7 minute read
Chemicals management is starting to make its mark in corporate sustainability reporting. How can software help?
Incorporating chemicals management information into an organisation’s sustainability reporting activities is not easy. Vanessa Zainzinger looks at how software used in chemicals management can help with the task of handling the data required.
Sustainability has never been more important for a company’s reputation, its resilience and its bottom line. As public awareness and concern over the climate emergency has grown to new heights, society is increasing its expectations of the role businesses should play in today’s volatile environment. And the investment community’s widespread adoption of environmental, social and governance (ESG) reporting as a mandatory risk assessment tool has turned sustainability reporting from an optional undertaking to an essential part of corporate success.
Historically, firms have focused their sustainability reports on impacts relating to climate change, water use and biodiversity loss. More recently, however, chemicals management has begun to play a vital role in corporate sustainability programmes.
This is not least due to more sustainability benchmarks – such as the Dow Jones Sustainability Index, the Chemical Footprint project and various ecolabels – addressing chemicals management. Most corporate sustainability reporting performed via the Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI), or ESG reporting standards incorporates some degree of chemical management information. And chemical use directly impacts multiple UN Sustainable Development Goals (SDGs) related to human health, climate change, aquatic health and ecosystem preservation.
But incorporating chemicals management information into an organisation’s sustainability reporting activities is no mean feat, says Julian Moffatt, director of environmental solutions at Chicagoheadquartered software provider, VelocityEHS.
There is a “vast quantity of data that needs to be collected and analysed to make intelligent decisions and support sustainability reporting objectives,” says Mr Moffatt. Even small-to medium-sized organisations can have tens of thousands of distinct products circulating throughout their facilities as part of their normal course of business.
“Simply tracking these products can be daunting enough, but when you factor in the need to cross-reference ingredients against a litany of chemical safety standards and regulatory lists, the challenge can become overwhelming. This is further compounded by the need to track chemical releases and emissions.”
The scope of this challenge, he says, makes it “extremely difficult, if not downright impossible, to achieve without software”.
Finding the right systems Software tools can make the data challenge seem surmountable from several angles. For one, they can be used to quantify greenhouse gas emissions and ecosystem impacts resulting from chemical use and the release of culprits such as ozone-depleting substances and chemicals that are toxic to aquatic and terrestrial ecosystems.
They can also automate critical inventory tracking and cross-referencing against a vast chemical product library. Some VelocityEHS tools directly support the completion of key reports required under environmental regulations, such as the US EPA’s Toxic Release Inventory (TRI) and Tier II Emergency and Hazardous Chemical Inventory reports, as well as Greenhouse Gas (GHG) reporting, according to Mr Moffatt.
Initially, however, chemical management [Ron] from a sustainability perspective is for many an unfamiliar and [Ron] a new challenge that firms are not sure how to approach, says Ron Huijsman, co-founder of sustainability management systems consultancy, Huco. As a result, companies differ greatly in their approaches to integrating chemicals management into sustainability reporting programmes, and the way they use software to do it.
“Using spreadsheets and disjointed tools and systems is still more the rule than the exception,” says Mr Huijsman. “Companies will, for instance, use different systems for federal and state reporting (in the US), or for chemical compliance and for sustainability reporting, even if one is an element of the other.”
Even large companies can struggle with finding the right system to keep on top of the plethora of reporting initiatives, sustainable development goals and carbon disclosure projects that affect their sustainability and chemical reporting duties, Huco found when benchmarking oil and gas companies on their climate change reports.
“Some larger companies that are well established and think they have this
under control don’t even realise when things go wrong because their reporting systems are very inefficient,” Mr Huijsman says. “Companies may need to focus on chemicals management and hazard communication, climate change and water usage all at the same time. If you look at all the sustainability topics that could be relevant to you, then the question is: would you like to manage these different topics in a dispersed system, or an integrated one?”
The larger the organisation, the more likely they are to have overlapping, or even competing, software applications in place, Mr Huijsman found, and speculates that this is a strategy to avoid gambling on one solution. Smaller companies are more likely to use integrated systems, often via a service provider rather than in-house.
Ikea’s approach Others are making a point of weaving a chemicals management system as tightly as possible into their sustainability web. Furniture giant Ikea used to require suppliers to complete paper-format material declaration forms against its comprehensive list of restricted substances, before switching to software when this was no longer tenable.
Now, the company uses the regulatory compliance tool BOMcheck as a database to monitor and report on chemicals of concern in its supply chain; a means to collect materials and compliance declarations and automatically submit dossiers; and a collaboration platform to provide regulatory training and chemicals guidance to its suppliers.
BOMcheck was deliberately priced cheaply and designed for intuitive use in order to allow it to cascade down the whole supply chain, even to the smallest players, says Dr Aidan Turnbull, senior director at Sphera and BOMcheck. “Many suppliers do not have chemicals experts in their companies,” he says. So, when companies or software solutions send a list of chemical names and ask the supplier to disclose a substance is present in its parts, they may struggle to investigate. contain these substances and what applications the substances are used for,” Dr Turnbull says. “Rather than ask about hexabromocyclododecane, for instance, explain that it is a flame retardant which is used in three types of polystyrene and backings for industrial textiles.”
Frank Arcadi, Sphera vice president of product stewardship, adds: “It’s not just about providing software. Chemicals management is new to many companies and they need a roadmap to guide them.”
Substances in the BOMcheck full materials declaration tool are colour-coded to show chemicals that are regulated around the world today and those at risk of becoming so in the next few years.
Tools like these are a sign of the times. Beyond Ikea, corporates are increasingly relying on chemicals management software to pre-screen substances and make better, sustainable choices. Says Dr Turnbull: “Companies are moving away from a reactive right-to-know approach and towards using software to proactively approve chemicals before they come to site.”
Future-proofing sustainability reporting The need for a proactive approach to chemicals management and sustainability reporting is becoming impossible to ignore, says Sushma Kittali-Weidner from Germany-headquartered software provider iPoint. “The need for sustainability strategies is already driving some companies to unifying their processes for product compliance, material compliance and data management,” she says. “When you converge this data you get a holistic picture of what, for instance, contains formaldehyde. Then you can take it to a strategic level.”
Echa’s Scip database for information on substances of concern in articles or complex objects was the key driver behind Ikea’s decision to introduce a holistic software approach. Soon, it will force many others down the same road, Ms Kittali-Weidner predicts. And those who have treated their chemicals management as a second thought in the sustainability reporting programme will find themselves lagging behind.
“A lot of our customers who used to be more reactive (to chemicals management) are now forced to act on Scip reporting,” she says. For now, Scip’s focus, which was established under the waste framework Directive (WFD), is on helping recyclers. But people are starting to recognise the larger goal of the database: to provide transparency to consumers, Ms KittaliWeider says.
Sustainability reporting – and the role that chemicals management plays in it – looks certain to rise in importance. Scip is touted for expansion to cover other European regulations. The EU Green Deal is one of many initiatives pushing corporates to come out of the pandemic with a greener approach. The circular economy action plan even puts a focus on digital solutions, like blockchain.
VelocityEHS’s Mr Moffatt says the investment community will continue to be the most important driver for comprehensive sustainability reporting over the next few years because this directly impacts organisations’ prospects for future growth.
“Software will ultimately be relied upon to manage these programmes by close to 100% of medium-to-large organisations due to the inherent complexity of manual chemicals management processes, and due to the growing importance of accurate sustainability metrics,” he predicts.
Put all this together and there is a perfect storm, says Sphera’s Mr Arcadi: “We’ve seen spikes in the sustainability movement come and go but this time this is here to stay.”
