Environmental and Social Risk Briefing

Chemicals and Pharmaceuticals

Table of Contents

1. Introduction .............................................................................................................................................................. 3
2. Overview of Chemicals and Pharmaceutical sector ........................................................................................ 3
3. Chemicals storage and hazard management ................................................................................................... 5
4. Laundries and dry cleaning ................................................................................................................................... 6
5. Research and development ................................................................................................................................... 8
6. Key sector risks and headline issues ................................................................................................................... 8
7. Risks and Controls ................................................................................................................................................ 10
8. Key considerations ............................................................................................................................................... 18
9. Regulation and Best Practice ............................................................................................................................. 19
10. Additional resources ............................................................................................................................................ 20
1. Introduction

This Environmental and Social Risk Briefing (ESRB) covers Chemicals and Pharmaceuticals. Both
industries manufacture products that are effectively the basis for almost every other manufacturing
activity. It is therefore, a highly complex sector.

The industries includes the manufacture of paints, medicines, fertilisers, pesticides and other agro-
chemicals, animal health products, water treatment materials, colouring agents, man-made fabrics,
detergents, disinfectants, polishes and cleansers, cosmetics and toiletries. While potentially
considered a service industry, due to the intensive use of hazardous chemicals, Laundries and Dry
Cleaning has been included in this ESRB.

For the purposes of this ESRB, Chemicals and Pharmaceuticals sector is subdivided as follows:

 Chemicals manufacture;
 Pharmaceuticals manufacture;
 Fertilisers and pesticides manufacture; and
 Research and Development;
 Chemical Storage and Hazard Management; and
 Laundries and Dry Cleaning.

2. Overview of Chemicals and Pharmaceutical sector

2.1 Chemicals manufacture

Chemicals manufacture is the processing of raw materials or other chemical feedstocks into a product
or series of products. The processing may involve a chemical reaction or simply the mixing of
feedstocks which when combined exhibit different physical properties than the raw materials
individually.

Effective process control is required to ensure that appropriate conditions are maintained throughout
the process. Ineffective process control can result in explosions. Poor process control might result in
the generation of products that do not display desired characteristics.

Chemical manufacturing processes may be relatively simple, single reactions or alternatively require a
series of complex reactions with by-products being generated at each stage. By-products may be sold
as products in their own right with or without further processing or be managed as a waste product.

Low margin chemical products will typically be manufactured through bulk processes with the
resulting requirement for bulk storage and transfer of raw materials, products and potentially by
products. The scale of processing for high margin chemical products may be considerably smaller
with the majority of storage occurring in small tanks or drums.

Page 3
Version 6.0 March 2015
© Barclays Bank PLC
The management of liquid or gaseous chemicals may be considered as more significant in terms of
environmental and / or social risks (e.g. emissions to air, land and / or water) but it is important to
note that there can also be inherent risks in plants managing bulk powders (e.g. explosions).

2.2 Pharmaceuticals manufacture

Many different biological and chemical substances are discovered, developed and used in the
manufacture of pharmaceuticals. Biological substances (e.g. bacteria and viruses) are used in
applications such as vaccine production, fermentation and biotechnology. Many agents used in
pharmaceutical research and development and manufacturing are potentially hazardous to workers.

Pharmaceutical manufacturing includes extraction, processing, purification, and packaging of

chemical materials to be used as medications. The major manufacturing stages are primary
processing, which is the production of the active ingredient or drug and secondary processing, which
is the conversion of the active ingredient into products suitable for administration. These
manufacturing stages generate air emissions, liquid effluents and / or solid wastes.

Pharmaceutical products are available as tablets, capsules, liquids (in the form of solutions,
suspensions, emulsions, gels, or injectables), creams (usually oil-in-water emulsions), ointments
(usually water-in-oil emulsions) and aerosols, which contain inhalable products or products suitable
for external use. In the past chlorofluorocarbons (CFC) were used as the primary aerosol propellant
but now, butane is more commonly used.

In many pharmaceutical production operations, a high degree of automation is used including milling
to reduce bulk chemicals to the required size, mixing and tablet capsulation, pressing, printing and
coating. Machines also fill, seal, label, and package the bottles.

Quality control of the pharmaceuticals manufacturing process from raw material supply to finished
product and testing is extremely onerous as the products are for human consumption. Hygiene and
cleanliness requirements are very strict.

