Ecolab, a chemicals industry company, is a global provider of water, hygiene, and energy technologies serving the food, energy, healthcare, industrial, and hospitality markets.
According to the Food and Agriculture Organization of the United Nations, by 2050 the world’s population will reach 9.1 billion and food production will have to increase by 70% to meet demand. According to the Global Water Forum, water demand is projected to increase by 55% globally between 2000 and 2050; the majority of this increase stems from manufacturing. Simultaneously, by 2050, over 40% of the world’s population will live in water stressed regions. Given these trends, it is essential that businesses and societies alike work to reduce resource consumption while increasing output.
Ecolab partners with its customers in more than 40 industries to increase their efficiency, improve their sustainability performance, and enhance their business results. One example is Ecolab’s Heating, Ventilation, and Air Conditioning (HVAC) Performance Services, which enables Ecolab’s customers to maintain their HVAC systems at peak performance by cleaning cooling and heating coils. Dirty coils and inefficient filters can reduce cooling capacity, causing a range of problems while also wasting energy and increasing the waste stream of filter disposal. In 2012, Ecolab’s HVAC Performance Services resulted in a 164 megawatt-hour reduction of electricity consumption, equivalent to 91 metric tons of carbon dioxide equivalent avoided.
There are environmental and human health risks associated with substances classified as carcinogenic, mutagenic, or reproductive toxins (CMR) or persistent, bio-accumulative, or toxic (PBT). Companies that rely on fewer toxic substances are at lower risk relative to sector peers that may have larger environmental and human health liabilities from reliance on toxic inputs.
As of 2013, Ecolab reports that less than 2% of the company’s products contain substances of very high concern (SVHC), a designation by the European Chemicals Agency that identifies substances that may have serious and often irreversible effects on human health and the environment. A substance may be classified this designation if it has CMR or PBT characteristics. In addition, Ecolab reports that none of its products sold in the European Union contain SVHC.
Chemical manufacturing companies are typically emissions and waste intensive. While some hazardous air pollutants that impact public health are limited by national or regional air quality standards in the United States and Europe, companies that establish emissions reductions goals will reduce their environmental liability and position themselves ahead of increasing regulations.
Ecolab’s toxic releases management strategy includes strong reduction targets for waste and water effluents. The company aims to achieve a 10% reduction by 2018 in solid waste, water use, and wastewater discharge using a 2012 baseline. Additionally, over 60% of Ecolab’s facilities are covered by ISO 14001 certified environmental management systems.
While over 60% of the company’s facilities have achieved ISO 14001 certification, Portfolio 21 would like to see increased adoption of this program. We believe this certification enhances a facility’s ability to manage environmental risks while increasing efficiency.
Portfolio 21 urges the company to apply the European Union’s REACH (Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals) Directive on a global basis. By doing so, the company will reduce its chemical profile risk and will likely be ahead of any new future regulations outside of the E.U.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/14 and may not reflect current opinions or subsequent events.