Portland Business Journal Spotlights CFP

Chemical Footprint: A new sustainability scorecard to help investors

4/16/2015   Colin Price, Jonas Kron, Susan Baker   Portland Business Journal   Press  

Portland Business Journal Spotlights CFP image

Heard of a Carbon Footprint? Well, another foot is dropping. The Chemical Footprint Project (CFP) provides the first-ever common metric of its kind for publicly comparing how companies manage chemicals. The initiative uses a benchmarking method, or comparison against an established set of criteria, to compare the overall performance of companies. Similar to Carbon Footprinting, Chemical Footprinting can apply to any business sector.

Hazardous chemicals can impose heavy burdens on workers, communities and the environment in the form of health care costs, lost productivity, and decreased quality of life — similar to many of the impacts of climate change. A recent report from the United Nations Environment Program documented hundreds of millions dollars of costs companies can incur due to toxic chemicals in products and supply chains.

From an investor perspective, hazardous chemicals present risks for companies across a broad range of industry sectors. Yet this is an important data gap for investors, who lack consistent, comparable information on the chemical risks companies carry. As costly chemical issues come up in the news, the public and investors are increasingly interested in understanding the “chemical risks” of companies and how they are meaningfully managing the toxic chemicals in their products and supply chains.

Asset managers like Trillium Asset Management, LLC, who recently merged with Portland-based Portfolio 21, work to integrate environmental, social, and governance factors into the investment process as a way to identify companies best positioned to deliver strong long-term performance.

Trillium clients — including Oregon Environmental Council, Grace Memorial Church Foundation, and First Unitarian Church of Portland are all now integrating environmental, social, and governance issues in their investment decision-making. Universities and public retirement systems, which control about 48% of investment capital according to the Rockefeller Foundation, are facing increasing public pressure to do the same.

With Chemical Footprint data, the growing class of investors who integrate environmental, social, and governance criteria or utilize impact investment strategies will be better equipped to identify leaders who are producing and using chemicals in ways that minimize impacts to human health and the environment, and engage with those companies seen lagging their peers.

The momentum in favor of integrating environmental, social, and governance issues has accelerated in recent years creating higher demand for meaningful data. The Chemical Footprint Project will help meet that demand. When fully operational it will give investors, companies and the public material information about chemicals management.

This guest column was contributed by Oregon Environmental Council's Colin Price and Trillium Asset Management's Jonas Kron and Susan Baker.