2.3 Pesticides and fertilisers manufacture

A pesticide may be a chemical substance (most commonly hydrocarbons derived from petroleum) or
biological agent (such as a virus or bacteria) used against pests, such as insects, plant pathogens and
microbes. There are three main types of chemical pesticides:

 Chlorinated hydrocarbons (e.g. DDT) - long life and have the capacity of being concentrated
in the food chain for extensive periods of time;
 Organophosphates - short lived and degrade to harmless end products; and
 Artificial pyrethrums - originally based on natural sources but now synthesised in very large
amounts.

Each of the principle manufacturing steps may generate air emissions, liquid effluents and / or solid
wastes.

Page 4
Version 6.0 March 2015
© Barclays Bank PLC
2.4 Pesticide Formulation

Pesticide formulation produces a product that has optimum biological efficiency, is convenient to use
and minimizes environmental impacts. The active ingredients are mixed with solvents, adjuvants
(boosters) and fillers as necessary to achieve the desired formulation for controlled release into the
environment. The formulation steps may generate air emissions, liquid effluents and / or solid wastes.

2.5 Fertiliser Manufacture

Fertilisers are organic or inorganic compounds applied to plants with the intention of promoting
growth. Such compounds can be naturally occurring (peat or mineral deposits), manufactured
through natural processes (composting) or chemical processes.

There are three different phases in the production of solid fertiliser (a) the conversion of the raw
material plant foods from the form in which they exist naturally to a usable form (using air, steam and
a fuel); (b) combining the individual plant foods into the desired mixture (blending); and (c) particle
formation, in which solid fertilisers are assembled into granules or prills (involves heating and drying).

3. Chemicals storage and hazard management

Sound management of chemicals includes addressing transport, storage and handling issues.

Chemicals should only be transported in purpose designed vehicles that are clearly labelled as
hazardous materials transport vehicles. Drivers should be appropriately trained and transport
companies fully and appropriately registered / licensed. Transport routes should be selected so as to
avoid as far as possible built up and urbanised areas. Copies of the latest version of MSDS should
accompany the chemicals during transportation.

Chemical storage areas should be secure (i.e. fenced and lockable), bunded sites with appropriate
hazardous material signage. All stored chemicals should be inventoried and current MSDS kept at
hand. Procedures for emergency response should be clearly indicated including emergency contact
numbers. Spill clean-up material and equipment should be readily accessible.

Personnel handling hazardous chemicals should always wear appropriate PPE and should be fully
trained in both handling procedures and emergency response.

Page 5
Version 6.0 March 2015
© Barclays Bank PLC
4. Laundries and dry cleaning

Despite the name, dry cleaning uses a liquid solvent (not water) in which items being cleaned are fully
immersed. Historically, dry cleaning used a variety of solvents including kerosene.

4.1 Process
There are two basic types of dry cleaning systems, “transfer” and “dry-to-dry”. In transfer systems,
garments are immersed in a solvent and then transferred by the operator to a drying machine. In dry-
to-dry system, the garments are immersed in a solvent, the solvent is extracted and the garment dried
all in one machine.

Dry cleaning machines hold 9kg to 45kg of cleaning items in a rotating, perforated stainless-steel
basket. As items rotate in the perforated basket, a constant flow of clean solvent from the pump and
filter system is injected. The solvent sprays into the chamber constantly immersing the items. Dirty
solvent is pumped continuously through the filter and re-circulated. The next cycle drains and rapidly
spins the items to expel the solvent then moves to a dry cycle by circulating warm air. Fumes and
solvent are vaporized, taken off and condensed over cooling coils. Distilled solvent is subsequently
separated from any water that may have condensed during the process.

Specialised “wet cleaning” processes are gradually replacing traditional dry cleaning processes for
delicate fabrics. Wet cleaning is a system that uses water and biodegradable soap. Computer-
controlled dryers and stretching machines ensure that the fabric retains its natural size and shape.

At the end of the cleaning process, solvents are separated from wastewater by distillation. In the past,
the wastewater was often poured down floor drains but today it is typically collected and evaporated
or removed by hazardous waste contractors.

4.2 Solvents
The most commonly used solvent in the dry cleaning process is perchloroethylene, or “perc”, a clear,
colourless liquid that has a sharp, sweet odour and evaporates quickly. The benefits of perc are that it
removes stains and dirt from all common types of fabrics, usually does not cause clothes to shrink nor
dyes or bleeds them, is not flammable, can be reused and is efficient and cost-effective. Perc is
however, a toxic chemical.

