Expert Analysis: Transparency – Reveal your Materiality Without Revealing your Trade Secrets! – Part 1

(Editor’s Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. Expert Analysis articles, produced by 3E subject matter experts, researchers, and consultants as well as external thought leaders, examine the regulations, trends, and forces impacting the use, manufacture, transport, and export/import of chemicals). 

As chemical regulations continue to grow in complexity and customer requests for additional compliance and sustainability data increase, chemical and article manufacturers are looking for new and innovative ways to manage their customer requests, compliance obligations, and asks from Non-Governmental Organizations (NGOs) without giving away trade secrets.    

Gathering the data to accommodate those requirements can't be one-off requests made to suppliers, because the suppliers themselves are being overwhelmed by the constant requests coming back to them through their supply chain. Because of this, in some industry sectors, companies have turned to full material disclosure to decrease the frequency with which they need to reach out to suppliers, and to feel more confident in their own compliance determinations. Let's look at the main challenges when requesting full material disclosure (FMD) and the response to meet those needs.
 
One common objection to FMD is because of the perceived proprietary nature of the product composition. Whether the product is a mixture of chemicals or a complex product made of a variety of materials, companies are often reluctant to reveal this information to others.  They are concerned about others duplicating their product or maintaining their competitive advantage in the marketplace. 

While that may be true for many companies, it is worth digging into the details of why they should not be reluctant to disclose Confidential Business Information (CBI). 

1. Common ingredients: To begin with, most raw materials of the same type often have the same common ingredients. A competitor isn’t going to be able to identify your suppliers or raw materials. Discovering raw materials or ingredients based on the overall product composition, especially when combined with all the other components, is incredibly difficult. It is important to give suppliers more context on how the data will be used – i.e. if the FMD will be for internal uses or if it will be part of a transparency report that will combine all necessary ingredients for the product. 
2. Existing disclosures: Often, the chemical ingredients may have already been disclosed in a different context.  For example, they may have been disclosed in a patent or trademark application, the chemical composition/identity was disclosed to a government agency (e.g., US EPA under TSCA or FIFRA) or voluntarily to a certification body or industry association. It can be helpful to ask your supplier contact if they have previously made these disclosures to other entities. 
3. Exact percentages: While disclosure of the precise identity (name) of the ingredients (and, at times, even impurities) is often the primary concern when it comes to FMD, disclosure of the precise amounts of the ingredients is a very close second. The goal of FMD is to understand what’s in (or what is not in) the product, not to recreate the product. Often the requestor of the data doesn’t need exact percent composition. If fact, an upper boundary limit is sufficient for many requests, and this may alleviate the supplier’s concerns about sharing what they perceive to be CBI.  
4. Competitive advantage: Many times, a company’s competitive advantage is less related to their product composition than one might think. Process improvements, marketing approaches, unique business models, delivery mechanism, or customer service benefits all contribute to a product’s status in the marketplace. Fewer of those things are dependent on the product makeup than you might think. 

As it becomes easier to collect full material disclosure from your suppliers, it may make sense to consider internally how you respond to FMD requests from your own customers. Are you willing and able to fulfill your own customers’ FMD requests? It may cost your company valuable time and money to protest requests when fulfilling them actually might help enhance relationships with your customers and generate more value for both parties.

In the supplier-customer engagement process have you ever hoped to:

• Respond to transparency and compliance requests with one automated, standardized disclosure? 
• Reduce the hassle factor on yourself and your suppliers? 
• Assure your customers that they get an update when an important regulation changes or a new regulation is released without them needing to ask? 

For the answers to these questions and more, look for Part 2 of this series coming soon!

Need help with collecting or answering transparency requests? Find out more about 3E Exchange here. 

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About the authors:
As Senior Solutions Engineer at 3E, Evelyn Ritter applies technology to simplify the complex world of product compliance, supplier outreach, and sustainability for manufacturers and customers. During her tenure at 3E, she has improved the supplier outreach capabilities and ensured that customers are getting the data needed to accomplish their compliance and sustainability goals. She has collaborated with a variety of compliance, sustainability, and circularity initiatives, including serving on the committees for the Health Product Declaration, Product Circularity Data Sheet, and USGBC. Prior to Toxnot, she worked in product stewardship for the furniture manufacturer Herman Miller and helped commercialize a screening technique for PFAS chemicals. Evelyn holds a B.S. in Engineering from Hope College in Michigan.

Having spent over 40 years leading product regulatory and stewardship activities for global industrial chemical companies based in the U.S., EU, and Korea, Rob Campbell recently joined 3E to help our customers find better ways to manage their Product Stewardship, Global Chemical Compliance, and Sustainability challenges using software tools and data management. Together we can find solutions that are smart, cost effective, bring value to the business, and help you sleep at night.

About the editor: Sandy Smith, Senior Reporter, 3E, is an award-winning newspaper reporter and business-to-business journalist who has spent 20+ years researching and writing about EHS, regulatory compliance and risk management and networking with EHS professionals. She is passionate about helping to build and maintain safe workplaces and promote workplace cultures that support EHS. She has presented at major conferences and has been interviewed about workplace safety and risk by The Wall Street Journal, CNN and USA Today.