By Jerilyn Klein Bier

Whether or not you've got environmentally conscious clients, it pays to know the financial and public health risks associated with a corporation's toxic chemical policies. And one of the better go-to places for that information is the Investor Environmental Health Network (www.iehn.org).

IEHN is a collaborative partnership of different investment organizations that in aggregate manage more than $30 billion in assets. Its goal is to encourage companies to adopt policies that reduce and/or eliminate toxic chemicals in their products and operations.

IEHN's operating principle is that safer chemical policies can help companies anticipate and avoid "toxic lockout" from the marketplace in the form of government bans or restrictions on products. In turn, that can reduce reputational and legal risks, as well as  enhance brands and create greater long-term shareholder value.

"We needed to move beyond the chemical to chemical [approach] and look at the larger picture of what companies are doing," says IEHN executive director Richard Liroff, who founded the network in 2004. "We're trying to change the underlying ground rules that apply to all companies worldwide."

IEHN's members include Calvert Investments, Domini Social Investments, Parnassus Investments, As You Sow Foundation, First Affirmative Financial Network, faith-based institutional investors and other leaders in sustainable and socially responsible investing. The network is advised by scientific, policy and technical experts from roughly a dozen environmental health organizations.

Liroff, who spent more than two decades directing projects on toxic chemicals and other issues at the World Wildlife Fund, serves as a technical resource for IEHN and has helped develop the rationale for resolutions and written letters to companies.

Body Of Work

IEHN, which analyzes corporate, government and scientific data, gets most of its funding through smaller philanthropic organizations concerned about environmental health. In addition to working on environmental issues involving corporations, the organization does outreach and develops tools such as reports and fiduciary guides for pension plans and other investors.

Among its activities, IEHN has pressed regulators to close corporate liability accounting loopholes that enable companies to conceal damaging scientific findings and their full potential liabilities associated with toxic chemicals. It has also provided suggestions to the Global Reporting Initiative on how it can better address toxic chemicals in its upcoming guidelines.

IEHN's résumé includes tackling issues such as bisphenol A (BPA) and phthalates used in plastic products, polyvinyl chloride (PVC) in packaging, pesticides in food, and nanomaterials in cosmetics.

One of the coalition's pressing tasks of late has been calling out energy companies on the environmental and business risks of hydraulic fracturing technology used in oil and natural gas drilling. And IEHN member Domini filed resolutions with Coca Cola in 2010 and 2011 asking it to disclose how it's responding to safety concerns about BPA used in its can linings.

IEHN members have been the lead filers on two-thirds of the 103 shareholder resolutions on toxic chemicals filed by investors since 2006. Of the 44 resolutions that were voted on during that period (many others were withdrawn due to favorable company responses), two dozen received more than 20% of shareholder votes.

"That's a significant enough number to get a company's attention," says Larisa Ruoff, the director of shareholder advocacy at Green Century Capital Management in Boston, one of IEHN's partner organizations.

For broader context, a first-year resolution filed with a company needs to get at least 3% of the vote in order to be refiled the following year.

Solutions, Not Just Talk

Roger McFadden, a senior scientist with Staples Advantage, the business-to-business division of Staples Inc., circulates IEHN information with the office supply retailer's key decision makers. "I view IEHN as a credible and relevant information resource to identify chemicals of high concern, but more importantly, to identify safer alternatives," he says
As a result of talks with IEHN, Staples has eliminated endocrine-disrupting nonylphenol ethoxylates from its own brand cleaning supplies; stopped using thermal register receipts coated in BPA; and now uses PVC-free packaging materials for its own brands.

IEHN has helped oil and gas exploration company Apache Corp. identify important questions regarding hydraulic fracturing. "While other people spend time preaching to their own choirs and valuing opinion over fact, Rich [Liroff] spends time crunching numbers, reading footnotes, reaching out to new people from across the spectrum, and forging doable-but-meaningful deals," says Sarah Teslik, Apache's senior vice president of policy and governance.

Liroff encourages financial advisors to use information resources on IEHN's web site, including case studies, reports and articles. IEHN staff also provides fee-based services for people who want to dive deeper into these issues.

In addition, Liroff recommends checking out the SIN (Substitute It Now!) List developed by the nonprofit International Chemical Secretariat, or ChemSec. It includes 378 substances identified as very high concern under REACH, the European Community Regulation on chemicals and their safe use.

Down the road, Liroff expects companies will talk more about their toxic footprints like they've begun to do with their carbon and water footprints. IEHN's partner organizations believe that'll help achieve the trifecta of improved corporate operations, public health and shareholder value.