An Updated Benchmark for Corporate Green Chemistry Practices

[Editor's Note: This is a companion piece offering background details for our three-part series by Richard Liroff on corporate toxic footprints. Part one, focused on corporate commitment, is "How Companies Are Committing to Reduce Toxic Footprints;" part two, exploring ways to develop data on toxic chemicals and their alternatives, is "Getting a Grip on Your Company's Toxic Footprint;" and part three, addressing the ways companies disclose their toxics footprint and engage in shaping public policy on the issue is "The Benefits of Coming Clean on Your Company's Toxic Footprint."]

Companies need to move towards using greener chemicals because the principal drivers demanding such change -- science, regulation, and B2B environmentally preferable purchasing programs -- are surging and will intensify. This benchmark, case examples, and links to tools can help you figure out how to reduce your company's toxic footprint by reducing and eliminating "worst of the worst" toxic chemicals and promoting use of "best of the best" green ones.

Product toxicity reduction should be a core element of business strategy because it can reduce reputational and litigation liabilities, help companies avoid "toxic lockout" of their products from the marketplace, and drive innovation. It can drive sales in the marketplace for environmentally preferable products, lower overhead costs when products subject to government hazardous waste laws are eliminated, and contribute to enhanced employee safety and productivity. Toxicity reduction and elimination can also yield other forms of cost savings, generally determined on a case by case basis.

The initial version [PDF] of this benchmark was published five years ago when concern about toxic chemicals in consumer products and supply chains was beginning to coalesce. It was "intended to be an iterative benchmark, elaborated and refined over time [since] as companies develop innovative approaches to safer chemicals and substitution policies, they will raise the bar for acceptable and outstanding performance."

This update builds on corporate case studies and tools since developed by the Investor Environmental Health Network, Clean Production Action, the Green Chemistry and Commerce Council, Europe's International Chemical Secretariat (ChemSec), and others.

Companies can use this benchmark to develop an initial assessment of where they stand. For a "deeper dive," more detailed guidelines will be available in 2010 from the Business-NGO Working Group for Safer Chemicals and Sustainable Materials. The Working Group has produced a set of "guiding principles for chemicals policy" whose elements include "know and disclose product chemistry," "assess and avoid hazards," "commit to continuous improvement," and "support public policies and industry standards." The Working Group's forthcoming guidelines will provide detailed guidance for implementing the principles.

The updated "Corporate Toxic Footprint/Green Chemistry Benchmark" has five core elements:

1. Corporate Commitment
• Signal the company's commitment -- preferably via a statement from the CEO -- to lowering product toxicity by reducing or eliminating known or suspected high priority toxicants and promoting development of products comprised of chemicals created according to the principles of green chemistry;
• Establish an internal process for review and ranking of chemicals used by the company;
• Based on the internal assessment, establish short, medium, and long-term targets and measurable goals for chemical substitutions and provide for routine reporting on progress; and
• Favor reductions in toxicity even in the face of scientific uncertainty.

2. Data Development

• Adopt standard procedures for systematically reviewing the chemical composition of company products and promote generation of toxicity data by chemical suppliers; and
• Assess the chemical composition of company products against published lists of known or suspected high priority chemicals, with particular emphasis on such categories as persistent and bioaccumulative substances, carcinogens, mutagens, reproductive toxicants, neurotoxicants, and hormone disruptors.

3. Capacity Building and Greening The Supply Chain

• Create information, training, and incentive programs to help identify, research, and implement safer alternative ideas;
• Add "reduce inherent hazards" as a criterion for product formulation and chemical procurement, including a commitment to continuous improvement in use of safer chemicals as effective, cost-competitive alternatives become available;
• Develop collaborative activities with suppliers or other companies, including research and financial risk sharing, to procure or develop reduced toxicity chemicals, particularly those designed in accordance with the principles of green chemistry; and
• Devise supplier codes of conduct and certification programs, and associated corporate or third-party auditing methods, to identify suppliers' progress and problems in reducing toxicity of supplied materials

4. Investor and Public Accountability

• Discuss and analyze in annual and quarterly SEC filings the material risks and opportunities for the company associated with toxic chemicals and with safer alternatives and cleaner production processes. Disclosures should include new government- or peer-reviewed studies of environmental and health hazards pertinent to toxic chemicals in company products; the range of potential liabilities and market risks associated with toxic chemicals in company products, and market trends associated with alternatives to toxic chemicals used in company products.
• Issue a sustainability or corporate social responsibility report that includes a discussion of product toxicity and corporate milestones for and progress in reducing or eliminating toxic chemicals.
• Engage in effective consumer disclosure practices regarding chemicals of concern (in product labeling, warning notices and catalogue listings" target=new> so as to avoid potential "duty to warn" liabilities and, where safer alternatives are offered, to publicize the benefits of these alternatives.

5. Public Policy Positions

• Encourage progressive trade association stances on toxics reduction; and
• Speak with an independent voice and organize ad hoc industry and industry/NGO coalitions to advance toxics reduction

Richard A. Liroff, Ph.D., is founder and director of the Investor Environmental Health Network (IEHN). IEHN is a collaboration of investment managers that advocates for safer corporate chemicals policies to grow long-term shareholder value and reduce financial and reputational risks to companies. The business case for corporate safer chemicals policies, a list of shareholder resolutions on safer chemicals policies, and a roster of participants can be found on the IEHN website, www.iehn.org. The author is engaged with numerous organizations and processes discussed above; mention of commercial products and services should not be construed as endorsement. This article has benefited from comments provided by corporate and NGO colleagues working on toxicity reduction.