One of the trends driving corporate interest in sustainable development is growing consumer concern - not about the welfare of the planet, but about themselves and their own health. Consumers are becoming more "risk averse", are asking more searching questions about what is in products and how they are made, and are willing to take risks with products only if, as with mobile phones or cars, they see clear personal benefits.
At the same time, environmental groups have shifted their focus away from governments to where the real power to change lies - the large corporations eager to protect the reputation of their brands. Shareholder pressure on companies, meanwhile, is increasing, through socially responsible investment and indices of ethical performance such as "FTSE4Good" (ENDS Report 318, p 4 ).
This was the message to an Environment Council seminar on stakeholder accountability earlier this year by Greenpeace's then director of political and business affairs and now executive director, Stephen Tindale. It is a message with particular resonance for retailers, who face the sharp end of public opinion.
Some retailers now believe that hazardous substances in products could be the biggest consumer issue in this arena since the storm broke over genetically modified crops four years ago.
The parallels are striking. Like GM foods, hazardous substances in products that are eaten - or breathed in or applied to the skin - are regarded as a health risk. Assurances from the Government or companies supplying the products are regarded with scepticism. Consumers cannot see any benefits associated with such substances except for the companies that make them. And environmental groups are playing a dual role, publicly exposing which retailers use hazardous substances in their products while quietly advising the stores on alternatives.
Last year, Greenpeace and Friends of the Earth (FoE) wrote to major retailers asking about their policies on a number of chemicals for which there is evidence of bioaccumulation or endocrine disruption, including brominated flame retardants, phthalates and bisphenol A (ENDS report 307, p 23 ). FoE ranked retailers' performance by placing them on a red, amber or green list.
Those on the red list, such as Boots and Mothercare, were warned they might face action such as protests at AGMs and consumer boycotts.
FoE also issued a report warning that advances in genetics over the next ten years will enable individuals to know that they may be unusually susceptible to diseases or allergies induced by exposure to particular chemicals (ENDS Report 304, pp 13-14 ).
Around the same time, the British Society for Allergy, Environmental and Nutritional Medicine warned that allergies are on the increase and urged the Government to reduce public exposure to synthetic chemicals in the home (ENDS Report 302, pp 5-6 ). And last year also saw the launch of the Healthy Flooring Network, a coalition of scientists and environmental and allergy groups campaigning against carpets and PVC flooring.
FoE is now preparing an update on the performance of companies on hazardous substances. This time it will publish league tables based on different retail or manufacturing sectors, rather than the red, amber and green lists.
These pressures have seen B&Q, Marks and Spencer and Homebase all announce chemicals policies since the beginning of the year (ENDS Reports 312, p 27 ; 314, p 31 ; and 317, p 24 ). The issue has also spread to the childcare market, with Mothercare taking action on PVC (see box ). Other sectors, such as electrical goods and clothes, remain unaffected as yet because consumers do not perceive a health risk from the hazardous substances they contain.
But for the retail businesses which are affected there are important implications. "Environmental and social issues are now a very competitive issue in the retail sector," Mike Barry of M&S told a recent IQPC conference on the toxics debate. "This is not just among our close competitors - B&Q, for example, are shaping the market we work in.
"Retailers are competing to be seen as the most trustworthy. NGOs have targeted the growing concern about health generated by BSE and GM foods to raise concern in the media about chemicals. Our investors and management are worried about the impact on our brand if we don't do well in the league tables of performance."
Business risk management
There is also growing interest from the City in corporate social responsibility as an element of overall risk management. Since 1999, companies listed by the London Stock Exchange have been required to adopt a risk-based approach to management, and to report on their procedures to control relevant risks, including risks to reputation (ENDS Report 305, p 40 ).
Newcomers to the stock exchange, such as Mothercare, can find this surprising. After its demerger with BHS last year and the launch of an intensive rebuilding strategy, there was "immediate, intense interest in our business," marketing director Gemma Whiteside told the conference. "Since then, we have met with fund managers like Jupiter and Friends Ivory and Sime to discuss how we are managing our non-financial risks."
A change in fortunes can also be the trigger. "During the 1990s, we believed we were the most trusted retailer and we failed to recognise some new issues, such as ethical trading and the environment," says M&S's Mike Barry. "Corporate social responsibility requires you to look outside your business. When everything is going fine you tend not to do it, but when things go pear-shaped you re-examine everything from top to bottom."
