Another sustainability ranking, aren’t there enough ratings already?
Evaluations of companies’ sustainability work have been around for decades, each with its own specific focus and criteria. ChemScore aims to fill in a blank spot, a topic that other sustainability rankings tend to leave out – chemicals. The issue of chemicals is rarely reflected in the environmental criteria contained in Environmental, Social and Governance (ESG) screenings and has a minor role in Socially Responsible Investing (SRI). ChemScore wants to change this.
Why is the production of hazardous chemicals weighted so heavily?
When we developed and discussed the criteria, it always boiled down to the hazardousness of the companies’ products. If you consider other problems related to chemicals such as handling by workers and consumers, transport, and waste at the end of life of products, none of them would be problems if the substances were benign. Even when considering accidents and damage such as fires, explosions and spills, you would come to the same conclusion: if the chemicals are safe then there would be no threat to human health or the environment. To understand the financial risks of a company, it is therefore extremely important to consider the hazardous product portfolio.
Why do you count some hazardous chemicals twice?
All chemicals accounted for in ChemScore are very hazardous and have extremely problematic properties. However, from an investor’s point of view, some are worse than others. For persistent chemicals, the risk of huge future liabilities is a very probable scenario. For other chemicals, regulation is approaching (REACH Candidate List) or imminent (REACH Authorisation List). Certain substances are therefore weighted more heavily (counted twice) when calculating the total hazard score for each company.
Why aren’t risk assessments taken into account in ChemScore?
Can negative impacts be minimised by controlling the exposure? The short answer is: yes, they can. Risk assessments are important in some cases, especially when there is a need to handle potentially harmful chemicals. They are, however, expensive and can be very complex. More importantly, risk assessments are by no means foolproof. When products are used in unintended ways or without the required protection, these predictions fail to fulfil their purpose, which is to protect human health and the environment. Moreover, products containing hazardous substances are difficult to dispose of in a safe manner and cannot be recycled without polluting new material streams.
Why don’t you differentiate between the severity of hazards?
The substances on the SIN List have different hazardous properties. Some are carcinogenic, some are toxic to reproduction, some cause brain damage, and so on. It’s hard to judge if cancer is worse than infertility or loss of brain function. What we do know is that all substances on the SIN List are chemicals of very high concern (as defined by the EU) and that they should be phased out from products and processes in order to reduce negative impacts on human health and the environment.
We are not a chemical company, we don’t produce chemicals. Why are we included in this ranking?
Since ChemScore’s aim is to help investors understand financial risks arising from chemicals management, we used the Global Industry Classification Standard (GICS) to identify companies in the “chemical sector”. We are aware that the 35 companies included in this year’s ranking can differ a lot in the way they work with chemicals. The ranking includes companies that produce chemicals, companies that formulate them, companies that import and procure them. But, these differences do not matter when it comes to the financial risks linked to environmental pollution and negative health effects.
Please be aware that even though ChemScore mainly uses the word “production”, it could also refer to importation and use.
Why do you list chemicals that are just used as intermediates in the industrial process?
An intermediate use for a substance is a very strict definition under the EU chemicals regulation REACH. This use benefits from exemptions to many of the registration requirements, as well as regulatory pressure. The registration process in Europe allows differentiation between substances, by registering them for either “full” or “intermediate” use. In ChemScore, we only include “full” substance registrations in the European Chemicals Agency’s (ECHA) database. In some cases, a registration by a group of companies (SIEFs) can include both full and intermediate use of the substance, but that is, unfortunately, not visible to anyone outside of the authorities.
We acknowledge the fact that this may be the case for some companies. If they have registered a substance and all their production/use of that substance is as an intermediate (according to the REACH definition) and they want us to take this into consideration, they need to provide a clear public statement confirming this on the company website.
We have a substance with a conditional classification as a CMR but only use the non-classified version. Why do you include these chemicals in your assessment?
Unfortunately, it’s not possible to verify such a claim on the ECHA website. It is true, however, that some substances have a conditional classification as a CMR that does not always apply.
We acknowledge that this may be the case for some companies. If they have registered a substance and all their production/use of that substance involves the non-classified version, and they want us to take this into consideration, they need to provide a clear public statement confirming this on the company website.
Hazardous chemicals are needed to produce sustainable products!
For a large proportion of the current uses of hazardous chemicals, there are safer alternatives available. We agree that for some very specific functions and properties, the use of hazardous chemicals may be needed. However, highly hazardous substances should only be used as a very last resort. If they are used, it should be under strictly controlled conditions, which are ensured through the authorisation regime in the EU chemicals regulation REACH.
Why do you not award points for the use of other assessment tools apart from GreenScreen?
We are open to the inclusion of other hazard assessment tools as well if they are equally progressive, clear and chemical specific. However, to our knowledge, most other existing tools have a broader perspective where chemical hazard is just one part of the assessment. Meaning that a substance’s hazardous properties might get “diluted” by other sustainability aspects.
Isn’t it biased to award points for using ChemSec’s own marketing channel for safer alternatives – Marketplace?
Many less-toxic alternatives are marketed directly to current customers; there is no overview of safer alternatives available on the market. It is therefore very difficult for downstream users to get the safest products for the best price. That’s why we developed Marketplace – an online platform that showcases products free from substances of very high concern. Moreover, the platform is completely free of charge.
We have also researched corporate websites, authoritative reports and even trade fairs to find safer alternatives from companies, and awarded a point for these, even if the company itself does not market the alternatives publicly.
Why aren’t other sustainable practices taken into account?
Thankfully, carbon disclosure as well as water, waste and emissions are nowadays included in sustainability reporting. In ChemScore, we didn’t want to duplicate existing rankings and evaluations. So we left these aspects out and focused solely on chemical practices.
To have a completely sustainable product portfolio is unrealistic!
Currently, no company has been awarded points for this criterion. Does this mean that a chemical portfolio made up solely of benign products is a dream? No. We believe that it’s possible for chemical companies to have such a core value, and that we will see companies developing products without using hazardous chemicals at all in a not-so-distant future. This criterion should be seen as an aspirational goal today, something to strive for in the future.