New Investor Guide Looks at Toxic Chemical Risk

The number of shareholder resolutions dealing with toxic product risks jumped from three in 2004-2005 to 17 in 2006-2007, including 13 resolutions introduced for the ‘?07 proxy season at such leading U.S. corporations as Apple, CVS, Dow, DuPont, Sears, and ServiceMaster.

Now, the Investor Environmental Health Network, which represents 20 investment organizations with $22 billion in assets under management, has released a 52-page Fiduciary Guide to Toxic Chemical Risk PDF). The guide, for institutional investors, examines the financial dimensions of toxic chemical risk, including how to quantify such risk, the theory behind the danger posed by toxic chemicals to the wealth of shareholders, and a comprehensive set of action steps that can be taken by investors to translate the long-term threats and opportunities associated with toxic chemical issues into prudent portfolio stewardship.

Here are the report’s prototype investor inquiry questions to companies regarding corporate safer chemical policies

1. Has your company adopted any kind of “safer chemicals or safer products” policy committing you to eliminating certain specific toxic chemicals in the products you manufacture or retail by certain dates, even if some of these chemicals have not yet been formally banned or limited by regulators?

2. What procedures do you have in place to identify the chemicals in products or materials you procure from your supply chain? Are there discrete lists of chemicals that you seek to avoid when alternatives are available, that you’ve scheduled for phaseout, or for which you set concentration limits? To develop such lists, do you check just against published lists of regulated chemicals or do you look beyond these lists? Which published lists do you rely on?

3. What procedures do you have in place to identify the chemicals in materials provided by your suppliers? How do you audit or verify this information?

4. What kinds of guidelines or financial incentives does your company provide to its suppliers to encourage them to substitute safer chemicals or conduct research on safer chemicals?

5. What kinds of training or financial incentives does your company provide to its staff to encourage them to substitute safer chemicals or conduct research on safer chemicals?

6. Does your company have any kind of formal “Green Chemistry” Program?

7. Does your company have a policy to globally reformulate products to meet the toughest existing regional or national standards for chemicals? In other words, for example, if the EU or California ban certain chemicals in your products, do you reformulate to meet this standard in all your global markets?

8. In providing financial disclosures to investors, does your company summarize and analyze major new scientific findings in peer reviewed studies or by government sponsored bodies that signal health or environmental risks associated with materials in your products? Do you make futureoriented statements about how such findings, changing regulations, or environmentally preferable purchasing programs may positively or negatively influence the financial value of your company?

9. Do products you manufacture or retail contain lead, mercury, polyvinyl chloride, brominated flame retardants, perfluorinated chemicals (e.g,, PFOA), DEHP (a phthalate chemical), or Bisphenol-A? If so, what steps has your company taken to reduce or eliminate these chemicals from its products?

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