Grade summary

Over the past four years, Shin-Etsu has demonstrated a notable change in its ChemScore ranking. It started at 13 points in 2020, dropped to eight in the subsequent years, but in 2023, it made a significant leap to 15 points, resulting in a C- rating. The company has made one of the most substantial upward movements this year, while engaging with ChemSec for the first time, marking a new chapter for the company.

Shin-Etsu manages 10 SIN List substances, an increase of two from the previous year. The count of persistent chemicals has risen to five. However, less than half of its sold production is currently known, indicating room for improvement in transparency. Shin-Etsu’s approach to sustainable measures primarily occurs at a facility level, aligning with the practices of many Asian companies. Some critical areas, such as low-carbon and high recyclability, are assessed on a product level, warranting a point this year.

In conclusion, Shin-Etsu’s progress is marked by a significant turnaround in its ranking, demonstrating commendable efforts in various categories. While notable strides have been made, areas such as chemical transparency and the disclosure of SVHC revenue warrant further attention for continued improvement.

How did we come to this score?

Opportunities for improvement

1. Map and phase out persistent chemicals
   Shin-Etsu produces or uses at least 5 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. Shin-Etsu 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.

2. Reduce hazardous portfolio
   Scientists agree that chemical pollution has crossed a planetary boundary and become an urgent global crisis, threatening both ecosystems and human health. Since Shin-Etsu has 10 hazardous chemicals in its product portfolio, a key improvement point for the company is to reduce this number. Shin-Etsu should therefore identify all uses, as well as publish the share of revenue and production volume of hazardous chemicals (or products that contain them).

It should also publish a reduction road map of each hazardous chemical together with an annual progression report. Ideally, the company should commit to having a toxic-free product portfolio within the next decade. If the company decides to continue producing a hazardous substance, it needs to present a rationale for its essential use and prove that no feasible alternatives are available at present. In such a case, the company should also state the share of the R&D budget spent on finding a safer alternative for that particular substance.

3. Market safer alternatives
   Shin-Etsu 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.

Category breakdown