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Formosa Chemicals & Fibre
Grade summary
Formosa was among the bottom four in the previous ranking and has slipped even further this year, sharing the ranking’s lowest total score of four points with Sinopec Shanghai Petrochemical. Granted, Formosa does not produce or use any highly hazardous chemicals within the EU or US. However, there is no available data for the 91 percent of the company’s production taking place outside of these regions. Like all companies in the ranking, Formosa has been encouraged to share information about its production, but has declined to do so. This low transparency is a big issue for investors, as it makes it hard to do a proper evaluation of the risks connected to the product portfolio. Another poor area for Formosa is the Lack of Controversies category, where the Taiwanese company scores zero points, due to several pollution scandals and serious accidents.
Opportunities for improvement
- We can only rank 9 percent of Formosa’s overall production, since the rest takes place outside the EU and US, where there are no reliable and publicly available sources for identifying producers of hazardous chemicals. Informing ChemSec about hazardous chemical production outside the EU and US could raise the company’s score considerably.
- Formosa, along with its Chinese peers Wanhua Chemical and Sinopec Shanghai Petroleum, make up the taillight of the ChemScore ranking. The company lacks all the parts of a chemical management strategy: Assessment of products’ intrinsic hazardous properties, as well as development of safer or circular alternatives.
- Numerous incidents, including explosions, air pollution and other environmental breaches, indicate that Formosa needs to invest in stringent safety measures, including continuous employee training.
Category breakdown
Formosa Chemicals produces/uses no highly hazardous substances. However, much about the company’s product portfolio is unknown due to the its large production that takes place outside of the EU and US.
Please note that there is no available data for the 91% of the company’s production that takes place outside of the EU and US. Lower EU/US production means higher uncertainty with regard to the total production of hazardous chemicals, which will have a negative impact on the company’s score in this category.
Formosa has a method in place to screen and assess the sustainability of its products, but does not include the intrinsic hazards of ingredients in the screening process. Nor does it exclude substances with toxic properties from its new products. Formosa does not actively market safer alternatives on its own website or on ChemSec Marketplace. The company has no true circular product, process or innovation. Formosa does not use biobased resources. Nor does it source and treat recycled materials in a sustainable way, which is one of the key elements of a circular economy. Formosa is not actively reducing the hazardous waste it generates.
The Taiwan company does not produce only sustainable products. Nor does it have a phase-out strategy for hazardous substances that go beyond regulatory compliance. It does not share chemical safety information on its website and lacks a credible code of conduct standard. Formosa did not respond to ChemSec’s attempts to communicate around its ChemScore ranking. Nor does it share any information about what kind of chemicals it produces in regions with low regulatory demands for transparency (e.g. Asia). Formosa does not have a circular economy program, thus lacking objective and measurable circular economy targets.
In 2016, Formosa was linked to the worst water pollution scandal in Vietnamese history. A Formosa plant spilled toxic waste, including cyanide, and polluted more than 200 kilometres of Vietnam’s coastline. According to government officials, the incident caused a massive fish kill in which at least 100 tons of dead fish washed ashore. The company was fined 500 million USD by the government for damages caused by the spill. A year after the disaster, the company was hit with another big fine when it had to pay more than 40 million USD for environmental breaches at one of its plants in Taiwan. Environmental scandals linked to Formosa have been frequent not only in Asia, but also in the United States. Two years ago, a Texas federal judge found the company liable for polluting waterways with billions of plastic pellets. As the trial moved into the penalty phase, Formosa faced fines of up to 184 million USD, but ultimately made a settlement of 50 million USD and promised no future plastic discharges from the plant.
Download Controversies Formosa Chemicals and Fibre Corporation (PDF, 129 KB)
