Slow progress by 50 largest chemical companies highlights lack of holistic action.
Chemical companies are pushing their more sustainable products in marketing materials choose while sweeping details on production of hazardous chemicals under the carpet, said a new report from ChemSec.
The report, ChemScore 2021, which ranks chemical companies, found that 38 out of 50 companies profiled offer no public information on global hazardous chemicals production. Many of the companies, however, were actively marketing greener, sustainable products on their websites, according to Sweden-based ChemSec, an independent non-profit organisation.
“Only four out of 50 companies showed evidence of a public strategy with plans to phase out existing hazardous chemicals; all continue to produce hazardous chemicals in high numbers,” it said. The companies assessed have revenue of over US$860 billion combined.
ChemScore’s annual ranking of the world’s 50 largest global chemical companies is based on environmental impact and treatment of hazardous chemicals by the company’s operations. The rankings cover companies’ hazardous chemical portfolio; development of safer chemicals and circular products; chemical management and company transparency; and response to controversies, lawsuits and regulation.
ChemSec said the report was designed to help investors to assess companies’ chemicals management strategies.
Over 95% of manufactured products rely on chemicals to some degree, according to a 2021 report published by NGO ShareAction, which added that the sector is responsible for 5.8% of global greenhouse gas emissions. Chemicals companies have largely eluded the pressures forcing other industries, such as oil and gas, automakers and aviation, to change their processes, policies and business models. The sector has become “a blind spot” for investors, said Helen Wiggs, Head of Corporate Climate at ShareAction.
The best performers in the rankings were Indorama from Thailand, followed closely by Dutch firm DSM, which scored 29 and 28 out of 48, respectively. “Both score highly for demonstrating a lack of controversies, and developing safer chemicals through circular production,” said ChemSec.
However, several companies were highlighted for weaker performances. The report said that companies such as Germany’s BASF have touted “environmentally friendly solutions” on their websites. ChemSec said, “there is no mention of the global production of hazardous chemicals in its 30-page ‘safety in production’ report. BASF has at least 127 different hazardous chemicals in its portfolio,” it added.
“Almost all chemical companies have made claims about green products – yet few have a clear strategy to wind down their hazardous chemical portfolio,” said Sonja Haider, Senior Business and Investors Advisor at ChemSec.
Other companies in the rankings included US-based Dupont de Nemours, which the report added was investigated by the New York Times on its use of Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS) chemicals.
PFAS are also colloquially known as ‘forever chemicals’. “Dupont still has at least 36 different hazardous chemicals in its portfolio, and no public strategy with phase-out plans for its existing hazardous chemicals,” ChemSec said.
The indictments from ChemSec’s report continued with several Asian chemical companies listed, including China’s Sinopec and Taiwan’s Formosa Chemical & Fibres, which came joint last. The companies scored just 3.6 points out of 48. “Both are making little effort to develop safer chemicals, and greatly lack transparency,” ChemSec said.
The UN Environment Programme estimated the size of the chemical industry exceeded US$5 trillion in 2017 and is projected to double by 2030 said the report.
“ESG investors have focused mainly on climate change and carbon emissions, but these issues are not isolated; the sustainable investor’s perspective needs to be more holistic,” said Emine Isciel, Head of Climate and Environment, Storebrand Asset Management, on the report’s findings. “The chemical industry is not only a huge energy consumer, but it is also an enabler; the world needs it to be progressive and help solve the current climate crisis.”
The ChemScore report called on chemicals firms to provide more detailed information to help investors understand the risks of ownership. Firms should also reduce their hazardous chemical portfolio by using safer alternatives – since last year’s inaugural evaluation, there has been very little movement from the chemical industry in this area, it said.
The report also encouraged chemicals companies to bring more aspects of the circular economy into production. “A circular economy needs an active chemical industry at the start of the supply chain to provide material that can be reused and recycled.”