Ecolab

Q4 2023 Engagement case study: Investor Initiative on Hazardous Chemicals:

Ecolab sells cleaning products and services to restaurants, hotels, hospitals, food and beverage producers and other businesses. The company has a particular focus on energy and water efficiency. Ecolab has developed a range of products and services that help to reduce, and in some cases even eliminate, the use of water in a wide range of industrial applications. In turn

Objectives

Overarching objectives of the initiative:

  • Increase transparency;
  • Publish time-bound phase-out plan of products that are, or contain, persistent chemicals;
  • Develop safer alternatives for hazardous chemicals.

Background

WHEB has been engaging Ecolab on the topic of hazardous chemicals since 2012, to support this work, we have been involved with ChemSec’s Investor Initiative on Hazardous Chemicals (IIHC) since 20211.

Through previous engagements, we were confident that Ecolab had a good understanding of the need to move away from hazardous chemicals. It had, for example, committed in 2021 to: prohibit the development of any new products containing substances of very high concern (SVHC); and, incorporated the SVHC authorization list into its internal chemical ingredient policy in support of an internal target to eliminate the remaining <2% of products using these chemistries.

However, while ChemSec had identified 18 SVHCs for the company to phase out, Ecolab considered there to be only one. It therefore intended to speak to ChemSec to explain that the others were monomers being used as intermediaries (i.e., the monomer is being used to make another chemical) and so did not leave the factory gates. Our priority in 2023 was therefore to better understand the extent to which this has been resolved with ChemSec

Actions

When  engaging collaboratively, WHEB aims to be as active a participant as possible. Having already been involved in a long-term engagement with Ecolab on hazardous chemicals, we volunteered as co-lead for the investor group targeting the company.

We began the 2023 IIHC engagement season by speaking to ChemSec’s experts for an update on the disputed SVHCs. ChemSec had told Ecolab they would agree not to class the monomers in question as SVHCs, should Ecolab state publicly on its website that these chemicals are used only as: a) intermediaries; or b) to produce a polymer in a process that is irreversible under normal conditions.

We then lead an investor call with Ecolab in November 2023, which covered:

  • Ecolab’s discussions with ChemSec about which chemicals to phase out.
  • Proportion of revenue and production volume linked to chemicals identified for phase out.
  • Timeframes and roadmap for phase out and the extent to which it plans to make this information publicly available.

Outcomes

Milestone 3 – Company develops or commits to developing an appropriate policy or strategy to manage the issue.

During the call, Ecolab’s Chief Sustainability Officer (CSO) and Investor Relations contact, explained it has increased its ambitions for SVHC phase-out. More specifically, the SVHC revenue target has decreased to <1% by 2030 and there are intentions to publish the roadmap of how to achieve this in its forthcoming Corporate Sustainability Report report (May 2024). This roadmap will cover three target areas:

  1. Improving system engineering to minimise risks and improve safety.
  2. Investment into research and development
  3. Working with strategic partners to find safer alternatives.

Ecolab has also since spoken with ChemSec and has now met its requirements for the disputed SVHCs to be reclassified by publishing information about how they are used on their website. In addition to this it has also published details of processes used to help minimise their use risk.

While it’s clear that Ecolab is making great progress in some areas, we made suggestions for further improvements. For example, improving disclosure on circularity should be a focus and will help the company improve its ChemSec score on Transparency. The CSO also highlighted ongoing internal discussions to publish Ecolab’s responses to the Chemical Footprint project.

During the call it became clear that Ecolab had not been aware of ChemSec’s marketplace for advertising its safer alternative products and so emphasised the importance of listing its products there.

1 https://www.whebgroup.com/hazardous-chemicals-engagement-case-study-2023