Perc can get into the air, water and ground during the cleaning, purification and waste disposal phases
of dry cleaning. Once outdoors, perc can remain in the atmosphere for several weeks but perc itself
does not deplete the ozone layer of the atmosphere - after a few weeks, it breaks down into other
chemicals, some of which are toxic and some of which are suspected to deplete the ozone layer.

Perc is known to be toxic to plants. It can enter the ground in liquid form through spills, leaky pipes,
leaky tanks, machine leaks and from improperly handled waste. A small amount of perc can
contaminate a large amount of water. Small amounts of perc in the water have been shown to be
toxic to aquatic animals that can store the chemical in their fatty tissues.

Page 6
Version 6.0 March 2015
© Barclays Bank PLC
People can be exposed to perc by drinking or using contaminated water. People exposed to high
levels of perc, even for brief periods, may experience serious symptoms including dizziness, fatigue,
headaches, confusion, nausea and skin, lung, eye and mucous membrane irritation. Repeated
exposure to high levels can also irritate the skin, eyes, nose and mouth, and can cause liver damage
and respiratory failure.

Petroleum Solvents
Petroleum solvents are highly flammable and therefore operations using this solvent must also have
more advanced fire prevention measures. The solvent is lighter than water and the two mix easily
making separation from wastewater more difficult. There is also a need for higher temperatures to
dry and deodorize the garments thus potentially increasing energy consumption.

Other Solvents
Two other relatively new solvents in the dry cleaning process include
 Silicone and Liquid CO2 Solvents: use of both liquid carbon dioxide (usually obtained as a
recycled by-product of other industrial processes) and silicone - dry cleaners using these
solvents are currently few in number; and
 Alternative Petroleum Solvents: more akin to standard dry cleaning processes but uses
alternative hydrocarbon solvents such as “Exxon DF-2000” or Chevron-Phillips' “EcoSolv” -
these alternative solvents tend to be much less effective than the typically used perc and are
very flammable.
Other potential pollutants arising form the dry cleaning process include chlorofluorocarbons (CFC)
and hydrochlorofluorocarbons (HCFC), both of which are ozone “depleters”.

4.3 Dry Cleaning Wastes

Wastewater from dry-cleaners ideally is discharged direct to public sewer system. At some larger
sites, wastewater may be subject to a degree of pre-treatment prior to discharge as large volumes of
wastewater with elevated concentrations of contaminants may adversely affect sewage treatment
processes within the sewage treatment plant.

Other wastes produced by the dry-cleaning process consist of insoluble materials, such as extracted
dirt / soil and filter powder, soluble fats and mineral oils, together with small quantities of spotting
chemicals water and solvent residues which have not been recycled.

The waste material generated by cooking down or distilling muck is called Cooked Powder Residue
which is a hazardous waste that contains solvent, powdered filter material (diatomite), carbon, non-
volatile residues, lint, dyes, grease, soils and water.

The waste sludge or solid residue from the still contains solvent, water, soils, carbon and other non-
volatile residues. The chlorinated solvent from the dry cleaning operations is hazardous waste.

Page 7
Version 6.0 March 2015
© Barclays Bank PLC
5. Research and development

There is significant research and development activity within the Chemicals and Pharmaceuticals
industry. A controversial activity associated with research is animal testing / animal research being
the use of non-human animals in experiments. There is evidence of investors in companies, active in
or using third parties involved in animal testing, being targeted by animal rights campaigners.
Proponents argue however, that animal research has played a vital role in many major medical
advances of the last century - for both human and animal health. Animal rights groups and critics
have questioned whether animal research was necessary to achieve these results.

6. Key sector risks and headline issues

In large-scale chemical and pharmaceutical manufacturing some critical issues of particular public
concern may result in reputation or credit risk to a lender or an investor, these include:

6.1 Universal
 Climate change - long term impact and phase out of greenhouse gases;
 Air / water / soil pollution caused by industrial manufacturing activities including accidental
events;
 Legality of supply chain and ethical sourcing of raw materials.
 Products create high volumes of packaging material, including paper and plastics which must
be responsibly disposed of through recycling or biodegradability;
 Political and litigious issues resulting from environmental risks (e.g. transboundary impacts
resulting from air and water contamination);
 Human rights and occupational safety of workers / affected communities – poor working
conditions and labour standards in regions with little or no regulation;
 Costs of waste management - e.g. changes in legislation surrounding waste disposal,
especially hazardous waste.

