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The Right Chemistry

Walmart grows the chemical footprint movement

With chemical disclosure on the rise, the mega retailer is one example of a company adjusting the way product ingredients are tracked and disclosed.

Walmart announced in April that it has removed 95 percent of the 10 highest priority chemicals targeted by its pioneering Sustainable Chemistry Policy. This is striking progress, as Walmart announced its goal to eliminate these chemicals just two years ago.

It is a reminder of the power of major retailers and manufacturers to reduce business and consumer risk and enhance public health through targeted chemical management.

Walmart characterized its activities as reflecting its commitment "to improving our chemical footprint." The embrace by America’s largest retailer of chemical footprinting language represents endorsement of an emerging, critically important sustainability concept.

Chemical footprinting can be defined as the process of assessing progress toward the use of safer chemicals and away from chemicals of high concern to human health or the environment. Investors in North America, Europe and Australia managing more than $2.3 trillion in assets publicly support the Chemical Footprint Project, which has developed an assessment tool for analyzing and scoring corporate chemical footprints.

Investors are seeking a more effective way of comparing public companies on the extent to which they reduce chemical hazards and realize the business benefits of moving towards safer chemicals and materials; chemical footprinting analytics provide such a tool.

Investors’ aspirational goal is having chemical footprinting assessment and public disclosure become as widespread as now well-established carbon footprinting and more recent and growing water footprinting.

To promote it, investors have reached out to major commercial suppliers and aggregators of ESG (environmental, social, governance) data for investor analytics to add chemical footprint information to their repertoire.

As a general rule, current ESG data for chemicals tend to focus mainly on emissions, spills, reputational risks associated with chemical incidents, and fines, penalties and litigation. While important, such data mainly reflect "end of pipe" risk management failures.

They do not capture very well the risk reduction and other positive business benefits of front-end chemical selection and product design choices that can very efficiently eliminate potential sources of human health risk from chemical hazards in both common home, office and automotive products and in manufacturers’ discharges to the environment.

For many investors, how well companies manage their chemicals, as well as other environmental and social concerns, reflects how well companies are managed overall.

Concern for ESG is becoming increasingly mainstream in the U.S. For example, in 2015, BlackRock, the world’s largest investment management firm with $4.5 trillion assets under management, declared ESG "is not just about saving the planet or feeling good. We view ESG excellence as a mark of operational and management quality."

Driving the point home, BlackRock added, "It can be costly to underestimate environmental risks. Just ask BP’s equity and debt holders." Lumber Liquidators provides a more immediate chemical example. Its stock dropped roughly two-thirds, its CEO resigned and it faced an onslaught of litigation following public disclosures in 2015 of formaldehyde risks from its flooring products.

Defining chemical footprinting

The term "toxic footprint," a precursor of "chemical footprint," initially was elaborated in a series of GreenBiz articles in 2009 on benchmarking corporate chemical policies and practices.

The term was created to foster enhanced disclosures about corporate management of this scientifically complex issue, but the downside quickly became apparent: No corporate staff would feel comfortable using the word "toxic" in public communications.

Nor did the term adequately capture the potential benefits of moving towards safer chemistry. Using instead more balanced "chemical footprint" language, shortly thereafter environmental non-profit Clean Production Action, research institute the Lowell Center for Sustainable Production at the University of Massachusetts-Lowell and sustainability consultancy Pure Strategies launched the Chemical Footprint Project.

The Chemical Footprint Project evolved from a set of Principles for Safer Chemicals developed by Clean Production Action’s BizNGO group, businesses and NGOs working collaboratively to advance and disseminate safer chemicals policies and practices, and from the BizNGO Guide to Safer Chemicals. GreenBiz published what likely was the first article in the sustainable business media on "chemical footprinting" in 2013.

Project founders, to buttress their own extensive policy and scientific skill-sets, convened a steering committee that included retailers Target and Staples; health care providers Kaiser Permanente, Partners Health Care and Dignity Health; investor representatives Trillium Asset Management, Boston Common Asset Management and the Investor Environmental Health Network; and environmental nonprofits U.S. Green Building Council and Environmental Defense Fund.

