connecting with the organisations that would use the information made available.
However, for the CFP to succeed and meet these expectations it will require scalability. Ms Baker says the project’s development hinges on getting endorsement from investors and other stakeholders; a communications strategy that articulates effectively the business case; industry champions speaking publicly to the value of footprinting and asset owners demanding improved disclosure of chemical use.
“If it continues to receive strong endorsements from a broad cross section of asset owners, industry and NGOs, and the business risk and opportunities afforded by rigorous management continue to play out, while pressures continue to strengthen, then I believe over time this tool will gain in popularity,” she says.
Mr McFadden agrees that the CFP will need to be adaptive, iterative, correctable and scalable. “It will take time, just as it did for carbon disclosure,“ he says. “Engaging and including a wide range of experts and stakeholders, and aligning it with business strategy, will increase the chance of chemical footprinting becoming mainstream.”