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Shin-Etsu
Grade Summary
Shin-Etsu Chemical produces 4 highly hazardous chemicals, including 1 persistent. This may not seem all that bad, compared to the other companies in the ranking, but it’s still a portfolio full of problematic substances. Also, there is no available data for the 67 percent of the company’s production that takes place outside of the EU and US, leaving Shin-Etsu with just 3 points in the Product Portfolio category. 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 the company is the Lack of Controversies category, where the Japanese company has gone from 6 points last year to 3 points this year, due to increased penalty fines. In the remaining categories, Shin-Etsu Chemical’s performance is weak across the board.
Opportunities for improvement
- Shin-Etsu Chemical is awarded one circularity point for its reduction of hazardous waste. The circular concept is definitely discussed in this sector, which is evident when looking at peer company Toray, scoring five circularity points. Shin-Etsu should start to find ways to develop circular strategies and products.
- The company’s fines for environmental violations over the past decade, listed in the violation tracker, now adds up to over 1 million USD, decreasing its controversies category score from six to three. Five out of eleven incidents happened during 2019 and 2020. To halt this trend and return to a high level of safety, Shin-Etsu should evaluate the reasons for the incidents and strengthen measures accordingly.
- We can only rank 33 percent of Shin-Etsu’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. We also recommend that Shin-Etsu phases out the PIC substance that it 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.
Category breakdown
Shin-Etsu Chemical produces/uses 4 highly hazardous substances – 4 SIN List chemicals, 1 PIC, and 1 HHP – 3 of which are included on the EU’s REACH Candidate List. 1 of these highly hazardous substances is either banned or severely restricted, with set dates when production needs to cease (1 Authorisation List substances, no POPs). The company produces 1 persistent chemical. 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 67 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.
Shin-Etsu Chemical 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. Neither does it exclude substances with toxic properties from its new products. Shin-Etsu Chemicals actively markets safer alternatives on its own website, but not on ChemSec Marketplace. The company does not have any true circular products, processes or innovations. Shin-Etsu Chemicals does not use bio-based resources. Nor does it source or treat recycled materials in a sustainable way, which is one of the key elements of a circular economy. Shin-Etsu Chemicals is, however, actively reducing the hazardous waste it generates.
The Japanese company does not produce only sustainable products and it does not have a timed phase-out strategy 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. Shin-Etsu Chemical 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). Shin-Etsu Chemical does not have a circular economy program in place, and it is lacking objective and measurable circular economy targets.
Only two incidents have been reported at the sites of Shin-Etsu Chemical. In October 2020, a fire broke out in at the company’s Matsuida plant sending one person to the hospital. In February 2018, natural gas blew out abruptly from the company’s Naoetsu plant when excavation was taking place. No major damages or injuries were reported from the incident. The company has paid 1.2 million USD in fines for environmental violations during the last ten years.
Download Controversies Shin-Etsu Chemical (PDF, 106 KB)
