Overview

Toxic Hazards in the Marketplace

Widespread publicity around recalls of lead-painted toys, toxic chemical-contaminated toothpaste and pet food, and vinyl bibs and lunchboxes containing elevated levels of lead underscores the risk to both manufacturers and retailers of “toxic lockout” — having their products banned from the marketplace because of the toxic chemicals they contain. Such lockouts are frequently accompanied by reputational damage and litigation.

Toxic lockout can be the result of tightening government regulations and environmentally preferable purchasing programs established both by government and by the private sector. The European Union has been responsible for much of the tightened regulation of cosmetics, electronics and individual chemicals such as flame retardants containing bromine. In the absence of strong environmental and product safety regulation by the U.S. government, California and other states are increasingly following Europe’s lead, shutting their markets to targeted products and chemicals.

Proliferating private sector environmentally preferable purchasing programs are also shifting market places to safer products. For example, in the health care sector, Kaiser Permanente has awarded contracts to companies based on their ability to provide products like carpets, medical devices, and building materials free of certain chemicals. Wal-Mart, the world’s largest retailer, is working on developing a toxics scorecard for its buyers and suppliers, to encourage substitution of safer chemicals in products.

Companies Must Adapt...or Pay the Price

It is incumbent upon companies to know the chemicals in their products, lest they be caught by surprise. Sony learned this the hard way in 2001, when cadmium found in connecting cables of PlayStations in the Netherlands led to their sale being banned during the year-end holiday shopping season. The cost to Sony of lost sales and establishing a chemicals policy to avoid a repeat has been estimated to be between $100 and $200 million. Following the recall of lead-contaminated toys including Thomas the Tank Engine, toy manufacture RC2 announced large quarterly losses, estimated recall costs of $13-14 million, and its stock dropped by about one-third. The stock of the Canadian owner of the pet food company responsible for marketing contaminated pet foods hit a record low after the company said it lost a “significant” customer.

To build public trust, reduce overhead costs, stay ahead of regulation, and for other solid business reasons, increasing numbers of companies are adopting safer chemicals policies. They are working to identify chemicals in their supply chains, establishing reduction and phaseout goals, and reporting results to the public. They are building their capacities to address these issues, developing policies and practices to encourage safer chemicals practices by their suppliers, and working collaboratively with both industry coalitions and nongovernmental organizations to collaboratively address chemical safety issues.