News Brief

UN: Manufacturers Turn Blind Eye to Hazardous Chemicals At Their Peril

Knowing the chemical ingredients in a product’s supply chain just makes good business sense, according to a United Nations report.  

Lowering Costs Through Supply-Chain Management

Having already spent the time and energy needed to collect information from its supply chain, Seagate is now able to respond to regulatory changes at relatively little cost.

Credit: BizNGO
Companies that know more about the chemicals in their products and in their supply chains avoid big financial losses and are better able to stay ahead of market demands, finds a report from the United Nations Environment Programme (UNEP).

The report warns of some of the potential consequences for companies that don’t take it upon themselves to identify hazardous chemicals in their products. In one horror story from 2009, tens of thousands of consumers stopped buying—and thousands of stores stopped selling—Johnson & Johnson’s baby products after formaldehyde was found in some of them. In China, the company’s market share dropped by almost 10%. And SIGG USA, a water bottle manufacturer, was forced to file for bankruptcy in 2011 with $13 million in liabilities after it failed to disclose levels of Bisphenol A (BPA) in its product.

Mark Rossi, Ph.D., co-director of Clean Production Action, which helped to prepare the report, said such examples are just the beginning of the potential “costs of not knowing.” Companies that survive must then reformulate the product in a crisis environment and recover from a supply-chain disruption.

In contrast, companies that proactively identify and manage the chemicals in their products may spend more money up front but are then better positioned to handle shifting regulatory changes or market demands. The report gives the example of Seagate Technology, a hard-drive manufacturer that created an internal system for collecting ingredient information from its suppliers. Now, whenever a new chemical of concern emerges, Seagate doesn’t have to vet every supplier one at a time; instead, it simply checks its database.

“The most immediate benefit [of identifying supply-chain ingredients] will be being out ahead of regulatory requirements,” says Rossi, “but the process also gives a company a leg up on beginning to eliminate chemicals of concern.”

Published March 3, 2015

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Comments

March 9, 2015 - 10:39 am

This is the power in understanding "front of the pipe" solutions.  Many product manaufacturers have found cost beneficial ways to reduce waste and toxins burdens by plain old payng attention and assessing the real burdens and benefits of thier ingredient stream.  Glad to see this report, and glad to share it.