B&Q's rationale for launching its chemicals programme is all about controlling the agenda and risk minimisation. "Where we have had to react rapidly to issues for which we were not prepared, such as lead stabilisers in PVC blinds, or the combination of fine dust and formaldehyde fumes released from sawn MDF [medium density fibreboard], it has been disruptive and costly to the business," environmental controller Alan Knight told delegates. "But where we have taken a proactive approach, such as labelling volatile organic compounds in paints, the benefits have significantly outweighed the time and costs involved."
The company found itself "increasingly exposed to the wider issue of hazardous chemicals in products" as the number of chemicals under suspicion grew and growing use of the internet meant that issues could spread faster from one country to another.
Science or pragmatism?
David Chesneau, BP Chemicals' director of product communication, drew delegates' attention to a recent email exchange between John Elkington of SustainAbility and US risk communication consultant Peter Sandman over whether businesses should be "responsive" or "responsible". Should retailers, he asked, be responsible, and make their own assessments of substances, or should they give stakeholders what they want?
Retailers would probably argue that the two approaches are not mutually exclusive, but the emphasis on one or the other varies from company to company.
"Chemicals of the same family, such as brominated flame retardants, are all the same to the public," says M&S's Mike Barry. "When talking to our suppliers about chemicals I tell them science isn't the be all and end all."
B&Q is equally pragmatic. Asked how it selects substances of concern for scrutiny, Alan Knight said: "Basically, it's me and the environmental manager, a couple of buyers and the PR manager going through them and deciding. We can spend as long talking about the political issues as the technical ones. Sometimes we say, 'we think the trade association will screw this up and we'll get dragged into the middle of this'."
Boots has been more conservative. Unusually, it is both a retailer and a manufacturer, formulating a wide range of consumer products such as cosmetics and toiletries containing a large number of chemical ingredients.
This means that the company possesses "a level of understanding and experience that enables informed judgements to be made in the interests of its customers," says Phil Stubbs, head of group environment and safety. "You need a strategy that is science-based, rather than political," he told the seminar. "If it isn't, you're in trouble, and will respond to events in a knee-jerk manner."
Along with other retailers, Boots does not want the speed at which companies phase out substances to become a competitive issue. "Whilst it might be beneficial to a company's reputation to make bold statements about excluding certain chemicals from their inventory, the reality is that a programme of successful replacement can be a long and resource-intensive process," said Dr Stubbs.
However, Boots' attitude may be changing. "Time has moved on and scientists have lost a lot of credibility," he told ENDS. "You have to include a political, as well as a scientific, perspective."
Secrecy over bisphenol A
The endocrine disruptor bisphenol A, used in food can linings, is a particular problem for retailers.
Just a few large corporations, such as Crown Cork and Seal, control food can manufacture - giving them far more clout than any of the retailers.
Dr Stubbs told the seminar: "We have limited control over the use of bisphenol A, even as a brand owner. On the basis of risk assessment action would not be currently justified, although the evidence does suggest it has oestrogenic properties. Although we are not convinced by the scientific evidence at this moment, we will work with the supply chain to seek reductions in bisphenol A levels."
Sainsbury's has the same problem, said environmental manager George White. "Our frustrations on can linings and bisphenol A are the same as FoE's and WWF's - the can makers won't tell us which cans use bisphenol A linings."
Environmental groups' influence in the debate is partly due to retailers' feelings of isolation, with neither the Government or the chemical industry seemingly willing to discuss alternatives to chemicals of concern.
The chemical industry, say retailers, is unwilling to engage with retailers in a meaningful way. "It has been backward in coming forward," according to Sainsbury's George White, "and is not particularly good at recognising that the retailers are also their customers as well as those they immediately supply. We've had to manage this issue on our own."
"Retailers should get used to using their own judgement and learn to rely on it," argued B&Q's Alan Knight. "People say you should talk to the chemical industry more, but they're not talking to us."
According to B&Q's revised toxics strategy, "We need the chemicals industry to help us by providing the information that we need in a form that we can use, and to develop cost-effective solutions that our customers can trust."
Instead, retailers are having to rely on manufacturers' safety data sheets. These, says Mr Barry of M&S, are characterised by missing data and incomprehensible jargon. "I need more information on persistence, bioaccumulation and toxicity and for them to be more user-friendly."
Furthermore, the chemical industry's defensiveness is limiting its influence. Managers at Mothercare were not best pleased to be told by the British Plastics Federation that the company could not restrict its use of PVC after its toxics strategy was passed to the trade body by one of the retailer's toy suppliers.
Similarly, the creosote industry's trade body achieved little by threatening to take B&Q to court after the store removed the product from its shelves and put up signs telling its customers about the chemical's alleged health effects and inviting them to try alternative wood treatment products.
