Research: Product-level sustainability risk looms large for multinationals

Key findings

• ‘Forever chemicals’ in the spotlight: A surge in new regulatory proposals and investor initiatives have taken aim so-called “forever chemicals,” which are man-made compounds that do not degrade naturally in the environment. Traces of these chemicals, such as PFAS, have been found to leach into soil, air and water and significant exposure has been linked to significant health risks for humans.
• 5 widely used chemicals subject to over 1,600 regulatory developments: Five commonly used chemical groups – perfluoroalkyl and polyfluoroalkyl substances (PFAS), bisphenol A (BPA), ortho phthalates, medium-chain chlorinated paraffins (MCCPs) and polyvinyl chloride (PVC) – are the subject of over 1,600 current and pending regulatory developments globally.
• Ortho phthalates underscore hidden risks in supply chain: Less well-known chemicals, like ortho phthalates, which are used in everything from food production materials and packaging to medical devices, are currently in the crosshairs of more than 400 different regulatory initiatives. Three hundred of these were introduced in 2019 alone.

Executive summary

A perfect storm of environmental crises, pandemic and economic uncertainty has spurred a global reckoning on public health, sustainability, worker safety, wellness and corporate responsibility. As a result, regulators around the world are sharpening their pencils to launch new environmental, social and governance (ESG) and environmental, health and safety (EHS) requirements and the world’s largest corporations, institutional investors and government leaders have all put their voices and big dollars behind headline-grabbing sustainability initiatives.

While most of these initiatives have focused on topline environmental and sustainability targets, such as achieving net zero status by 2025 or participating in the United Nations Global Compact, few have gone deep enough to address the ESG risks enmeshed in their supply chains. The individual products we use every day – from footwear and apparel to cosmetics and housewares – are loaded with compounds and chemicals that are starting to come into the crosshairs of ESG regulations worldwide. Few companies that produce these products are ready for the looming financial, reputational and operational risks that will come along with product-level ESG regulation.

To help put this growing constellation of risks in perspective, we have scoured our Scivera library of Chemical Hazard Assessments and our Chemical Watch database of global chemicals regulation to identify the top five chemical families widely used in products ranging from clothing to cosmetics to home goods to packaging that are currently facing the greatest regulatory scrutiny on a global basis. Based on this analysis, we found a total of over 1,600 global regulatory initiatives currently pending that will create serious challenges for industries including: packaging, cosmetics, children’s products and toys, electronics, textiles and furniture.

Analysis methodology

To conduct this analysis, Scivera toxicologists reviewed the Restriction Roadmap issued by the European Union and other global regulators to identify chemical groups which are likely to be subjected to the largest number of new regulations, along with the product families and industries in which they are used most frequently. These chemical groups were then cross-referenced against the Chemical Watch database of global chemicals regulation to determine the total number of current and pending regulations affecting each chemical group globally, and analyzed by Chemical Watch and Enhesa’s team of regional chemicals management experts.

The analysis included global, national and regional laws, regulations, proposals and policy recommendations that have either been proposed or come into force over the last 10 years.

Results

Regulatory authorities around the world have increasingly trained their focus on putting strict controls on the use of chemicals that have been found to pose human health risk. Within that broad universe of chemical management regulation, a handful of widely used chemicals and chemical groups continue to claim the lion’s share of attention.

Table: Global regulatory developments on some hazardous chemicals

PFAS in the Spotlight

Based on our analysis, perfluoroalkyl and polyfluoroalkyl substances, commonly referred to as PFAS, are currently leading the way in global regulatory scrutiny. This well-known chemical group has been used since the 1950s in everything from nonstick cookware, water-repellent clothing, stain-resistant fabrics, packaging, flame retardants, cosmetics and more. Colloquially known as “forever chemicals,” PFAS does not degrade naturally in the environment, so traces have been found to leach into soil, air and water and significant exposure has been linked to a host of health risks for humans.

To-date, roughly 1,200 global regulatory initiatives have been launched to regulate PFAS, with 800 of these emerging over the last three years. In the U.S., in 2022 alone, a total of 145 new bills governing the use of PFAS were proposed, resulting in 1 federal law and 16 new laws in 11 US states. Between 2020 and 2021, 38 pieces of new legislation were passed.

