Investors urged to advocate for standardisation of chemical industry regulations

Planet Tracker’s latest research highlights inconsistencies between U.S. and EU toxic release reporting requirements, exposing corporates and financiers to growing regulatory and litigation risks.

• Lack of harmonisation between U.S. and EU toxic release reporting regimes makes it difficult to assess or compare toxic footprints, exposing corporates and financiers to future risk.
• The EU takes a hazard-based approach, whilst the U.S. uses a risk-based approach to regulation. This difference could materially impact future litigation risk.
• Drawing on previous novel entities research, Planet Tracker urges investors to push for a standardisation of regulation and to implement better transparency on toxic chemicals. 

London, December 5, 2024:  Planet Tracker’s report, A Tale of Two Systems: Comparing Toxic Reporting Requirements in the U.S. and EU, uncovers significant differences between the two regions’ chemical regulation frameworks. These discrepancies hinder accurate assessments of toxic footprints and increase future risks for companies and investors.

The research highlights a fundamental difference in approach: the EU employs a hazard-based regulatory model, while the U.S. uses a risk-based model. Planet Tracker warns that this disparity could heighten litigation risks for companies operating in regions with weaker regulatory oversight because of the lack of clarity.

Richard Wielechowski, Senior Investment Analyst at Planet Tracker, comments: “Investors must push for transparency and advocate for a robust standardised regulatory framework to protect themselves. While producers may favour markets with a lower regulatory burden, they risk losing access to higher-regulated markets and could face litigation challenges. Standardisation benefits both environmental responsibility and financial stability”

The report draws on previous Planet Tracker research including Toxic Footprints USA, Toxic Fog, Toxic Footprints-Europe and Novel Entities, a financial time bomb, to highlight the risks associated with the unregulated toxic chemical production. These risks include profit warnings, asset devaluation and dividend cuts.

Using Exxon as a case study, the report highlights gaps in corporate transparency. Exxon disclosed a >10% reduction in its environmental footprint since 2016 but does not provide information about chemical or toxic releases. To combat this lack of transparency, investors can use tools like Planet Tracker’s Toxic Footprints USA and Europe dashboards to monitor companies such as Exxon The report emphasises the role and responsibility of investors in driving transformative change within the sector. By pushing for standardisation and enhanced transparency, investors could have more influence than regulators in reducing toxic chemical impacts while safeguarding financial interests.

This report follows Novel Entities, which was part of a series by Planet Tracker analysing Earth’s nine critical boundaries and is available here. 

Read the full report here.

For more information, please contact:

Izzy Schaw Miller, ESG Communications | t: +44 7905 619881 | izzy@esgcomms.com

About Planet Tracker

Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.