6.2 Chemical Manufacture

 Petro-chemicals are slow to biodegrade and are more damaging in terms of toxicity,
contribution to global warming and acidification;
 Chemical ingredients such as mineral acids (hydrochloric, sulphuric and phosphoric acids)
are known to be toxic in the environment;
 High levels of water consumption for the cleaning of machinery, packaging systems and
pipelines, and wastewater require responsible management;
 Energy consumption for production, refrigeration, lighting and transportation produces CO2
emissions, particularly when raw material sourcing and product delivery, is organised on a
global scale;
 The risk of terrorist attack on chemical plants;

6.3 Pharmaceutical Manufacture

 Generic substitutes of patented medicines could be manufactured in defiance of the patent
laws particularly for drugs that are too expensive for emerging countries to afford (e.g. HIV);
 Health risks from testing and use of pharmaceuticals;
Page 8
Version 6.0 March 2015
© Barclays Bank PLC
  Pharmaceutical trials targeting low income and or other vulnerable groups;
 Affordable access to medicines / pharmaceuticals in developing nations (e.g. HIV / AIDS
treatments);
 Product stewardship - consumer health and safety, product safety and labelling and
responsible marketing;
 Litigation risks (e.g. consumer damage claims); and
 Risk of boycotting and negative publicity (e.g. ethical issues surrounding animal welfare).

6.4 Laundries and dry cleaning

 Contamination of land and water from solvents and detergents from the dry cleaning
process;
 Mismanagement of materials may lead, or have led, to contamination of ground or
groundwater. The contamination may, in extreme cases, result in the business being
prosecuted and/or being forced to remediate the site. The value of the security may also be
adversely affected.
 Costs of less environmentally detrimental new technologies - dry-cleaning businesses are
characterised by their small size and low profitability and may face financial failure through
inability to meet the required conversion costs.

The following tables detail potential environmental and social risks associated with industry processes
and appropriate control measures. These may include Environmental and Social Management Plans
and may form part of a wider Environmental and Social Management System.

Page 9
Version 6.0 March 2015
© Barclays Bank PLC
7. Risks and Controls

7.1 Environmental Risks

Life Cycle Phase Risks Controls
and Activity
Raw Materials Unethical supply chain - raw materials could be sourced Environmental and ethical sourcing policy
Supply from countries where standards for environmental
management are not rigorous
Manufacturing Pressure on natural resources - excessive / unmonitored Minimize facility footprint- optimisation of operations and
Operations use of water and energy processes to minimise energy and water consumption

Atmospheric emissions Use of Best Available Technique not Entailing Excessive

 Pollutants (VOC, NOX, SOX, PM10, CO, CO2, etc) Cost (BATNEEC) – especially in emission stack design;
 Greenhouse gas production development of emissions inventory; wastewater treatment
 Dust and noise design implement air quality monitoring

Liquid waste (production and disposal) - hazardous Emissions management - greenhouse gas / climate change
waste (i.e. process and effluent treatment sludges, spent offset programmes - phase out of ozone-depleting
catalysts and container residues containing significant substances
concentrations of spent solvents and other toxic organics)
Waste management and end of life process
Accidental spills - wastewater to storm water system and  Re-use and recycling and appropriate waste
drift of pesticides due to aerial application, adverse health disposal (chain of custody) - - Return toxic materials
effects of pesticide coated produce packaging to the supplier for reuse or incinerate /
destroy in an environmentally acceptable manner
Storm water runoff - contamination resulting from poor
materials transportation, storage and handling practices Emergency preparedness and spill response plans -
management and training measures
Page 10
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity
Disruption and pollution to surface water (hydrological)
and groundwater (hydrogeological) systems and flows - Hazardous materials storage, transport and containment
accidental releases of chemical pollutants to surface and /
or groundwater and / or soil  Label and store toxic and hazardous materials in
secure, bunded areas
 Use automated filling to minimise spillage

