Rose Foundation for Communities and the Environment
February 10, 2006

BENCHMARKING CORPORATE GOVERNANCE OF CHEMICALS IN PRODUCTS

A new report released today [Feb. 10, 2006] by The Rose Foundation for Communities and the Environment and published in the journal Corporate Environmental Strategy provides investors and senior corporate executives with a new tool for measuring corporate progress in producing safer consumer products. The report also offers vignettes of cutting edge actions by major companies to reduce the toxic chemicals in their products.

Companies face growing challenges to their reputations and bottom lines because of toxic chemicals in their products. Scientists are finding chemicals in human blood and breast milk and voicing concern about impacts on the health of infants, children, and fetuses. Environmental health advocates have targeted cosmetics, electronics, and health care product manufacturers. Investment companies are raising questions and filing proxy resolutions.

But there are good business reasons for substituting safer chemicals in products. Such shifts present a remarkable opportunity for competitive advantage, reduced operating costs, increased profits, and enhanced shareholder value.

The benchmarking tool highlights steps companies can take in the following areas: making a corporate commitment to toxicity reduction with measurable goals and public reporting; increased and more effective public disclosure of business risks and opportunities associated with chemicals in products; systematic review of the chemical make-up of products and comparison with published lists of high priority suspect chemicals; and greening corporate supply chains.

The benchmarking tool can be used by corporate managers to design safer chemicals programs. A prime example of such an effort is SC Johnson's trade-marked Greenlist program, which has successfully reduced product toxicity and lowered costs. Other companies highlighted include Samsung, Fujitsu, Nike, Marks & Spencer, and Boots Group, PLC.

Investors can use the tool to screen and identify "best in class" companies and raise questions with corporate management. It is proposed as a "first generation" tool subject to further refinement and upgrading.

"There are sound business reasons for reducing the health impacts of many companies' products. Companies and investors that recognize this dynamic will gain competitive advantage and position themselves to make more money," said Tim Little, Executive Director of The Rose Foundation in Oakland, California. Tim Smith, President of the Social Investment Forum, commented, "It is increasingly important for companies to be transparent in their disclosure of chemicals which adversely affect people and our environment. It is also important for investors, environmentalists and citizen groups to have access to such information so that we can urge companies to be more responsible environmental citizens." Darden Business School Professor Andrea Larson, author of a forthcoming book on corporate innovation and the environment, states "The innovative firms are creating opportunity from what other companies see as only problems. Using green chemistry principles and benchmarking tools they have moved beyond cost savings to top line growth through strategic positioning of high performance products without the health risk."

A condensed form of the report, "Benchmarking Corporate Management of Safer Chemicals in Consumer Products -- A Tool for Investors and Senior Executives" appears in the January-February 2005 issue of Corporate Environmental Strategy, accessible at the Rose Foundation Website. The complete version, "Protecting Public Health, Increasing Profits and Promoting Innovation by Benchmarking Corporate Governance of Chemicals in Products" is also available at the Rose Foundation Website. The longer paper also provides annexes compiling shareholder resolutions on environmental health, environmental health advocacy websites, and pertinent state, local, and European policy enactments.

Dr. Richard A. Liroff, Senior Fellow in the Toxics Program at World Wildlife Fund (Washington, D.C.) is the paper's author.

Short PDF version of the report as it was published in the Corporate Environmental Strategy January/February 2005 issue

PDF version of the full report