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Chemical manufacturers and traders are only now starting to feel the full impact of the changes in American legislation on the chemical industry following the signing into law of the Lautenberg Chemical Safety Act in June 2016. It is an act that is seen by legislators, including one of its authors Tom Udall as, “Landmark chemical safety reform [that] will finally protect our kids from dangerous chemicals.” While the Society of Chemical Manufacturers and Affiliates said that the bill’s signing, “…begins the process of regaining the public’s confidence in everyday products made possible by our industry.”

Certainly the law will increase protection for the public, as it will also allow for greater scrutiny of chemical products. As the Washington Post writes, “[It is a] law that places stronger regulations on chemicals present in nearly every product Americans use, including detergents, clothing, paint thinners, cleansers and automobiles”.

But in adding extra oversight, someone has to become an overseer, and this role has fallen to the Environmental Protection Agency (EPA). A government body that must now decide where to draw the line between what is best for chemical companies, and what is best for consumers. As the Washington Post states, “the new law allows the EPA to stop a potentially dangerous chemical from going to market. A consideration of high risk populations, such as pregnant women and children, will factor into decisions on whether to approve chemicals.” Adding that, “Chemicals with high priority concerns will get faster reviews.”

However, the Post also includes the key fact that, “… companies can no longer hide behind ‘trade secret’ claims to shield the identity of chemicals they use so officials can’t investigate them.”

And it is this conflict between a chemical company protecting its business advantage, and the public’s ‘right to know’ that is causing much concern and confusion in the industry.

In a recent report, Bloomberg BNA, the legal news wing of the Bloomberg business news, tried to clarify much of the misunderstandings of the new legislation. In the report,  Washington based reporter Pat Rizzuto writes how in the past, “The agency reflexively granted Confidential Business Information [CBI or trade secret] claims without asking for detailed rationales which shielded information from the public arena.” And explains how today, chemical companies should expect more frequent reviews of their right to CBI, as well as a ‘raising of the bar’ on what chemical information should remain confidential.

The report also includes input from, Judah Prero, an attorney with Sidley Austin LLPc, who explained how chemical companies must prove that they have tried to protect their trade secrets and that public knowledge of those secrets would damage their business.

In the interview he states that, “One of the main new requirements discussed in EPA’s guidance is the need for companies to certify that the information for which they seek CBI protection meets the criteria provided in the law. For example, companies must certify that they have taken measures to protect the confidentiality of the information they ask the agency to protect and have a reasonable basis to conclude disclosure of the information is likely to cause substantial harm to their competitive position.”

What’s in a Chemical Product’s name?

Furthermore, the new legislation also outlines the names that new chemicals can be given, stating that they must have a name that describes the chemical structure of the product. This means that if ‘glyphosate’ were to come to the market today, it would need to be called, at least as a secondary name, something such as ‘phosphonomethylglycine’, or maybe even ‘C3H8NO5P’.

This is a point raised by Martha Marrapese, a partner at the law firm of Keller and Heckman LLP, who said, “When a manufacturer claims the identity of its chemical to be confidential, the amended law requires the company to provide a ‘structurally descriptive generic name’. While some companies already give their chemicals generic names based on the molecular structure of the substance, others base the name on how the chemical will be used. ” Adding that, “The selection of a structurally descriptive name will be new for these latter companies and something they’ll need to craft in concert with the agency [EPA]”.

This is a point that Bloomberg BNA confirmed when writing that, “The requirement to use a structurally descriptive name when identifying a chemical generically will apply to all chemical manufacturers when the agency updates the TSCA inventory, as it is required to do under Lautenberg.”

What Will Keep a Company’s Trade Secrets Secret?

But while this idea of the public’s right to know of a chemical product’s make-up is clear, there is still uncertainty over other legal requirements. This is in large part because the law has yet to be fully enacted, however, as Marrapese makes clear, “By June 2017, the EPA is required to issue a final rule describing the process chemical manufacturers will use to have their chemicals listed on one of two TSCA inventories: the active inventory or the inactive inventory. Chemicals on the active inventory are in commerce or have been within the last 10 years.”

