Value at Stake Environmental and Social Issues in the Chemical Industry

3 Value at Stake Environmental and Social Issues in the Chemical Industry 

So how does this look in the chemical industry More so than in many other industries, investors generally accept that social and environmental issues can be financially significant in the chemical industry, but within traditional parameters. Most chemical industry analysts lack training in how to analyze the financial impact of social and environmental considerations in the industry. It is not an ordinary or systematic part of what they consider. There are no accepted standards for when these issues are and are not important and there is no accepted means of integrating and understanding social and environmental issues into financial analysis. 

Empirical research is one of the ways to understand how investors view how the companies have value at stake on sustainability issues. Here, I will briefly discuss two types of research that are directly applicable to the chemical industry.26 

A number of research papers have shown how investors react negatively to the disclosure of data from the Toxics Release Inventory when a company is a leading emitter (Konar and Cohen, 1997). This is not particularly surprising investors typically react negatively to news events they believe have some dark connotation. Environmental news is no different from other types of news. While it is true that investors dislike bad environmental news, this research does not show how long this effect lasts. 

Taken together, this combination of intuition, examples, and research build a clear case that the chemical industry has material value at stake from environmental issues. 

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