Getting a Grip on Your Company's Toxic Footprint
<p>At first glance it seems an impossible task to take on the hundreds or thousands of chemicals in your company's supply chain, but a number of companies have developed useful approaches to measuring and lowering their use of hazardous chemicals.</p>
This is the second part in a three-part series exploring how to reduce your company's toxic footprint by reducing and eliminating the "worst of the worst" toxic chemicals and promoting use of "best of the best" green ones.
Part one of this series is focused on corporate commitment: "How Companies Are Committing to Reduce Toxic Footprints." And part three addresses the ways companies disclose their toxics footprint and engage in shaping public policy on the issue: "The Benefits of Coming Clean on Your Company's Toxic Footprint." For background and details about the benchmark referred to throughout this series, please read "An Updated Benchmark for Corporate Green Chemistry Practices."
The data development portion of the benchmark has two principal components:
• 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
"If it's not measured, it's not managed" is a core tenet of sound business operations. So if you want to go down the safer chemicals/green chemistry path, how do you put your hands around it?
Dealing with your company's carbon footprint is challenge enough -- starting with your stack emissions and then extending to the carbon embedded in your products' components and your operating products' own carbon demand. At a cursory glance it might seem near-impossible to take on the hundreds if not thousands of chemicals in your company's supply chain: How do you weigh these chemicals' diverse environmental health impacts -- from acute human toxicity to cancers to impacts on aquatic ecosystems?
There's no perfect answer to this metric question, but leadership companies have begun to devise responses. For example, SC Johnson's Greenlist process rates the materials in its products based on their impact on the environment and human health, rating materials from a zero ("restricted use") to a 3 ("best").
The detailed criteria are elaborated in a superb SC Johnson case study [PDF] prepared for the Green Chemistry and Commerce Council. The goal for individual products and the company as a whole is to continually innovate away from the lowest rated materials and towards the highest. Over a period of six years from the program's beginning, the company increased its two highest categories of raw materials from 4 percent to 18 percent and dropped its zero-rated restricted use materials from 17 percent to 1 percent.
Walmart has developed another scoring system called the GreenWERCS Chemical Screening Tool. The tool, developed in a collaborative process involving suppliers, nongovernmental organizations and software company TheWERCS, is intended to identify chemicals' potential environmental impact and drive green chemistry innovation. The system [PDF] assesses products based on ingredient information provided by suppliers. The tool currently uses 30 separate lists that contain information on about 2,400 chemicals. It generates a score for each product based on chemical composition and allows comparisons among products in the same category. A traffic light system of red, yellow and green is used for comparisons.
Numerous companies have developed less comprehensive yet nevertheless useful approaches to lowering their toxic footprint. These generally involve the creation of "Restricted Substances Lists" or RSLs. Clean Production Action and the Healthy Buildings Network have collaborated to offer a "Red List" -- a list of official lists of "chemicals of high concern", such as persistent, bioaccumulative toxic chemicals, and carcinogens, mutagens, and reproductive toxicants.
The Green Chemistry and Commerce Council has provided a useful overview [PDF] of such lists, noting they are driven by regulation, by marketing considerations (will Walmart buy my product, or is there consumer concern about a chemical?), and advocacy by nongovernmental organizations. Companies can measure their progress in reducing their toxic footprint by reporting on reduced use of particular chemicals of concern or groups of chemicals. They can also work with certifiers such as McDonough Braungart Design Chemistry to receive "cradle to cradle" certification of products in their product portfolio; cradle to cradle certification incorporates reduced toxicity criteria.
Leadership companies are eager to share their tools. SC Johnson has made Greenlist available for licensing at no cost, via the consultancy Five Winds International, though companies would incur costs in adapting it to their own product stream. Likewise, Walmart has signaled its willingness to have other retailers engage GreenWERCS. Walmart, with other companies, is working on a "Global Data Synchronization Network Product Ingredient Reporting Project" [PDF] that would enhance movement of product ingredient data within supply chains.
These activities in the U.S. complement data development systems in the European Union, where numerous consultancies are assisting companies in addressing the demands for chemical disclosure, hazard data development, and enhanced supply chain communication required by the EU's newly-enacted chemical management legislation known as REACH.
Many industry trade associations are also contributing constructively to the chemical tracking effort, forging progressive industry-wide lists that member companies should address. For example, the American Apparel & Footwear Association (AAFA) has developed an RSL, [PDF] and a multi-company apparel industry working group has created an RSL kit for suppliers that builds on the AAFA's work.
