The Looming Challenge of Chemical Disclosures

New sustainability rules make consumer brands accountable for the composition of their products, but most companies are in the dark.

-  Lori Bestervelt, Colleen McLoughlin, and Jillian Stacy

New and emerging rules in the U.S. and Europe that make companies responsible for the environmental impacts of products through their entire life cycles are forcing brands to confront a striking knowledge gap: their often inadequate understanding of the chemicals found in their supply chains.

The European Green Deal’s Circular Economy Action Plan, which was adopted in March 2020; newly proposed eco-design rules affecting fashion and textiles; and the proposed Corporate Sustainability Due Diligence Directive will require companies to disclose any risks to human rights and the environment. They apply throughout the product life cycle, from the formulation of ingredients and materials to product manufacturing, packaging and distribution, and recycling and disposal. In the U.S., four states — California, Colorado, Maine, and Oregon — have adopted extended producer responsibility laws aimed at packaging materials, and the issue will be a focal point of the U.S. Securities and Exchange Commission’s eventual Scope 3 supply chain requirements. On top of such legislation, a host of new regulatory actions focused on materials sourcing and disposal, safety in global supply chains, and the protection of employee safety and human rights are rolling out in jurisdictions around the world. These rules  pose a challenge for manyof the brands that manufacture, market, and sell the clothes we wear, the cosmetics we apply, and the toys our kids play with, because their companies have very little visibility into the detailed chemical composition of their products.