Protecting Public Health, Increasing Profits and Promoting Innovation by Benchmarking Corporate Governance of Chemicals in Produ

In coming years, companies are likely to face increasing pressures to remove toxic chemicals from consumer products. These pressures will stem from new scientific knowledge and media and political attention. Corporate and product reputations may face sizeable risks, and corporate bottom lines and investor returns on investment may suffer.

On the other hand, innovative, entrepreneurial companies can gain competitive advantage, increase profits, and grow shareholder value by systematically reviewing chemicals in their products, working with their suppliers to reduce or eliminate product toxicity, and responding creatively to the growing demand for environmentally preferable goods. Corporate directors and executives exercising due diligence in managing the risks and rewards from this evolving environment can promote their companies’ long-term well-being by recognizing that a focused concern on product toxicity is not so much a regulatory compliance cost as it is a potentially value-adding benefit.

This paper reviews these developments, identifies innovative corporate programs to reduce product toxicity, and offers a governance framework of benchmarked “best practices” that investors may use in screening investments, managing portfolio risk, and engaging in shareholder actions. This “best practices” framework can also be used by independent directors seeking to promote their companies’ financial health. Annexes provide summaries of recent shareholder actions, websites of pertinent resources, and overviews of evolving regulatory requirements.