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A notorious trio of chemicals poses potential hazards to consumers and manufacturers, according to the recently released report from Allianz Global Corporate & Specialty (AGCS) and Praedicat, “Emerging Liability Risks: The ‘Toxic Trio.’”
Dibutyl phthalate (DBP), toluene, and formaldehyde are commonly used in the personal care industry, such as in nail varnish, and as regulatory awareness increases around their use, liability issues can quickly arise. Navigating the variances in regulations around the globe is one challenge for manufacturers.
“Some of the chemicals or one of the chemicals is banned, for example. You’ve got DVP, where you have different regulatory approaches in the US than in the EU,” explained Wolfram Ferdinand Schultz, global practice group leader heavy industries and manufacturing for AGCS. “You have to take into the consideration that the EU approach is following the precautionary principle whereas the US approach is rather that there is a very high bar of proof of harm,” which is one reason why other chemicals are also not banned in the US, while those in the EU are banned.
Mislabeling is a potential stumbling block that manufacturers of personal care products could encounter. According to the AGCS report, products that are labeled “three-free” while still containing one or more of the toxic trio increase the liability exposure as well as the reputational risk for the producer.
“This just represents one of the risks somebody has who is producing personal care products. It could be that with a good intention, they put the label on the products, but due to the fact that one of the supplies doesn’t really follow one of the specifications, it might be that this product is not free of those chemicals,” said Schultz.
By publishing reports like “Emerging Liability Risks” AGCS wants to alert its clients that they should be aware of the issue before they fall victim to liability risks.
“Our intention is to highlight how important it is that our companies and clients are focusing and spending their efforts into prevention and adequate risk management, and supply chain controls,” said Nina Everding, global head of portfolio steering and pricing for AGCS, adding that controlling what ends up in their product, which inevitably ends up in consumers’ hands, should be top of mind.
Staying up to date with scientific developments around these and other chemicals is another method of mitigating against exposures.
“They [have to] understand during the product life that they have to monitor the scientific developments. If new scientific information occurs that shows that some ingredients might be problematic, then they have to think about substitutes,” said Alfred Henneboehl, deputy global head of liability for AGCS. “We try to help our clients to get awareness and to understand that they don’t just keep insurance, which is [also] important because certainly if something goes wrong – and it can go wrong – there are two elements that insurance is providing. On one hand, defense against alleged liability and on the other hand, payment for settlements.”