Once this process has been concluded, the debate on what is a chemical company trade secret and what isn’t will fully begin. This is because, “EPA’s guidance describes various times the agency may review and re-review a company’s need for CBI protection. These include when someone has submitted a Freedom of Information Act request seeking documents that contain CBI information, when the agency designates a chemical to be a high priority for risk evaluation, when the agency updates the TSCA inventory and when the agency determines disclosure would be important to implement chemical restrictions or bans authorized under Section 6 of TSCA.”

To help with the change, the EPA recently issued advice on what chemical manufacturers can do to keep trade secrets secret. However, the guidance is far from clear, and includes generalisations, such as, “Currently, EPA is using existing authorities to obtain CBI substantiations. This includes substantiation of CBI claims in submissions for which Agency rules currently require it, such as certain CBI claims under the Chemical Data Reporting (CDR) rule, and requests for comment (substantiation) on CBI claims under EPA general confidentiality regulations at 40 CFR § 2.204(e). These regulations allow EPA to request additional information, including substantiation, when making a CBI determination. EPA will use the substantiation provided to inform the confidentiality determinations for chemical identity and other CBI claims. The Agency may revise CBI substantiation requirements for specific types of information submissions by subsequent rulemaking.”

As Prero said, he often hears clients asking, “What types of evidence does the EPA want a company to provide to substantiate its need for CBI protection and how much evidence is sufficient?”

In general, what will keep a chemical company‘s trade secrets secret?

While the EPA is hard at work trying to carry the fine print of the law into working practice, many chemical companies are being left in limbo over how to proceed with their business. Not knowing what information will be made public and what can remain a secret effects future contracts being signed, causes uncertainty over competitive advantage and limits the investment for product development. Must chemical manufacturers and traders wait until June 2017 to know where they stand?

Photo credit: University of Sheffield

Each decade has its own set of well-loved, overused, business buzzwords. The 80’s gave us ‘low-hanging fruit’ and ‘bottom-line’, the 90’s ‘streamline’ and ‘leverage’, whilst the 2000’s gave us ‘synergy’.

One of this decade’s top buzzwords is ‘sustainability’. But unlike most buzzwords, the word ‘sustainability’ is overused with good reason. That being that we live in a world with diminishing natural resources, and a growing population.

As a result, the UN is reporting that, “2016 is slated to be hottest year ever, with record-breaking emissions and melting Arctic ice.” While the WWF states that, “A new economic path towards sustainability is both a necessity and a huge opportunity.”

It is this necessity and opportunity that is directing the chemical industry’s thinking.

Take for example, the fact that the chemical company Henkel, includes sustainability as one of four main criteria for supplier selection (the others being price, on-time delivery and product quality). Given that Henkel is a very successful company, with 50,000 employees, and an €18 billion turnover, which operates brands such as Persil, Fa, Schwarzkopf, Pritt, Locktite and Dial, then other chemical companies would do well to follow their lead.

In fact, given the number of suppliers Henkel cooperates with, chemical traders or manufacturers need to source their feedstock wisely if they wish to do any business at all.

This is a point that Christine Schneider, Head of Global Sustainability in Research and Development in Laundry and Home Care at Henkel, made clear in her presentation at CIEX Europe 2016, a unique platform created for R&D and innovation experts from the consumer, industrial and specialty chemical sectors.

You can watch her presentation and others like it, from the CIEX Europe conference on YouTube here.

Here she opened up about some of the challenges chemical companies face in improving sustainability, and talked about the processes Henkel had in place to achieve their targets.

Sustainability Targets

Indeed, one of the first steps to success in sustainability is establishing targets, with Henkel setting out in 2010 with a simple goal to triple sustainability over the next 20 years. They aim to achieve this by increasing sales by 50% in that time, while halving the footprint of raw chemical material sourcing.

The second step a chemical company needs to take is analysis; the need to study a product’s environmental impact. This should take into account all the stages of its life, including the resources used during the product’s (even domestic) consumption. Schneider gave the example of washing detergent, and explained how much of this product’s impact was in packaging or in heating the washing water. As a result, a ‘life cycle assessment’ of detergent showed the phase that causes the biggest carbon footprint was ‘usage’, which creates 81% of a detergent’s ‘ungreenliness’.

As is evident in the graph, much of the challenge in making many domestic products more sustainable is that the largest carbon footprint process is out of the manufacturer’s control. If Henkel could persuade its customers to wash their laundry at 30°, instead of 40°, then the brand Persil would reduce CO² emissions by 500,000 tons a year.

