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SABIC
About the company
Grade summary
SABIC has a large portfolio of toxic chemicals, including two persistent “forever chemicals”, and has decreased its score in the first category from three points last year to two points this year. The production of problematic chemicals is one reason for the poor score, but also the fact that there’s no available data for the 68 percent of the company’s production that takes place outside of the EU and US. 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. Like all companies in the ranking, SABIC has been encouraged to share information about its production but it has declined. Another poor area for SABIC is the Lack of Controversies category where the Saudi company scores yet another zero points due to several violations and accidents. SABIC scores fairly high in the Development of Safer Chemicals category as it is actively marketing safer chemicals and also recognizes the inherent toxicity of its ingredients.
Opportunities for improvement
- SABIC currently has two substances in its product portfolio belonging to the group of chemicals dubbed “forever chemicals”, due to their extreme persistence. For investors, these chemicals pose a nightmare when the persistence and level of exposure is revealed, as demonstrated by the companies involved in the PFAS disaster, suffering massive financial implications. Investors risk stranded assets, as the environmental and human health impacts of exposure to “forever chemicals” can’t be stopped or easily reversed. For this reason – not to mention for the sake of human health and the environment – we strongly recommend that SABIC prioritises phasing out persistent chemicals from its product portfolio.
- The company should also reduce its hazardous portfolio overall, which currently consists of 24 banned, severely restricted or SIN-listed substances. Chemical pollution has a harmful impact on human health and the environment, and poses a growing threat. Two million people died due to exposure to hazardous chemicals in 2019, compared to 1.56 million in 2016, according to the World Health Organization (WHO). Hazardous chemicals are also key drivers of biodiversity loss, putting entire ecosystems in jeopardy. A good place to start the reduction would be the four PIC substances that SABIC still offers. PIC, short for Prior Informed Consent, is one of the key provisions of the Rotterdam Convention, allowing the export of – often domestically restricted – hazardous chemicals to poorer countries with weaker chemical legislation, as long as the receiving country signs a consent that it understands what it is accepting and has a plan for how to handle it.
- SABIC aims to contribute to circular economy with its TRUCIRCLE portfolio. We are critical to the company’s mass balance approach, as it allows for misleading accounting. SABIC should find a way to be transparent about material flows, clearly requiring a physical connection between the input waste material and the end product, claiming to contain recycled content.
Category breakdown
SABIC produces/uses 24 highly hazardous substances – 23 SIN List chemicals, 4 PICs, and 2 HHPs – 4 of which are included on the EU’s REACH Candidate List. 2 of these highly hazardous substances are either banned or severely restricted, with set dates when production needs to cease (2 Authorisation List substances, and no POPs). The company produces 2 persistent chemicals. Persistent chemicals are particularly problematic, since they do not break down, but instead accumulate in humans and the environment. Because of this, persistent chemicals should be of extra concern for investors; substances that are not considered a problem today could become huge liabilities in the future.
Please note that there is no available data for the 68 percent 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.
SABIC has a method in place to screen and assess the sustainability of its products and includes intrinsic hazards of ingredients in the screening process. It does not, however, exclude substances with toxic properties from its new products. SABIC actively markets safer alternatives on its own website, but not on ChemSec Marketplace. The company has no true circular product, process or innovation. SABIC uses biobased resources without occupying extra land or competing with food production. It also sources and treats recycled materials in a sustainable way, which is one of the key elements of a circular economy. SABIC is actively reducing the hazardous waste it generates.
The Saudi company does not produce only sustainable products, but it does have a phase-out strategy – albeit not timed – for hazardous substances that go beyond regulatory compliance. It shares chemical safety information on its website and is following a credible code of conduct standard. SABIC did not respond to ChemSec’s attempts to communicate around its ChemScore ranking and it does not share any information about what kind of chemicals it produces in regions with low regulatory demands for transparency (e.g Asia). SABIC does have a circular economy program in place, but it is lacking objective and measurable circular economy targets.
SABIC has been involved in several workplace-related incidents and environmental violations during the last ten years. For example, a fire at a plant operated by a subsidiary killed 12 workers and injured 11 more in 2016. The next year, a shipping accident caused a massive spill of plastic nurdles. SABIC was accused of lack of transparency and collusion with the government authorities in an attempt to hide the extent of pollution caused by the accident. In 2020, nearly 16,000 pounds of toxic styrene gas leaked from a rail car at SABIC’s plant in Selkirk, NY, prompting road closures and a shelter-in-place order for the surrounding area.
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