Grade summary

Shin-Etsu gets a D in this year’s ChemScore ranking and ends up in 44^th place. Based on publicly available data – covering 40 percent of the company’s chemical portfolio – it produces eight hazardous substances, including two persistent ones. The company states that it works to reduce the environmental impact of its products, but is one of few in the ranking lacking a hazard assessment program. Shin-Etsu performs various recycling activities and highlights the importance of circular economy measures, but no circular products or processes could be identified, including any use of biobased or renewable feedstock. Nor could any phase-out plans for hazardous chemicals be identified. The company states that when developing new products, it does not use hazardous substances restricted by the main Japanese chemical regulation (CSCL) or the EU’s directive on Hazardous Substances in Electrical and Electronic Equipment (RoHS). Even if this is a good first step, these regulations do not cover all hazardous substances, thus no points are awarded for cut-off criteria.

How did we come to this score?

Opportunities for improvement

1. Map and phase out persistent chemicals
   Shin-Etsu produces or uses two persistent chemicals, one more than last year. These substances are also known as “forever chemicals” due to the fact that they do not break down in nature. Instead, these chemicals — which are linked to many negative health effects — build up over time. The consequences of these substances are becoming increasingly detrimental, not only for human health and the environment but also for investors. Investors risk stranded assets now that the regulatory speed is accelerating, and are also exposed to significant liability risks since more chemical companies are being sued for contamination. Shin-Etsu should therefore make sure to identify all uses, and publish volumes and percentages of the total revenue of all its persistent substances. The company should also publish a time-bound phase-out plan of both known persistent chemicals and an annual progression report to go with it.
2. Increase transparency
   There is limited information about Shin-Etsu’s chemical portfolio. We have requested that the company disclose information about its chemicals portfolio and management, but the company has not responded to that request. In order to be more transparent, the company should disclose the full list of hazardous chemicals that it produces, including the volume of each of these chemicals as well as its percentage of the total revenue. It would also be wise to specify which chemicals are intended for end products and for intermediate use. Generally speaking, information about chemicals sold in EU and US markets is available through public records, which is not the case in other parts of the world. For that reason, Shin-Etsu should make the details of its revenue generated outside of these regions public to ensure chemical transparency and allow for a comprehensive global evaluation.
3. Increase circularity
   The chemical industry finds itself at the beginning of the value chain. Therefore, it has a responsibility to act fast and ambitiously against the ever-growing scarcity of our planet’s resources. But Shin-Etsu 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 any use of recycled, hazard-free feedstock or biobased materials. For these reasons, it is important that Shin-Etsu starts with identifying its current production and use of circular products and processes, and then specifies how many percent of its total revenue comes from circular products. The company should also develop and present a strategy, which includes an activity plan, with clear indicators for how to expand its production and use of circular products and processes.

Category breakdown