But by analysing the data, any efforts to make Persil a more sustainable product can now focus on the heart of the problem. Without analysis, any sustainability drive may focus on the wrong goal, and any success would be immeasurable

The third step towards sustainable chemical products was traceability. This was achieved by tracking where a raw material originated from, how it was sourced, how it was transported and refined, and knowing who was involved in each process. This traceability includes following the route that waste products take, as well as what happens to chemical products after they have been used and are at the end of their lives.

To do this, Henkel recommends working closely with suppliers, building long-term understandings, and sharing information about sourcing and sustainability issues. Co-operating with NGO’s, such as WWF and Greenpeace, also allows companies access to advice and helps with the sharing of ideas and efforts towards a mutual goal. This not only allows for ‘sustainability credentials’ to be openly verified, but also saves money, as the company can adopt a ‘one audit’ process, that is used by both chemical supplier and manufacturer to confirm the sustainability of feedstock.

Schneider also stated that, “Another very good initiative is [that we] reward our suppliers; one example being Novozyme, who won Henkel’s ‘Best Sustainability Award in Laundry and Home Care’. [They won] for their work in producing a better enzyme mix, with more high performing enzymes which could reduce the surfactant content, which is a driver when it comes to counting carbon footprint.”

The issuing of awards was also part of a concerted effort to establish a public commitment towards sustainability. This acts not only to promote the company’s efforts in a positive light, but also makes the public aware of the issues at hand. This could lower wastage, help recycle packaging, lower wash temperatures etc, as well as help guide the company towards its goals, as sustainability becomes a public and declared intent.

This is why Henkel has joined the initiative of ‘Zero net deforestation by 2020’, in an attempt to reduce the impact of the company’s sourcing of palm oil.

To the future, Henkel is looking to innovation to improve its sustainability. The use of fossil fuel alternatives, such as coconut oil, lignite or algae oils are being studied, but may be as far as 20 years from becoming a core chemical feedstock.

Despite all these efforts, the fact remains that sustainability is a hard nut to crack. It will require a lot of time, effort and money from everyone involved with chemicals if the industry is to become what it needs to become. But given the health of the planet, given the public’s desire for sustainable products, given the moral obligation chemical traders and manufacturers have to source responsibly. Isn’t doing good a necessary evil?

Photo credit; SINCHEM Luca Cervone, Monica Palmirani

If there is a moral obligation on the agricultural industry to use its ‘big data’ to try and feed the world’s growing population, isn’t there also a moral obligation to protect farmers and agrichemical traders?

While new crop protection products and crop varieties have the power to feed a growing global population, some experts are advising caution in the amount and way that information is being shared. ‘Big data’ may help feed the world, but care should also be taken to protect the farmers, customers and chemical product traders involved.

This is a point highlighted in a recent article by Prof. Ian Boyd, Chief Scientific Adviser at Defra, the British ministry responsible for, among other things, agriculture. He wrote that, “As the population increases and food production becomes more costly due to climate change and uncertainties about energy and fertiliser production, open data has the capacity to be an important part of the solution to global problems of food poverty and poor nutrition.”

However, despite being a speaker at the UN’s recent GODAN (Global Open Data in Agriculture and Nutrition) meeting in New York, Boyd still maintains his reservations over the sharing of data and its conflict with personal security. Stating that, “Central to the risks associated with data is personal information. Everybody leaves behind their digital fingerprint as they engage in digital economies. For those who wish to, there are ways of using these signals to find out more about us than perhaps some people might wish. I am a great supporter of better use of data, but we need to make sure that people know what data there is about them, how it is being used, and by whom.”

So while data is shared to feed the world, data sharing should be limited to save the individual.

Agribusiness companies who spend millions of dollars researching improved fertilisers, pesticides, herbicides, and crop varieties do well in sharing their knowledge and products with the world’s hand-to-mouth farmers. But this information should be disseminated carefully, as we all (including farmers and agrichemical traders) have a right to privacy.

Using and trading agribusiness products is a secretive industry, where prices and market intelligence comes at a price. This means, that when it comes to big data in agrichemical products, it needs a portion of caution to make sharing caring.

Photo credit: Nick Mesely