P&G, SC Johnson back California chemical labeling law

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California is mandating transparency for household cleaning products, and the private sector is on board.

In mid-October, California Gov. Jerry Brown signed the Cleaning Product Right to Know Act, authored by Democratic Sen. Ricardo Lara. The law makes California the first state to require companies to disclose the chemicals present in both commercial and householder cleaning products through both packaging labels and online declarations, joining New York as one of just two states that regulate chemicals disclosure.  

Several consumer products companies and chemicals manufacturers backed passage of the California bill, working with NGOs to advocate for mandatory disclosure of their chemical formulations. 

Under the new regulation, also known as SB-258, companies selling products in California will be required to list their ingredients online by Jan. 1, 2020, and include that information as part of on-package disclosures by Jan. 1, 2021. The bill text states that product labels and websites for "air care" (such as fresheners), automotive products, colorants, floor polish and cleansing substances used in janitorial, domestic or institutional cleaning processes must list intentionally added ingredients, including phthalates and bisphenol A (BPA), and known fragrance allergens. The bill does not, however, require manufacturers to disclose the weight or amount of these ingredients, which is protected as confidential business information (CBI).

Avoiding 'toxic lockout'

If companies don't comply, they can't sell their products in the state, leading to what Richard Liroff, executive director of the Investor Environmental Health Network, calls a "toxic lockout" — exclusion from the marketplace as its needs evolve in favor of protecting consumer health.

While no provision in the bill requires enforcement by a state agency, the California Attorney General has the authority to enforce the law. What's more, the public relations fallout for violating the law will motivate manufacturers to comply, said Janet Nudelman, director of program and policy for Breast Cancer Prevention Partners.

"Similar California laws banning the use of certain phthalates in children’s toys and the use of bisphenol A in baby bottles similarly did not include a specific enforcement provision; yet, subsequent analysis showed compliance with the law," she said. 

Another effect of SB-258 is that it will move companies towards disclosing their ingredients nationally because most won't create special labels for products sold just in California, Liroff said.

Indeed, some notable members of the corporate sector were on board before the legislation was passed: The California law was backed by companies including SC Johnson, Seventh Generation, Procter & Gamble and the Honest Company, along with the world's largest flavor and fragrance house, Givaudan. Environmental health advocates and nonprofit organizations Breast Cancer Prevention Partners, the Natural Resources Defense Council and Women's Voices for the Earth co-sponsored the bill.

Through Givaudan, even the notoriously tight-lipped fragrance industry stood in favor of moving towards increased disclosure.

"While the new bill does impact the confidentiality of our art work, it is considered a balanced measure to enable disclosure, while protecting critical CBI," said Greg Adamson, senior vice president of global regulatory affairs, product safety and sustainability in Givaudan's fragrances group. He told GreenBiz that complying with the bill won't affect the company's supply chain.

Although efforts for chemicals disclosure laws have been "percolating for years," said Deb Fiddelke, senior director of government relations at SC Johnson, what made this finally work is the cooperation of NGOs and industry players. She said that negotiations began in April and a final agreement was reached in July.

"This is the first bill that is workable for consumers and the industry," Fiddelke said.

Consumer demand has been a major driver in getting companies behind transparency legislation, said Jamie McConnell, director of programs and policy for Women's Voices for the Earth.

"Companies saw the writing on the wall and knew it was the right thing to do," she said. "We've been seeing companies creating voluntary disclosure policies on their own … Legislation helps level the playing field."

A good business formula

As consumer awareness grows, companies and suppliers that take the initiative to disclose chemicals and allergens proactively could have a leg up on competitors. And the measure is becoming more common. This year, the world's largest retailer Walmart signed on to the Chemicals Footprint Project, which sets guidelines for companies to disclose and manage chemical inventories. Its supporters comprise investors with more than $2.3 trillion in assets under management.

Also in 2017, consumer products giant Unilever vowed to voluntarily disclose fragrance ingredients included in its U.S. and European market products, and mammoth retailer Target announced a push to achieve full visibility of the ingredients in all products on its shelves by 2020.

The business benefits of safer chemicals might include reduced operating expenses because hazardous chemicals no longer require special handling and management, wrote Libby Bernick, global head of corporate business at Trucost, part of S&P Dow Jones Indices.

It also could mean greater revenues from new products: The North American market for green chemistry (the area of chemical engineering focused on minimizing the use of hazardous chemicals) is projected to grow from $3 billion in 2015 to over $20 billion by 2020, according to Pike Research.

SC Johnson, which was at SB-258's negotiating table as part of the Consumer Specialty Products Association — a century-old consumer products trade association — has been a leader in disclosing chemicals of concern. It launched its Greenlist process in 2001, which rates the ingredients it uses with the goal of choosing formulas that don't negatively affect environmental and human health.

Another supporter, Seventh Generation, has been offering ingredient labels on product packaging since 2008.

"It's clear that people demand more and more transparency of all things they're bringing to their homes and families," said Joey Bergstein, CEO of Seventh Generation. The legislation reflects this trend, he said, and was successful because industry players and NGOs were able to come together to identify the level of transparency that customers are demanding.

"I don't think anyone has to scramble," Bergstein said, because the law has a long implementation period. "There's no unnecessary extra cost, as companies have time to manage the label transition process."

He does advise manufacturers to make the changes as quickly as "reasonably possible," which will take engagement between marketing, supply chain and research and development teams, although each company's situation will be unique to the organization.

California's chemicals disclosure bill was one of 118 bills that Brown signed of the 977 bills that came across his desk during the legislation session earlier this month. Other environmental laws adopted by the state included a $4 billion parks and water bond (Senate Bill 5) that boosts water recycling, stormwater capture and conservation infrastructure; and AB-262 (the Buy Clean California Act), the world's first legislative effort to address imported carbon emissions.