Water disposal and monitoring systems – continuous

monitoring of water quality and appropriate waste water
disposal
Transport and Atmospheric emissions Waste and hazardous materials transport, storage and
Product  Noise impacts from transport vehicles in handling plans
Distribution residential areas along transport routes  Plan transport routes to avoid highly populated
 Pollutants (VOC, NOX, SOX, PM10, CO, CO2, etc) areas where possible
 Greenhouse gas production  Only use vehicles designed to carry specified
hazardous substances
Liquid waste (production and disposal) - spills of  Ensure vehicles are properly maintained to
hazardous chemicals and substances resulting from manufacturers specifications and switch to cleaner
accidents involving transport vehicles fuel vehicles if feasible
Emergency preparedness and spill response plans - for
transport vehicle accidents

Emissions management - greenhouse gas / climate change

offset programmes - phase out of ozone-depleting
substances

Bulk Storage Explosion and fire risk – due to poor segregation of Emergency preparedness and spill response plans -
chemicals/hazardous materials equipment maintenance and integrity testing

Page 11
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity

Disruption and pollution of surface water (hydrological) Hazardous materials transport, storage and handling
and groundwater (hydrogeological) systems and flows - plans
due to spills and leakages  Improved handling, storage and use of hazardous
materials
 Use automated filling to minimize spillage and
“closed” feed systems into batch reactors
 Secondary containment (e.g., berm, sump areas,
and pumping / removal facility)
Water disposal and monitoring systems – continuous
monitoring of water quality and appropriate waste water
disposal
Product Use Solid waste (production and disposal) - disposal of Waste management - Eco-design of products to minimise
waste products and / or waste packaging amounts and toxicity of the wastes and to allow re-use or
recycling, ensure non-toxic package design
Bioaccumulation and contamination of food chain
 Chemicals not appropriately removed in the Water disposal and monitoring systems – continuous
wastewater treatment process (e.g. endocrine monitoring of water quality and appropriate waste water
disrupters such as alkyl phenols can cause sex disposal especially monitoring of chemical release in
change in fish) stormwater
 Toxic chemicals leaching out of food packaging
contaminating food

Liquid waste (production and disposal) - rainwater

runoff contaminating surface and / or groundwater due
to Pesticide and fertilizer application
Laundries and Pressure on natural resources - high energy use and Use of Best Available Technique Not Entailing Excessive
Dry Cleaning overuse of water in water scarce areas Cost (BATNEEC) e.g. control of emissions of ozone

Page 12
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity
depleting gases and harmful chemical residues and
Atmospheric emission appropriate discharge of wastewater
 Pollutants (VOC, NOX, SOX, PM10, CO, CO2, etc)
 Greenhouse gas production e.g. Hazardous materials storage, transport and containment
chlorofluorocarbons (CFCs) and  Label and store toxic and hazardous materials in
Hydrochlorofluorocarbons (HCFCs), „perc‟ secure, bunded areas
 Dust and noise  Improvement and regular third party audits of
chemicals storage facilities
Disruption and pollution of surface water (hydrological) Waste management - responsible waste management
and ground water (hydrogeological) systems and flows
- accidental spillage and inappropriate storage/packaging Partnering with and supporting host governments
of solvents  Encourage revenue transparency and good
governance
Accidental spills and fire risk - storage and handling of  Compliance with national / regional / local
chemicals, materials storage and transportation can lead regulations
to contamination of air and land and to fire risk from
flammable and combustible dry cleaning liquids

Liquid/solid waste (production and disposal) - storage

and handling of non-hazardous and hazardous waste

Page 13
Version 6.0 March 2015
© Barclays Bank PLC
7.2 Social Risks

Life Cycle Phase Risks Controls

and Activity
Raw Materials Employee health and safety Supply chain sustainability and employee health and
Supply  Weak enforcement of labour standards; safety risk management system
 Labour relations (e.g. employee organisation,  Ethical sourcing policy
representation and negotiation);  Commitment to company-wide and supplier-wide
 Working conditions (H & S standards, training and employment and H & S standards
monitoring of risk exposure); and
 General employee welfare (including employee
compensation, benefits, and training).
Manufacturing Employee health and safety Community health and safety plan and awareness raising
Operations  Employee / Occupational Health and Safety (e.g. on communicable diseases - administration of
exposure to hazardous chemicals (e.g. carcinogens vaccinations
such as asbestos), dust and noise; unguarded
machinery; fire and explosion risks; ergonomics Partnering with and supporting host governments
issues).  Encourage revenue transparency and good
 Employment and poor labour standards - child governance
labour and working conditions (labour intensive,  Compliance with national / regional / local
long working hours, pay, work by hand) regulations