Recent legislation has been focused primarily on the use of PFAS in firefighting foams, children’s products, furniture and textiles. Recently, U.S. state legislatures and state agencies have been preparing to expand that scope to include the use of PFAS in more applications, including cosmetics and personal care products, food packaging materials, ski wax and other consumer products. While California, Maine, New York, Washington, and Vermont are leading the charge, at least 15 other states have some form of laws or regulations restricting the use of the chemicals in various products. Colorado and Maine have banned several categories of products containing PFAS altogether.

Internationally, perfluorooctanoic acid (PFOA) – a “branch” of chemical groups under PFAS, has been named as a persistent organic pollutant (POP) under the Stockholm Convention, which has been ratified by 152 and 31 EU-member states and jurisdictions who adopt EU regulations. For many of these countries, any restrictions required by the Convention will automatically or will soon become part of their national law. In addition, Denmark, Germany, the Netherlands, Norway and Sweden – with the support of France – have initiated their own studies on PFAS and are expected to propose new restrictions to the European Chemicals Agency in February 2023.

One Word: Plastics

While PFAS has received a great deal of media attention recently, the remaining chemical groups included in this analysis have not received the same level of public scrutiny. Yet these chemicals – bisphenol A (BPA), ortho phthalates, medium-chain chlorinated paraffins (MCCPs) and polyvinyl chloride (PVC) – which are ubiquitous in consumer-packaged goods, electronics and children’s products, are currently the subject of over 600 different regulatory initiatives around the world.

With applications ranging from the manufacturing of plastics to the development of lubricants and coolants to building and construction, these are some of the most widely produced chemicals in the world. Ortho phthalates, for example, which are plasticizers used in everything from food production materials and packaging to medical devices, are currently in the crosshairs of more than 400 different regulatory initiatives. Three hundred of these were introduced in 2019 alone as a number of European countries introduced restrictions on the use of the chemical in electrical and electronic products and food contact materials. This year, the U.S. introduced 37 different bills addressing the use of ortho phthalates and 10 states introduced potential restrictions or bans on the substances. Maryland and California have already banned the substances use in cosmetics.

Similarly, some 201 new regulatory initiatives have been introduced to address the use of BPA in products across the Americas, Europe and Asia. MCCPs and PVC have seen lower volumes of legislative activity, but they remain in the spotlight. The EU is currently evaluating whether to restrict the use of MCCPs in electronics in a proposal slated to go into effect after 2024. PVC has been banned in certain packaging materials in South Korea, New Zealand and Taiwan and the U.S. is currently considering designating the material as hazardous waste under the Resource Conservation and Recovery Act, which will introduce a host of new requirements for manufacturers.

Discussion

As the world starts to get serious about sustainability and the impact that these chemicals have on our health and the health of our planet, thousands of everyday products are coming under greater regulatory scrutiny. And that’s going to pose big challenges for the corporations that produce and distribute these products globally.

Not only will they need to retool and reengineer decades-old manufacturing processes, they will need to navigate a labyrinthine global network of national and regional regulations that are rolling out at break-neck pace with each passing day. Simply keeping pace with new requirements and managing supply chains accordingly is poised to become the operations management challenge of our time.

The first step for many companies in navigating this transformation will be awareness. While the major chemical manufacturers and distributors at the center of these issues are likely aware of many of these pending regulations, the producers of the end products that use them are often completely ignorant to the chemical risks hiding in their supply chains. Now is the time to start asking the tough questions and digging deep into the detailed chemical composition of everything from apparel to packaging to make sure ESG goals are not derailed by hidden risks.

Authors

This Enhesa Research Brief was authored by Lori Bestervelt, Ph.D., Global Operations Lead, Scivera, an Enhesa company; Colleen McLoughlin, Ph.D., Director, Toxicology, Scivera, an Enhesa company; and Nhat Nguyen, Chief Analyst, Chemical Watch, an Enhesa company.