Toxic Chemicals in Products
Investor Risks and Opportunities
February 28, 2008
Blue Summit Wealth Management hosted its first of a series of workshops covering the topic of toxicity in products and in the supply chain of various companies. Attendees learned of the potential risks that these harmful substances pose to their investments as well as the exciting opportunities in "green chemistry" and companies incorporating more environmentally efficient practices.
Some of the risks involved include regulatory risks, such as those being imposed in California right now, involving the ban of mercury-filled thermostats. Another timely issue facing legislative blockades revolves around flame retardants being found in new-born ambilical cords and breast milk, now being linked to birth defects and developmental complications.
In Europe, over 1,200 toxic chemicals have been banned from the shelves while American consumers have become the world's largest importers of such elements. The prospect of market exclusion, or "toxic lockout," is a real risk to many companies today.
Another serious risk for companies relates to their reputation. Mattel's toy recalls during Christmas time makes for a poignant recent example of how detrimental such a lack of product safety guidelines can be for a company's bottom line.
As investors, we're not just trying to avoid risk; equally important are the tremendous opportunities that come with investing in "clean" companies.
Building materials are responsible for 75% of PVC use (polyvinyl chloride or vinyl), the worst plastic from an environmental health perspective, posing unique and major hazards in its manufacture, product life, and disposal. Because of the increased awareness of these issues, in addition to the increasing availability to safe alternatives, the market of PVC-free building materials is exploding along with the green building industry as a whole.
Other more mainstream consumer products such as baby bottles made without bisphenol A, or cosmetics made without CMRs (carcinogens, mutagens, or reproductive toxins), or fashion that bans over 170 chemicals form their production line are flying off the shelves.
All of this not to mention the big head-liner this year: Clorox's rollout of their natural cleaning line, called Green Works. Clorox representatives noted that, "the overall $2.7 billion market for household cleaning products isn't growing - but the green niche is."
Seventh Generation, for example, enjoyed 28% growth in 2006 and is approaching $100 million in annual sales.
Our next workshop will be in presented along with the Environmental Health Coalition, a San Diegobased advocacy group focusing on fighting toxic pollution, protecting public health, and promoting environmental justice.