The electronics industry has developed its own "joint industry guide" [PDF] for electronics products. Within the automotive industry, the Suppliers Partnership for the Environment is using the SciVera Lens [PDF] system for assessing and managing chemicals and is collaborating with the U.S. Environmental Protection Agency.
NGOs are pitching in as well. Clean Production Action has produced "The Green Screen for Safer Chemicals" that draws on hazard criteria based on the Globally Harmonized System of Classification and Labeling of Chemicals and incorporates various restricted substances lists to define four benchmarks of progressively safer chemicals, from the red "Avoid -- Chemical of High Concern" to the green "Prefer -- Safer Chemical." It draws on the work of EPA's Design for the Environment (DfE) Program, has been used to evaluate flame-retardant materials in electronics, and has been drawn upon by both Walmart and Hewlett-Packard, among others.
EPA's DfE program works collaboratively with both companies and environmental NGOs to screen chemicals and promote use of safer materials. DfE screens chemicals and awards DfE certifications to approved products. DfE says its logo reflects a judgment that a "product contains only those ingredients that pose the least concern among chemicals in their class." CleanGredients is a partnership between the NGO GreenBlue, EPA, and industry that provides an online database of chemical ingredients that have been pre-screened against the DfE criteria, with the goal of encouraging their use by product formulators.
CBI -- confidential business information -- is one of the largest barriers to the sharing of information, though chemical engineers in companies have said that reverse engineering can be used to uncover the ingredients in competitors' products. Trade secrets have historically been an obstacle to information sharing, but companies have found creative ways to address them while working towards safer chemicals.
For example, since Walmart sells its own private-label brands, national brand competitors have an understandable reluctance to share their ingredient information; Walmart has built protections into its system that permit toxicity comparisons among products and spur reduced toxicity, but also shield especially sensitive information from disclosure.
SC Johnson has built similar safeguards into its Greenlist system, while working to reduce the toxicity of fragrances. The fragrance business is intensely competitive and safeguarding formulations is a core corporate duty. For this ingredient category, fragrance suppliers determine their own Greenlist score, though their submittals are subject to audit by SC Johnson.
For somewhat less sensitive ingredient categories, ingredients are supplied to SC Johnson toxicologists, subject to a nondisclosure agreement. Certification of fragrances that meet the DfE Screen for Fragrances may be another strategy for selection of safer fragrance formulations without compromising proprietary information.
Capacity Building and Supply Chain Greening
The capacity building and greening the supply chain portion of the benchmark has four core components, and I'll go into each of them in turn:
• 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 green chemistry principles; 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.
Information, Training, and Incentive Programs. These programs are central to toxicity reduction, just as they are to achieving any corporate goal. The abundant sustainability literature and associated trainings are rich with "how to" suggestions. Once again, SC Johnson stands out, since Greenlist is so central to its operations. As far back as its 2004 CSR Report, "Earning Your Goodwill," the company stated:
An appreciation for sustainability and the Greenlist™ process in particular is integral to staff training, procedures, and motivation or rewards….New employees are trained on Greenlist™ within a few months of joining the company….Goals are set annually for the company, and personal performance and pay also are linked to progress on the Greenlist™ goals.
Just imagine if reducing product toxicity across the board and a simultaneous commitment to designing substitute chemicals to the maximum extent practicable consistent with the principles of green chemistry was a core value of the world's major chemical manufacturers, infused this way into their corporate cultures!
"Reduce Inherent Hazards" in Product Formulation. This is a core element of corporate toxic footprint reduction, as described previously in this series. Many such initiatives fall within the rubric of "Design for the Environment" and can specifically include highly detailed "life cycle assessment" or more qualitative "life cycle considerations." Both design for the environment and life cycle analysis have long histories. But what counts most in these processes is their expansiveness. For example, if the chemical component of a design for environment program focuses only on compliance with various regulatory requirements, that's far different from a program designed to drive down the total toxicity footprint of a product irrespective of its chemicals' regulatory status.
Develop Collaborative Activities with Suppliers or Other Companies, including Research and Financial Risk Sharing. As noted above, Europe's implementation of REACH is forcing unprecedented collaboration within supply chains on chemical assessment. Europe's implementation of its earlier Reduction of Hazardous Substances (RoHS) Directive, directed at the electronics sector, has similarly driven supply chain collaboration there, but collaborative activity in the electronics sector has been addressing chemicals of concern even beyond those named explicitly in RoHS.