At a broader level, says Mike Barry, "the chemical industry is defending all chemicals, whereas a clever industry would let a few go. It's spending 98% of its efforts defending a handful of substances."
Certainly the two industries seem a long way apart. With the first day of the seminar dominated by retailers talking about managing business risk and consumers' lack of trust in scientists, and the second by chemical companies emphasising risk assessment, "safe" exposure levels and the tainted term "sound science", there appeared to be little meeting of minds.
Judith Hackett of the Chemical Industries Association made all the right noises, accepting that "there has been a loss of faith in science and scientists" and that the industry must intensify discussions with customers and NGOs. But there was little sign from those chemical companies present that a more precautionary approach towards any of the substances targeted by environmental groups would be acceptable.
Danish chemicals strategy
Some retailers believe that the Government has done little to address the issue either.
Environmental groups compare the UK's actions with those of Denmark, which, like the UK, issued a chemicals strategy in 1999. Denmark's focuses on persistent and bioaccumulating chemicals, endocrine disruptors and substances causing irreparable damage to health. Special consideration is given to risks to children, pregnant women and people with allergies.
Priority is given to chemicals placed on a list of "undesirable substances". This is seen as a guide or early warning for companies and public bodies to substances whose use should be reduced or phased out.
Statutory bans or phase-outs have been introduced for mercury, cadmium, lead and the greenhouse gases HFCs, PFCs and SF6. But other policy instruments have been used for most of the hazardous chemicals currently under the spotlight.
On phthalates, for example, the aim is to phase out problematic uses, such as PVC toys and childcare products for children under three, textile printing and automotive applications, and generally to reduce the use of phthalates by 50% by 2009.
Taxes on PVC and phthalates were introduced last year, while projects for developing substitutes have received funding under the Government's cleaner product programme, and procurement guidelines have been issued to public bodies on how to avoid phthalates.
Retailers "are very positive about the Government's policy on chemicals," Helge Andreasen, deputy head of the Danish Environmental Protection Agency, told the seminar. "They are glad we are taking responsibility for the issue."
Denmark is keen that consumer goods, including imports into Europe, as well as hazardous chemicals in products, should be covered by the EU's new chemicals policy. EU Environment Ministers recently gave this idea broad backing, directing the European Commission to ensure that "all uses of concern" of chemicals in products, including imported goods, should be covered by the new regime (ENDS Report 317, pp 38-39 ).
Typical of the findings which underlie the Danish authorities' concern was a recent official study of tributyltin (TBT) in PVC products. Significant quantities of the chemical were found in a range of goods, mainly made in China, including flooring, wall coverings and gloves. "Therefore it seems daft to carry out an assessment of TBT without looking at leakage from products," said Mr Andreasen.
Denmark has begun a number of projects to investigate undesirable substances and their leakage rates from consumer products such as cosmetics, toys, household products, textiles, jewellery and furniture.
UK Government's role?
In the UK, the Department of Environment, Food and Rural Affairs' main efforts have been through its Chemicals Stakeholder Forum, launched last October (ENDS Report 308, p 5 ). But environmental groups and retailers active on the issue have little hope that it will achieve much, partly because the predominance of trade bodies at its meetings makes it too conservative.
The Department of Trade and Industry, which has a chemicals industry sponsorship division, is seen as firmly on the chemical companies' side. When FoE met officials to ask if the DTI would offer support to retailers along the lines of the Scandinavian model, it says it was told that officials "only talk to the chemical industry."
Should the Government play a more active role, and perhaps adopt some of Denmark's policy instruments? "I'm sure the Government could help," says Boots' Phil Stubbs. "This isn't just a retailer issue - it ought to be something where Government is taking a lead.
"Stakeholder engagement has got to be speeded up, as we can't tackle these issues on our own. Government guidance on substitutes and subsidies for alternative technologies are things we could explore, while a phased approach, such as the Danish target to reduce phthalate use, could be more practical than ban deadlines."
Another retailer told ENDS: "The Government has no input whatsoever on this issue. If it copied the Danish example it would be brilliant, but in effect it would be acting as a pressure group. In the UK, FoE has adopted this role because the public doesn't trust the Government. Moreover, DEFRA can't afford to be seen calling for phase-outs of chemicals on a precautionary basis."
The difference, says Helge Andreasen, is that in Denmark industry is happy with a precautionary policy on chemicals because the Government is willing to assume greater responsibility. "Years ago," he says, "it asked industry whether it wanted fairly strict regulation where it couldn't categorically tell the public a process was 'safe', or emission limits ten or a hundred times stricter where it could do so, and industry chose the latter." As a result, he says, the public trusts the Government.