The recent INC2 negotiations on a global plastic treaty have focused attention on the entire life cycle of plastics — from plastics’ fossil fuel origins and toxic additives to plastic waste’s persistence in the environment.
Recycling, along with reducing production and consumption, has been a key focus of the talks. A less prominent theme has been the need for innovation in green chemistry solutions for plastics.
The toxic hazards along the life cycle of most plastics have been the subject of two recent reports from the United Nations and the Minderoo-Monaco Commission and recent incidents, such as the East Palestine train derailment underscore the need to rethink the chemistry that fuels our materials economy. Many chemicals upon which our global economy is deeply dependent have been linked to disease and death in humans, biodiversity loss and climate change. Many of these chemistries are pervasive in our environment, leading to significant impacts on vulnerable populations and ecosystems. According to the Department of Energy, the chemical sector is also the largest industrial energy user and carbon emitter in the U.S. And due to regulatory changes, changing consumer demands and litigation, costs are rising for companies reluctant to transition their businesses and value chains to more sustainable approaches.
That’s creating new opportunities for sustainable chemistry in key sectors such as personal care, cleaning and solvents. For example:
- Solugen is engineering enzymes to efficiently produce molecules at room temperature using bio-based feedstocks;
- Genomatica combines advanced bioengineering, powerful computer modeling and proven industrial engineering to make chemical ingredients for a range of materials and products;
- Itaconix polymerizes itaconic acid to make bio-based functional ingredients for consumer products, such as dishwashing tablets; and
- BeautyCounter (recently acquired by the Carlyle Group) has become a leader in the clean beauty space with their comprehensive programs to test ingredients for health and safety.
These companies have demonstrated the viability and scalability of high-performance products and processes designed to compete for customers seeking healthier, safer, better performing products.
To scale this work, definitions for sustainable chemistry are being developed to delineate the changes in the marketplace. "Sustainable chemistry is the development and application of chemicals, chemical processes and products that benefit current and future generations without harmful impacts to humans or ecosystems," according to the Expert Committee on Sustainable Chemistry.
It took over a decade for the finance community to fully understand the need to address risks associated with climate change, and it will likely take years for it to effectively engage on sustainable chemistry.
This multistakeholder committee was convened by the Sustainable Chemistry Catalyst at UMass Lowell and the green chemistry education nonprofit Beyond Benign to develop consensus on actionable criteria for sustainable chemistry to guide decision-making by governments, investors and companies. Sustainable chemistry considers equity, justice, transparency, climate impact, ecosystem impacts and circularity, as well as health and safety impacts along with performance and economic viability. In short, the transition to sustainable chemicals offers holistic solutions to plastics pollution, climate change and biodiversity.
Why now: Major drivers for sustainable chemistry
Three converging market forces are creating both financial risks and opportunities for investors. Litigation risk, which on its own has been a cost of doing business as a chemicals company for decades, is rising as demonstrated by recent settlements for gylphosate and per- and polyfluoroalkyl substances (PFAS). Regulations restricting harmful chemicals are on the rise, and market and consumer demand for sustainable products is growing. As this convergence of major forces strengthens, shifts in the marketplace will occur, and the unexpected financial risks and exposure for investors will be increasingly unsustainable.
Litigation: Companies that fail to phase out or substitute hazardous chemicals in manufacturing or their products are left with future liabilities. For example, Bloomberg Intelligence estimates that 3M’s liability related to PFAS could be over $30 billion. (The company last week reached a $10.3 billion settlement to compensate for its past practices.) The New York Times reported that Johnson & Johnson’s continued use of asbestos cost the company $8.9 billion in litigation in addition to a loss in consumer trust.
Regulations: Upcoming regulations are a source of both chemical risk and opportunity for the growth of sustainable chemistry. In the U.S., for example, many state governments have established restrictions on hazardous chemicals use, and the European Union is proposing far reaching chemicals regulations under its Chemicals Strategy for Sustainability. Nationally, incentives for sustainable chemistry through the Inflation Reduction Act promise billions in tax breaks, loans and support for the purchasing of sustainable chemicals.
Consumers: Consumer demand is creating opportunities for the growth of sustainable chemicals. Certifications, such as the U.S. Environmental Protection Agency’s Safer Choice and GreenScreen, are gaining traction as consumers and institutional purchasers demonstrate their willingness to buy sustainable products. The Chemical Footprint Project has provided a framework for companies to assess which hazardous chemicals are used throughout their organization. (Editor’s note: The project is part of Clean Production Action, the organization represented by one of our authors.) Research commissioned by the Green Chemistry & Commerce Council (now called Change Chemistry), a cross-sectoral, value chain business organization has demonstrated the growth of sustainable chemistry products compared to incumbents in the same category.
Overcoming barriers
Where there are growing pressures for companies to substitute chemicals of concern with safer alternatives, those seeking to scale sustainable chemistries are competing with the incumbency of existing chemistries that are highly optimized, capitalized and integrated into global supply chains. Those traditional approaches also continue to be supported by certain parts of the business, financial and regulatory communities. To overcome these barriers and meet society’s pressing needs, sustainable chemistry needs to be a strategic focus for the finance community.
Actions within the financial community have brought increased attention to the hazards of certain chemistries. For example, the Swedish chemicals nonprofit ChemSec’s Investor Initiative on Hazardous Chemicals (IIHC) has called for greater transparency and management of hazardous chemicals. Five Below, Dollar General and Kroger have faced investor resolutions coordinated by the Investor Environmental Health Network calling for the improvement of these retailers’ chemical safety programs. (Editor’s note: The Investor Environmental Health Network is part of Clean Production Action.)
While there is momentum and positive change on investor collaboratives focused on the problem of hazardous chemical and plastics use, there is much less focus on mobilizing the financial community around accelerating the market transition to sustainable chemistry.
The Sustainable Chemistry Catalyst at UMass Lowell (The Catalyst) and the Investor Environmental Health Network partnered to identify gaps in the financial community’s support for investments that can help scale sustainable chemistry. (Editor’s note: This article’s authors represent both organizations.) Our research found that while progress has been made in building understanding across the financial sector abo
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