Daikin makes its debut in the ChemScore ranking in 2023, starting with a D+ grade and nine points. The company’s portfolio includes 12 SIN List substances, and all 12 are classified as persistent chemicals. Less than half of Daikin’s sold production is registered in EU/US markets, affecting transparency.
The company has established green procurement guidelines, indicating its commitment to more environmentally responsible products. However, it mainly consists of regulated substances, and it’s unclear whether all hazardous ingredients, especially those not yet regulated, are known and managed. The company lacks public design-out or phase-out plans, offering only generic statements about the “substitution of harmful substances.” While Daikin has sustainable products, these are limited to energy-efficient ones, with no presence on ChemSec’s Marketplace.
Daikin expresses its commitment to contributing to a circular economy through resource recycling and water conservation. While this is a positive start, more explicit policies and clear KPIs are needed to evaluate Daikin’s circular progress in the future.
Opportunities for improvement
- Map and phase out persistent chemicals
Daikin produces or uses at least 12 persistent chemicals. These substances are known as “forever chemicals” due to the fact that they do not break down in nature. These chemicals — which are linked to many negative health effects — instead build up over time, creating consequences that are becoming increasingly detrimental. Not only for human health and the environment but also for investors. Companies reliant on such chemicals risk stranded assets now that the regulatory speed is accelerating. They are also exposed to significant liability risks since more chemical companies are being sued for contamination and bodily injury. Daikin should therefore identify all uses, as well as publish the share of revenue and production volume of persistent chemicals (or products that contain them). The company should publish a time-bound phase-out plan for each persistent chemical and a realistic road map with clear KPIs to track progress.
- Market safer alternatives
Daikin does not have any safer alternatives evaluated by independent third parties in its product portfolio. Safer alternatives replace the use of hazardous substances and are crucial in order to put an end to chemical pollution. The company should, therefore, start producing safer alternatives or market existing ones on an independent third-party platform. A good place to advertise is ChemSec’s Marketplace, where buyers and suppliers can find and market safer alternatives.
- Increase circularity
The chemical industry finds itself at the beginning of the value chain. Therefore, it has a responsibility to act fast against the ever-growing scarcity of our planet’s resources. But Daikin receives zero points for circularity since we were unable to identify any circular products, processes or strategies. Nor did we see a decrease in hazardous waste or increased use of recycled hazard-free feedstock or biobased material. Daikin should start by identifying its current production and use of circular products and processes, and then specify the share of revenue that is derived from such products. The company should also develop and present a circularity strategy, including a commitment to increase the share of revenue derived from circular products.