“We know what our competition does, we know their facilities, we know where they’re producing products, and we know in what volumes”, says industry rep.
The chemical industry’s frugalness in sharing information about the chemicals it produces has always been a tough nut to crack for outsiders. How can you estimate anything about the issues connected to chemical production if you don’t know what is being produced, let alone in what quantities?
Nevertheless, the non-transparent approach has been a success factor for the industry. It has kept prying eyes and regulatory scrutiny away, urging them to look to other, more well-known polluting sectors instead.
One of the chemical industry’s main arguments for keeping the status quo has been that chemical production is a competitive secret. The reasoning goes that if everyone knew what I produced and how much of it, they could copy my formula and put me out of business!
You might think that there is no way anyone is buying that weak argument, but policymakers have taken it at face value. Even in today’s EU, which is often considered the spearhead of progressive chemicals legislation, many unknowns exist. While companies do need to register chemicals they produce or import into the region (the same is true in the US), they do not need to disclose the extent to which their business model relies on certain substances.
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Suppose a company registers the production or import of Bisphenol A, a substance that interferes with the hormone system and can be damaging to an unborn child. In that case, there’s no way of knowing if 0.01 per cent or 50 per cent of its revenue relies on this harmful substance, which is increasingly regulated around the world.
Outside of the EU and the US, the legally mandated disclosure standards are even weaker.
So far, only a few chemical companies have made any efforts to be more transparent. In ChemScore, our yearly sustainability ranking of the world’s largest chemical companies, we find that only seven out of 50 companies disclose which hazardous chemicals they produce worldwide.
“DuPont has gone to such lengths to hide what the heck it is conjuring up in its plants that it now calls everything, down to the Twinkies in the employee cafeteria, Confidential Business Information”
One company in particular stands out. That’s the Saudi Arabian petrochemical giant Sabic. Not only does it disclose its whole “portfolio” of chemicals it produces, it also reveals the volumes.
When asked why Sabic doesn’t do like, say, DuPont – the American chemical company that has gone to such lengths to hide what the heck it is conjuring up in its plants that it now calls everything, down to the Twinkies in the employee cafeteria, Confidential Business Information (CBI) – Dr. Greg Porta, Corporate Product Stewardship Director at Sabic, recently said:
“We know what our competition does, we know their facilities, we know where they’re producing products, we know their volumes. So to me calling that information CBI doesn’t have a lot of weight in my mind because we know! The competition already knows. So protecting those fundamental pieces of information doesn’t make a whole lot of sense”.
It’s a remarkable finding that Sabic, which is majority-owned by the oil company of the Saudi government, not exactly known for its extensive free speech environment, is the most transparent company in the whole chemical industry. That should tell you something about the state of things.
Obviously, the lack of data in the chemical sector is a big problem for investors, the main target group for our ChemScore ranking. Asset managers are obsessed with financial risk and accurate risk assessment relies on factual information. For this reason, some of the world’s largest and most powerful financial institutions have come together to form the Investor Initiative on Hazardous Chemicals to ask the world’s largest chemical companies to become more transparent. Specifically, they ask the companies to disclose “both the share of revenue and production volume of products that are, or contain, hazardous chemicals.”
And since the secret is already out, at least if we are to believe Dr Greg Porta from Sabic, it’s time to put out that ol’ CBI argument for good. Go on, show the world what it is you’re manufacturing.
