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Thursday, February 8

Value at Risk from Toxic Chemicals in Company Products

Electronics, cosmetics, and pesticide manufacturers are among the many companies that could face loss of market share and access to major markets due to “toxic lockouts” according to a new report just issued by Innovest Strategic Value Advisors, Inc. The New York based investment research firm examines this double-sided issue as well as other risks in four industry sectors (Household and Personal Care Products, Multi-Line Retail, Healthcare Equipment and Supplies and Household Durables) in their most recent analysis just released today.

Innovest’s report, Cross-Cutting Effects of Chemical Liability from Products, offers a pioneering analysis comparing companies’ chemical management policies. “This is an issue for the value investor” said Senior Analyst Heather Langsner. “Those concerned with the long-term viability of the brand and future competitive value of these and other large cap firms will need this information to understand potential challenges to companies retaining and maintaining market share for their products.”

On the upside, growing consumer and market interest in “safer chemicals” is spurring the development of new markets for higher value added and differentiated products. Companies such as Herman Miller, Steelcase, and Marks and Spencer are differentiating themselves in the marketplace with safer products. Chemical companies like DuPont are also entering the green chemistry space, winning recognition for new products even as they face continuing liability and market exclusion risks for their older product lines.

Innovest cites new laws and regulations in California and Europe as driving market transformation. The report also comments that Wal-Mart “will fundamentally alter the marketplace this year by announcing a chemicals screening policy for all its suppliers.” This and other private sector environmentally preferable purchasing programs are likely to create economies of scale that bring down the costs of safer alternative products.

Innovest’s report was commissioned by investment managers representing $22 billion in shareholder assets, who are collaborating as the Investor Environmental Health Network (IEHN) to encourage companies to adopt safer chemicals policies. Ten shareholder resolutions were filed in the 2006 proxy season and thirteen have been filed for the 2007 season.

Copies of the report can be downloaded here (PDF). For further information, listen to an interview with Ms. Langsner on the “online media” page on the IEHN Web site.


Peter Wilkes, Innovest, (212) 421 2000, ext 216