Chemical footprinting is about much more than just identifying and eliminating hazardous chemicals. Chemical Footprint Project’s assessment tool focuses on four key elements:

  1. Management strategy: scope of chemical policies, incentives, integration of policies into business strategy and support for public policies for safer chemicals
  2. Chemical inventory: company knowledge of chemicals in products and supply chains and systems for managing chemical data and ensuring supplier compliance
  3. Progress measurement: goals, measurement of progress from a baseline, and assessment of chemical and design alternatives
  4. Public disclosure: public disclosure of chemicals in products and manufacturing disclosure of Chemical Footprint Project participation and ranking, and third party verification of data provided to the project

The tool, accessible via online registration, includes 20 questions distributed across the four key elements, for which a maximum of 100 points are awarded by project reviewers.

The project worked with 11 companies to pilot the assessment tool and accompanying technical guidance for its completion. Even those companies that already have strong safer chemicals policies and practices found benefit from the structured analytic, including enabling gap analysis, facilitating conversations across "corporate silos," providing a systematic approach for evaluating chemicals and creating a standard for measuring performance in chemicals management.

One pilot company, GOJO Industries (best known for its Purell sanitizing products), subsequently incorporated in its 2020 sustainability goals a goal of halving its chemical footprint.

Walmart’s Sustainable Chemistry Policy has also been chronicled by GreenBiz. The company first focused on chemicals as one of the core elements of its broad sustainability initiative launched about 10 years ago. The policy has evolved substantially, drawing on an intensive stakeholder engagement process involving national consumer product brands, retailers, chemical manufacturers and environmental health advocates.

Walmart, in reporting progress under its Sustainable Chemistry Policy, incorporates core elements of chemical footprinting, although it has not formally participated in the Chemical Footprint Project.

These include, for example, identifying and ranking the hazards of chemicals in products, establishing goals for reducing chemical hazards and publicly tracking progress towards achieving them, promoting greater disclosure of the chemicals in products and fostering the collaborative work that can be essential to developing safer alternatives.

The downside quickly became apparent: No corporate staff would feel comfortable using the word 'toxic' in public communications.

Walmart uses a commercially available program, UL’s WERCSmart platform, for tracking chemicals in formulated products and ranking the hazards of the chemicals in those products while still protecting suppliers’ proprietary information. The company is able to measure its progress quantitatively because such measures "will adequately inform us about our policy’s effectiveness in achieving our goals of increasing ingredient transparency and advancing the safer formulations of products."

Walmart recognizes the importance of deadlines and collaborative efforts to drive substitution of safer chemicals: "When suppliers are unable to remove HPCs, we ask them to develop time-bound action plans to reduce, restrict and eliminate usage as well as to engage in broad stakeholder initiatives to work toward industry-wide solutions."

The company has not yet publicly disclosed the identities of its high priority chemicals, although it reportedly will do so later in 2016. Once these identities are released, they can be an important driver for safer chemical use by other retailers and consumer brands.

Walmart is also driving chemical ingredient disclosure by its suppliers: "We also asked national brand suppliers … to list product ingredients on their own websites, giving access to this information in multiple locations, so customers can make more informed choices."

The retailer queried its suppliers about their online disclosure practices through its broader Sustainability Index platform. Of the 76 percent that responded, "78 percent reported that they disclose ingredients online for all their products according to a nationally recognized standard."

The Chemical Footprint Project will release its first report, a review of the chemical footprints of about 25 companies, later this month. These companies are voluntarily reporting to the project their chemical footprints via use of the project’s analytical tool, although this first report will just summarize aggregate scores and patterns, not disclose individual company scores.

CDP (formerly the Carbon Disclosure Project) sent out its first carbon data request to companies in 2003, to which 235 companies replied. Now, reporting to CDP has become a core element of major corporations’ sustainability disclosures. Chemical footprinting can be much more complex than carbon reporting, but hopefully will become part of a "new normal" of corporate sustainability disclosures sooner rather than later.

This will be good for public health, the natural environment and businesses’ long-term well-being.

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