ChemSec look ahead report


I used to be a stock trader in the 90s. It was an exciting time trading on the floor, writing orders on paper and shouting buys and sells to brokers. And my time on the stock market not only gave me valuable working experience, it also taught me how the industry works and what drives it forward: the constant need to look ahead and search for new opportunities to invest in, hunting for pro­mising figures, stories and companies. Even to this day I still have this sense of excitement when I come across a promising investment opportunity – like a hound sniffing a scent.

In 2011 I picked up one my strongest “scents”: the wish of many of the world’s largest retailers to remove Bisphenol A in cash receipts, which emerged after scientific studies reported the health effects of touching these cash receipts, or thermal paper, which is the technical term. Back then I wanted to invest in a company that could offer a safer alternative to Bisphenol A in thermal paper, but unfortunately I got lost in the research. Ever since then, however, I’ve kept my eyes open for new information that could help me understand if it is as good an investment as I envisaged.

This report is a result of my personal conviction that chemical substitution can offer substantial investment opportunities. All over the globe there is emerging legislation that targets hazardous chemicals in products. Couple that with the increasing demand by consumers for chemical trans­parency and you have a very promising landscape for markets that are shifting towards safer alter­natives and new solutions.

But chemical substitution does not just offer opportunities for the investment community to make lots of money – investors can also play a large role in contributing to the elimination of hazardous chemicals from products. Shareholders wield powerful opinions over corporate decisions – power that can be used to make money as well as demand transitions to sustainable and safe products at the same time.

Sonja Haider
Senior Business and Investors Advisor

What is chemical substitution and why is it an investment opportunity?

The chemical industry is central to the world’s eco­nomy, as chemicals are used in many stages of the production of physical products: clothes, electronics, cars, plastics and so on. Most of the several hundred thousand well­known chemicals that are currently in use are harmless, but some of them are not. In production processes the term chemical substitution represents the act of replacing a hazardous chemical with a safer alternative. This can be achieved either by swapping the unwanted chemical with a safer substance, or by re­designing the product or chang­ing the process altogether and thus making the initial substance obsolete. Regardless of its type, the aim of substitution is to make a positive difference for health and safety.

There are several drivers behind a business decision to engage in substitution. Obviously legislation is one of the strongest. Due to restrictions and bans, compa­nies have to innovate to provide safer replacements. But before legislation kicks in, this need can often be foreseen by paying attention to other drivers, such as new scientific findings or campaigns by environmen­tal NGOs. This is exactly why most large corporations with a stake in the chemical industry keep a close eye on these drivers. When legislation hits, you want to be well prepared, since substitution is not something done overnight. Investors are wise to pay attention to these very same drivers, as they potentially are signs of looming investment opportunities.