Key Issues for Analysts of the Chemical Industry Now and in the Future

From an analysis of the published financial research on the chemical industry, the sustainability issues of concern in the mainstream investment world revolve first around exposure to "hot-button" issues such as asbestos and genetic modification. There are some indications that this concern may extend to issues that have not yet fully blossomed, such as endocrine disruptors. There is also lingering concern about the potential for European Union rules that, if adopted, would essentially shift the burden of proof from showing that a chemical caused harm to having to demonstrate the safety of a number of chemicals in current use. Among those analyzing the sustainability of the chemical industry, the primary task appears to be to evaluate the companies' ability to deal with complex issues of safety, emission reductions, community relations, and so on.

Looking around the corner, there are a number of sustainability issues that could be financially material in the chemical sector. The research on "body burden," or what trace (and otherwise) substances exist in humans as a result of environmental exposure is perhaps the most troubling in that little is known about how this occurs, especially among populations that are not in proximity to known sources. Look for the level of concern on this issue to rise and for potential societal and policy push-back fuelled by the uncertainty. "Body burden" could serve as a gateway issue to a wide range of actions by civil society on a whole host of specific substances and pathways of exposure. In particular, results that pertain to "body burden" in children have a huge emotional resonance beyond the scope of most issues of "pollution."

If the EU were to adopt the precautionary principle versus demonstrated harm as the standard for regulating the chemical industry, there would be natural pressure for this to spread to other regions, with potential material financial impact on the industry. Even if the EU proposal is watered down or rejected, this issue is not going away. The trend is clearly for activists to force a debate about the safety of chemicals currently in use and there are a number of different mechanisms through which that could take place.

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