Community health and safety - noise, vibration, dust

creation, traffic movement, emissions and air quality

Communicable diseases - spread of diseases by workforce

to local / foreign populations

Land acquisition – displacement - need for resettlement

and relocation with compensation
Page 14
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity

Social / community cohesion and exclusion of vulnerable

groups - socio-cultural tensions between local and foreign
workforce

Loss of livelihood - economic displacement - e.g. job

competition

Host country governance, national economy and

revenue transparency - e.g. security around operations,
bribery and corruption

Ethical issues
 Surrounding animal testing and the use of
xenotransplantation - i.e. use of genetically
modified animal organs for human transplants)
 Drug testing on vulnerable communities resulting
in Human Rights violations
Transport and Community health and safety - noise, vibration, dust Community health and safety plan - Enforce strict driver
Product creation, traffic movement, road safety, emissions and air skills standards and implement driver and road safety
Distribution quality behaviour training

Strain on infrastructure and public nuisance - strain on Transport management plans

transport networks and local infrastructure - disruption to  Mitigate delays and avoid peak hour times
road users both pedestrian and other vehicles (e.g.  Road safety awareness for communities and
refrigeration of vaccines while in transit to rural clinics) employees

Bulk Storage Site security and vandalism - risk of terrorist attack on  Site security plans - ensure appropriate security

Page 15
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity
chemical plants measures are in place
 Emergency preparedness and spill response plan
Community health and safety - accidental spills and tank - including provision of emergency water supply
leakage, water contamination
Product Use Community health and safety Community health and safety plans - Warning labels and
 Noise, vibration, dust creation, traffic movement, effective education of the dangers of inappropriate use and
emissions and air quality consumption
 Controversial prescription and use of medicines /
pharmaceuticals (e.g. Ritalin for diagnosed Use of BATNEEC and weather monitoring - mitigate
attention deficit disorder) effects on local communities
 Drift of pesticides due to aerial application, adverse
health effects of pesticide coated produce Community awareness and education - washing and
 Inappropriate / ill-informed use of chemicals / careful preparation of produce
pharmaceuticals leading to illness or death
Community awareness and education
Affordability of best available products in developing  Toxic substances present in certain products
countries availability of alternatives
 appropriate labelling‟ – including clear and specific
instructions as well as contradictory symptoms,
overdose information and contraindicators
 Pesticides labels should include directions for use,
mixing instructions, expiry date, health hazards and
first aid measures in case of accidental exposure or
ingestion
Laundries and Employee health and safety
Dry Cleaning  Poor employment and labour standards, Health and safety management systems
 Dangerous employee conditions including health  Adjust the employees work, temporary and long
and safety, exposure to chemicals term

Page 16
Version 6.0 March 2015
© Barclays Bank PLC
 Life Cycle Phase Risks Controls
and Activity
 Risk from exposure to hazardous chemicals and  Introduce a occupational health system
e.g. chlorinate solvents and heavy machinery  Information about occupational ill health
 Manual handling/musculoskeletal injuries  Risk assessment and safety instructions for all
 Noise induced hearing loss from noisy machines, employees
e.g. cleaning plant, packaging machinery
 Respiratory irritation from breathing fumes such as Emissions management - odour control
chlorine, hypochlorite, ammonia and sulphur
dioxide
 Occupational dermatitis from chemical cleaners

