Chemical hazard disclosure key to managing liabilities, says industry-led funding initiative
Companies facing significant financial risks from legal challenges
Enhesa
16 May 2025
The Safer Chemistry Impact Fund(SCIF) has called on investors to use robust chemical hazard disclosure tools to better manage the immediate financial risks associated with companies under regulatory pressure or facing potential legal liabilities from the use and production of hazardous substances.
The industry initiative, which aims to generate funds to help companies transition to safer chemicals, assessed several NGO tools such as ChemSec’s ChemScore ranking, Toxic-Free Future (TFF)’s retailer reportcard and Clean Production Action (CPA)’s chemical footprint project (CFP).
It found that many of the tools, with some modifications, "hold the potential to provide investors with information upon which to evaluate portfolio companies’ risk profile with regard to high hazard chemicals". SCIF recommends investors integrate and expand chemical hazard disclosure into their portfolio management, including:
using third-party verified reporting tools that assess chemicals of concern and track the transition to safer alternatives;
integrating chemical hazard assessment into investment decisions;
engaging with companies on chemical hazard reduction;
supporting the development and adoption of better reporting tools;
building a community of best practice among investors; and
requesting that finance rating agencies include chemical hazard reduction and disclosure in their ratings.
"By embracing robust data management and reporting systems, companies can demonstrate a commitment to transparency, building trust with investors and fostering informed decision-making," said the report.
Legal risks
Several companies have faced significant legal costs recently over their alleged use of hazardous chemicals in their products, with particular concern focused on per- and polyfluoroalkyl substances (PFAS).
ChemSec recently warned that chemical companies are yet to deal with "peak litigation" despite the current volume of lawsuits relating to the use of the persistent chemicals. Chemical manufacturing giant BASF is facing more than 4,500 PFAS-related lawsuits, while multinational conglomerate 3M is contending with nearly 6,000.
In 2023, 3M agreed to pay up to $10.3bn over 13 years to resolve a consolidated class action lawsuit claiming its PFAS-containing firefighting foam products contributed to the contamination of the public water supply in the US.
Chemical manufacturers Chemours, DuPont de Nemours and Corteva also agreed to pay nearly $1.2bn to settle similar PFAS-related claims.
But the financial risks go beyond PFAS. For example, multinational consumer products conglomerate Johnson & Johnson had to propose payment of $8.9bn to settle lawsuits that allege the company’s talc-containing baby powder causes cancer.
