Reducing Companies Chemical Footprint An Investor Perspective

Transcription

1 Reducing Companies Chemical Footprint An Investor Perspective Richard A. Liroff, Ph.D Executive Director Investor Environmental Health Network

2 Outline Prominent product chemical episodes Opportunities for companies Drivers of risks/opportunities Company safer chemicals policies Chemical footprinting Sustainable Investment metrics

3 LUMBER LIQUIDATORS STOCK HIT

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6 Key Findings Theme 1: Market Growth Growth Rates of Safer Chemistry vs Conventional Market Sector Building Materials Chemistr y Personal Care Cleaning Products Safer Chemistry Market Conv. Market Time Period +2000% % % % % CAGR (US) % CAGR (global) 5 +20% +1.5% CAGR 6 CAGR We have seen 6-10% annual growth in the natural products sector, compared to near-zero growth for conventional products. Martin Wolf, Director, Sustainability & Authenticity, Seventh Generation Sales Highly Advantaged by Sustainable Chemistry 16 10% 8% 6% 4% 2% 0% 4.3% 4.8% 3.4% 1.7% 1.7% 7.1% 10.0%

7 Key Findings Theme 2: Trends in Capital Flow Investments in Safer Chemistry Sector Chemical s Chemical s Building Materials Advanced Materials Investment Type Safer Chemistry R&D Safer Chemistry R&D Research Grant Investment (Various) Investment in Safer Chemistry 57% of chemical companies in MSCI World Index invested in green chemistry R&D % of average chemistry company s R&D budget 18 $3 million for USGBC research of health hazards, from Google 19 $4.9 billion invested in advanced materials industry; can help drive green chemistry 20 Time Perio d % of members believe the ROI of green chemistry R&D is greater than for standard investments. 25 American Chemistry Society (2013 survey) US Patents Issued for Sustainable Chemistry

8 DRIVERS OF CHANGE SCIENCE PUBLIC CONCERN MEDIA ATTENTION REGULATORY CHANGES (EUROPE/STATES) CORPORATE SAFER CHEMICALS POLICIES

9 STATE ACTION

10 Strategic Implications for Companies/Investors TOXIC LOCKOUT REPUTATIONAL RISK LITIGATION RISK GAIN MARKET SHARE FROM INNOVATIVE PREFERRED PRODUCTS

11 COMPANY SAFER CHEMICALS POLICIES Restricted Substances Lists (RSLs) Certifications Increased Disclosure Benchmarking Progress Sectoral Collaborations Public Policy Advocacy

12 Walmart Walmart announces Sustainable Chemistry Policy (2014) Targets 8 chemicals for phase-out (2014) Commits to public disclosure of progress Screens chemicals through UL WERCsmart Promotes public disclosures by suppliers Walmart announces 95% reduction of Highest Priority Chemicals, naming them. (2016)

13 Target Ingredient transparency (including fragrance) personal care, baby, cleaning products by 2020 No phthalates, 2 parabens, formaldehyde (incl. donors), NPEs in these categories by 2020 No PFCs, toxic flame retardants in textiles by 2022 Invest up to $5 million in green chemistry innovation by 2022

14 SC JOHNSON GREENLIST PROCESS PROGRESS

15 SELECTED COMPANY SAFER CHEMICALS POLICIES

16 BIZNGO PRINCIPLES FOR SAFER CHEMICALS Know Chemicals in Products Assess and Reduce Hazards Continuous Improvements Support Public Policies Promoting These Principles

17 Chemical Footprint Concept Evolution Benchmarking Corporate Management of Safer Chemicals in Consumer Products A Tool for Senior Executives (2005) Don t Know Your Company s Toxic Footprint? Ignorance Will Not Be Bliss (2009) The Benefits of Coming Clean on Your Company s Toxic Footprint (2009) Getting a Grip on Your Company s Toxic Footprint (2009) How Companies are Committing to Reduce Toxic Footprints (2009) An Updated Benchmark for Corporate Green Chemistry Practices (2009)

18 HOW INVESTORS USE CFP SURVEY DATA Insight into chemical management and supply chain management Proxy for good corporate governance practice Engagement those that do not address the issue can find themselves a target Investment decision ideas

19 Annual Survey 20 Questions pts CFP Assessment Framework a project of Clean Production Action 19

20 a project of Clean Production Action 20

21 a project of Clean Production Action 21

22 $2.3 trillion in assets under management a project of Clean Production Action 22

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24 GOJO 2020 Sustainable Value Strategies and Goals 5 Year Strategy Goals Innovate to Create Sustainable Value Double global sales from products with 3rd party certifications Establish and maintain an industry-leading sustainable chemistry policy, including reducing our Chemical Footprint by 50% Source reduce packaging material by 15% Elevate Public Health & Well-Being BHAG: Bring Well-Being to One Billion People Every Day Be the most recognized advocate for well-being through hygiene in our industry Steward a Thriving Environment Recover and reuse or recycle 50% of dispenser materials from the value chain 90% of GOJO Strategic, Preferred and Collaborative suppliers meet GOJO Sustainable Value Responsible Sourcing Criteria GOJO distribution operations powered by renewable energy Foster a Culture of Sustainable Value Core processes are infused with SWOW to create Sustainable Value All employees are engaged in SWOW

25 Chemicals= ESG Sustainability Issue Environmental Social Governance

26 2,000 Study Meta-Analysis Business case for ESG investing is empirically well founded ESG outperformance opportunities exist in many areas of the market (Journal of Sustainable Investment and Finance, 2015)

27 Mainstream Finance Responds Harvard Business Review Rating of 100 Best-Performing CEOs, 2015: --20 percent weighting for company ESG performance --80 percent weighting for long-term financial performance. BlackRock ($4.7 Trillion AUM): -- ESG is not about saving the planet or feeling good. We view ESG excellence as a mark of operational and management quality. -- Over the long-term, environmental, social and governance (ESG) issues ranging from climate change to diversity to board effectiveness have real and quantifiable financial impacts (BlackRock CEO letter to Fortune 500 CEOs)

28 ESG data: 700 ESG indicators from companies and third parties on more than 11,000 companies

29 Sustainability Accounting Standards Board (SASB) mission: set industry-specific standards for corporate sustainability disclosure material, comparable, useful for investors

30 Aligning SASB and the Chemical Footprint Project CFP Components Management Strategy ( M ) Chemical Inventory ( I ) Footprint Measurement ( F ) Public Disclosure and Verification ( D ) 30

31 Accounting Metrics (Building Products) Describe chemical management processes: Hazard-based, risk based, other? (M1, M2) Use RSL Screening Tools? (WHO? IARC? Others?) (I1, I2, F4) Life-cycle stage chemicals management: product design through to marketing? (M3, I3, I4, I5, I6) Prioritize chemicals for reduction/elimination? Incorporate alternatives? Material substitution assessments? Greenscreen or DfE? (F1, M2, F5) Third-party certification? (D4) Timeline and progress? (F1, F2, F3)

32 SASB Categories with Safer Chemicals Metrics Household and Personal Products Building Products and Furnishings Apparel, Accessories and Footware Toys and Sporting Goods 32

33 QUESTIONS? Richard Liroff