Fiduciary Guide To Toxic Chemical Risk

Apr 4: According to a release from the Investor Environmental Health Network (IEHN), in the wake of costly litigation, product sales bans, and reputational damage arising from asbestos, toxic materials in cosmetics and toys, and Teflon-related chemicals, U.S. investors are becoming increasingly wary of toxic chemical risks -- in products, in supply chains, and in their own portfolios. The number of companies facing 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.

In response, IEHN, which represents 20 investment organizations with $22 billion in assets under management, released the 52-page, Fiduciary Guide to Toxic Chemical Risk. 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.

The report is authored by Jane Ambachtsheer, Mercer Investment Consulting, Jonas Kron, Attorney at Law, Richard Liroff, Investor Environmental Health Network, Tim Little, Rose Foundation for Communities and the Environment, and Rachel Massey, Global Development and Environment Institute.

The IEHN primer for institutional investors concludes, “Researchers are increasingly detecting scores of these substances in human blood, breast milk, and amniotic fluid, and scientists are increasingly recognizing the particular vulnerability of fetuses and young children to them. These and related findings are contributing to rising awareness that the strategic choices businesses make about managing toxic chemicals in their products can have major financial consequences. As DuPont has been discovering with PFOA, a chemical used to produce Teflon and stain and grease repellants, consumers and industrial customers may abandon product lines over toxicity concerns. At the same time, liability litigation and government enforcement actions may further undermine bottom lines and reputations.”

IEHN is a collaboration of investment managers encouraging companies to adopt "safer chemicals" policies for cosmetics and other products. Members of the network are concerned that companies will be locked out of markets and suffer financial and reputational damage, if they don't systematically identify and eliminate hazardous chemicals in their products.

Access a release from IEHN (click here). Access the complete report (click here). Access the IEHN website for additional information (click here). [*Toxics]