Public nuisance - odour if operations in close proximity to

residential areas

Changing technology and regulation - costs of less

environmentally detrimental new technologies

Page 17
Version 6.0 March 2015
© Barclays Bank PLC
8. Key considerations
1. How long has the site been used for this purpose? The contamination risk increases with time.
2. Are all necessary environmental authorisations and permits held and is the operation in full
compliance with their requirements?
3. Has any on-site waste disposal (e.g. spent solvents or expired medicines etc.) ever taken place?
How are waste products treated and disposed of in general?
4. Has the company been prosecuted or served with any warnings for environmental offences? Are
there any outstanding prosecutions against the site?
5. What procedures/resources exist to manage environmental risks (e.g. an environmental
management system or personnel with specific responsibility for risk mitigation)? Are these
procedures considered to be adequate/robust? Are the same environmental standards applied to
facilities in different countries (if applicable)?
6. Is live animal testing or genetic engineering/research undertaken?
7. Has company received negative media coverage in the last three years?
8. Is there an emergency response plan in place for use in the event of an accident? Does the plan
taken into account neighbouring land uses and the potential consequences of an emergency?
9. Does the company face any significant expenditure to meet conditions attached to process
authorisations or permits (both current and pending)?
10. Is it anticipated that changes to environmental legislation or environmental pressures (e.g. from
the public or supply chain) will lead to an increase in the cost of raw materials or changes in the
means of manufacture, the product mix and/or waste disposal or wastewater treatment?
11. Does the company report externally on their sustainability / corporate social responsibility (CSR)
issues (environmental, social and economic)?
12. If an external report exists, is it independently verified?
13. Does the company identify its non-financial risks in a systematic manner?
14. Does the company score well in any of the sustainability ratings, rankings or indices (e.g. Dow
Jones Sustainability Index (DJSI), FTSE4Good)

Page 18
Version 6.0 March 2015
© Barclays Bank PLC
9. Regulation and Best Practice

Permits, consents and licences are likely to be required for chemicals and pharmaceuticals
manufacturing operations, the specifics of which will depend on the relevant regulatory framework in
the location of an operation/facility. In developing regions, weaker governance structures may mean
that there is less stringent implementation of local controls and regulations or indeed there may be no
controls at all. In such cases the project proponent as a demonstration of best practice should ideally
adopt international environmental and social standards and industry Best Practice.

In the case of almost all large-scale new build, expansion and development projects an Environmental
and Social Impact Assessment (ESIA) will be required particularly where project debt financing is
being sought. A comprehensive ESIA undertaken to international standards allows both the project
sponsor and the investors to assess the full range of potential environmental and social impacts
related to a project development, operation and decommissioning. Part of the ESIA process is to
design appropriate mitigation measures and to set a framework for monitoring the performance of
these measures on a long-term basis. This limits and controls compliance and remediation costs as
well as long term credit and reputation risks.

For smaller scale projects and operations a full ESIA may not be required. Focused studies on
particular issues of concern may however, be helpful in identifying potential environmental and social
risks associated with certain project activities.

The following section lists key international standards and publicly available best practice reference
materials relevant to the chemicals and pharmaceuticals industry.

Page 19
Version 6.0 March 2015
© Barclays Bank PLC
10. Additional resources

Multilateral:
1) IFC Performance Standards
2) World Bank Group: Energy Sector Management Assistance Program
3) Greenhouse gas Protocol Initiative (a tool that can be used to determine the emissions of your
specific project/industry) from the World Business Council for Sustainable Development
4) Intergovernmental Panel on Climate Change „IPCC Special Report on Carbon dioxide Capture
and Storage‟
5) Stockholm Convention on Persistent Organic Pollutants
6) EU Directive for Waste Management
7) The Global Environment Facility (GEF)
8) EU Policies: Integrated Pollution prevention and control.
9) International Labour Organization (ILO)
10) UNEP Environmentally Sound Management of Hazardous Wastes. Including Prevention of
Illegal International Traffic in Hazardous Wastes
11) The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and
their Disposal
12) Voluntary Principles on Security and Human Rights
13) UN Environment Programme: Environmentally Sound Management of Solid Wastes and
Sewage-related Issues.
14) Stockholm Convention on Persistent Organic Pollutants (POPs)
15) United Nations Convention on Climate Change
16) OECD Control System for waste recovery
17) UNEP International Declaration on Cleaner Production

Government:
1) Environment Agency UK Monitoring Guidance notes for emission levels
2) Health and Safety Executive Noise Regulations (complete)
3) Health and Safety Executive Guidance for Employers for the Control of Noise at Work
Regulations 2005
4) Air Quality Criteria for Particulate Matter Environmental Protection Agency United States
Government
5) Environment Canada Convention on Biological Diversity
6) Health Canada Guidelines on Noise in the Workplace
7) Traffic Noise Information and Recommendations
8) Canada Labour Code Federal Law and Regulations
9) Animal welfare act

Page 20
Version 6.0 March 2015
© Barclays Bank PLC
Industry Association
1) Health and Safety Executive
2) International Solid Waste Association
3) Waste Industry Safety and Health Forum (WISH)
4) The United States Occupational Safety and Health Administration (OSHA)
5) National Pesticide Information Center
6) National Paint and Coatings Association

Page 21
Version 6.0 March 2015
© Barclays Bank PLC