For example, the High Density Packaging User Group International, which focuses on electronic assemblies and sub-assemblies, has been developing a halogen-free materials database. INEMI, the International Electronics Manufacturing Initiative, is developing a project to conduct life-cycle assessments of PVC and PVC-free alternatives in power cords and connectors, since seven of the top 10 global PC manufacturers have set goals to phase out PVC where viable alternatives are identified.
Companies should themselves explore how they can provide incentives to their suppliers, or share risks, to encourage greener chemistries. One collaborative model that companies might consider is the American Chemical Society Green Chemistry Institute Pharmaceutical Roundtable. Through the roundtable, major pharmaceutical companies are working to implement green chemistry and green engineering.
One especially noteworthy activity is the roundtable's research grant competition. The competition is driven by the high levels of toxic chemicals used and waste generated when drugs are produced. The companies are collaboratively funding research consistent with the 12 principles of green chemistry [PDF], targeting chemical reactions and production methods that are especially in need of green chemistry alternatives. While this model focuses on cleaning up "upstream" production, downstream users might likewise consider pooling resources on targeted chemicals and products.
In its inaugural Corporate Social Responsibility report [PDF] last year, Campbell's declared sustainable agriculture to be one of its four core sustainability priorities. When Campbell's began its program about 20 years ago, as a way of reassuring its growers, it agreed to share the economic risks from adopting new Integrated Pest Management techniques. Its growers would manage both conventional plots and IPM plots, and Campbell's agreed that if there were shortfalls in yield or quality in the pilot plots, it would make up the difference. In fact, yield and quality were not issues [PDF], and costs dropped. Across a wide range of crops, Campbell's now reports that the need for synthetic pesticides has dropped 50 percent.
Walmart offers another potential competitive model that companies might wish to pursue. In September 2008, Walmart announced that Hewlett-Packard was the winner of Walmart's Home Entertainment Design Challenge. The challenge was open to all of Walmart's suppliers of consumer electronics, who were asked to submit products having attractive designs, product innovations that reduced their environmental impact, and packaging design that facilitated reuse and recycling, reduced waste, and reduced or eliminated the use of toxic materials.
Hewlett-Packard responded with a design -- the "HP Protect Messenger Bag" -- that reduced product packaging by 97 percent. While there's currently a U.S. government-sponsored President's Green Chemistry Challenge award competition that recognizes green chemistry innovations, individually or together or in collaboration with NGOs, companies can sponsor similar competitions to recognize products based on green chemistry principles. Such contests can be especially useful just to raise the public profile of green chemistry.
Supplier Codes of Conduct, Auditing, and Related Supply Chain Approaches. The 2005 version [PDF] of this framework opened with the story of Sony being unable to sell Playstations during the winter holiday season in the Netherlands in 2001 because regulators found cadmium in their connecting cables.
A more recent and widely known example of supply chain toxicity is Mattel's massive recall of toys in 2007 [PDF], with attendant recall costs, litigation, and reputational damage, because some of its toys sourced from China were coated with lead paint. Hasbro then launched an advertising campaign promoting its own safety record. In an on-line chat, Hasbro's CEO commented, "We believe that our high standards and robust testing and inspection process have allowed Hasbro to avoid any of the lead paint recalls." Indeed, Hasbro had significant staff in China and incorporated an extra step in its testing regimen that enabled it to avoid Mattel's problems.
Supply chains for consumer goods have drawn enormous attention over the last 10 years for a host of social and environmental reasons. A report cosponsored by The Investor Environmental Health Network, "Toxic Chemicals -- Asian Investors Are at Risk," highlighted some of the toxic challenges in Asian supply chains, noted the limits of auditing, and stressed the need for supply chain training and capacity building.
In the aftermath of its Netherlands imbroglio, Sony invested heavily in a revamped supply chain system that included a Restricted Substances List, supplier certification, and auditing. Business for Social Responsibility and other organizations have invested heavily in providing chemicals management and other supply chain training in China. Companies assessing their toxic footprint will want to make sure they have adequate processes and collaborations in place to minimize toxics issues arising from their supply chains.
Part one of this three-part series is focused on corporate commitment: "How Companies Are Committing to Reduce Toxic Footprints;" part three looks at how companies disclose their toxics footprint and engage in shaping public policy on the issue: "The Benefits of Coming Clean on Your Company's Toxic Footprint."
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.