Caveat Emptor: What Are You Putting on Your Skin?

On Christmas, I opened a beautiful makeup gift set from an upscale department store, and my heart sank after reading the ingredients. I wouldn’t be able to use it. For years I had struggled with eczema; however, it wasn’t until reading an article about a form of eczema as a delayed allergic reaction to chemicals in the environment that I was able to get it under control. The real kicker was learning that when my dermatologists recommended moisturizing daily to manage my skin disorder, regular lotions (even hypoallergenic ones) actually perpetuated my symptoms instead of alleviating them. Once I switched everything, from my laundry detergent to my lipstick, to more natural options, the itchy rashes I suffered for seven years virtually disappeared.

Many Americans assume the U.S. has stringent product-safety regulations in place to protect them from potential injury. Yet, chemical safety standards in the U.S. are anything but rigorous. The motto caveat emptor (the idea that the buyer is responsible for confirming the quality of an item before purchase) is perhaps a better description of our system.

Hard to believe? Although the Toxic Substances Control Act (TSCA) of 1976 was intended to regulate chemicals that pose a risk to the environment or human health, approximately 62,000 chemicals already in existence were grandfathered in without testing for use in consumer products. Four decades later, the Environmental Protection Agency’s TSCA inventory list includes an additional 23,000 chemicals, but the regulation only invites chemical manufacturers to voluntarily submit data and risk assessments if the company believes the chemical poses a threat. The burden of proof for toxicity or carcinogenic risk lies with the EPA, which has managed to adequately study little more than 250 chemicals and ban only five.

The Investor Environmental Health Network and As You Sow Foundation are leading shareholder advocacy organizations that engage corporations on their chemical safety policies. They ask firms to examine chemical safety procedures and find safer alternatives. In recent years, a new coalition has emerged: The Chemical Footprint Project gives companies a new benchmarking tool for improving their chemical management practice. The footprint is determined through a framework that evaluates company strategy, chemical inventory, goals for safer alternatives, and public disclosure practices beyond legal requirements. The framework gives investment analysts better quality information to understand a company’s risk profile and performance against peers. As of today, “CFP Signatories with $2.8 trillion in assets under management and over $700 billion in purchasing power are asking their stakeholders: Where are you on your chemicals management journey?”.

While government legislation regarding chemical safety in consumer products remains incredibly lax, investors have begun to evaluate the financial impact for companies that do not conduct proper chemical testing. Johnson & Johnson has taken heat recently regarding asbestos in baby powder, but it’s not the company’s first instance of corporate chicanery. The company has been criticized by investors before for reformulating products with safer alternatives for the European market, which has stricter safety standards, but leaving the more dangerous formulation in place for the U.S. market.

By placing profit over people, Johnson & Johnson has not only endangered the firm’s brand reputation and public trust, it also created the potential for costly legal ramifications. Although such short-sighted thinking is not a good bet from an investment standpoint, Johnson & Johnson is not alone in its disregard for such risks; Avon, Procter & Gamble, and Colgate-Palmolive are among other major brands that have scrambled to remove harmful chemicals from their products only after a consumer outcry.

Congress did pass a chemical reform bill in 2016, forty years after the TSCA was approved. Although it was called ‘toothless’ by several advocacy groups, the bill did introduce some changes that were better than the status quo, including the review of “confidential business claims” of product components; the requirement for science-based decisions, founded on the weight of evidence; and the collection of fees on new and existing chemicals filed for the TSCA inventory list that are directed to the EPA. Much of the legislation, however, depends on the EPA to implement and enforce the rules. Unfortunately, the current leadership at the EPA has delayed implementation of the new rules for so long that a federal judge recently intervened, calling the delay “arbitrary and capricious.”

With nearly all of 85,000 chemicals on retail shelves without adequate vetting for health and environmental safety, the actual impact that poor regulation has had on human development is immeasurable. The fight for greater chemical safety continues within the nation’s capital, and progress will likely be stymied until new leadership arrives. In the meantime, consumers, academics, and investors alike should warn corporations: caveat venditor (Let the seller beware.). Studies have shown a marked increase in consumer demand for chemical safety assurances, and corporations have noted higher sales growth for green goods, as more Americans become aware of chemical dangers in their purchases. Pike Research projects the North American market for “green chemistry” to expand sevenfold, from approximately $3 billion to $100 billion by 2020. If the federal government continues to shirk its duties, the public will vote with their dollars at the checkout line.

Sylvia Panek

Sylvia Panek

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