EXECUTIVE SUMMARY. Executive summary

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2 Authors This study was carried out by Mathieu Ryckewaert and Randy Ryder, two MBA students at the Belgium-based Vlerick Leuven Gent Management School, under the responsibility of Anne-Catherine Husson-Traore, Novethic's Managing Director and Dr. Professor Céline Louche, a CSR expert. Novethic's CSR researches Novethic analyses companies communication practices on specific Environmental, Social or Governance (ESG) issues likely to be of interest to investors because of the impact which they may have on the companies in the medium- and long-term. The aim is to see whether or not companies CSR strategies and communication meet investors expectations taking non-financial criteria into account. These studies relate to issues which are still emerging but which are already sufficiently present in public discussion and likely to affect a significant number of European listed companies belonging to different sectors of activity. Novethic 2010 Any full or partial reproduction of the content of this document is subject to Novethic s authorisation. Any quotation or use of data must indicate the source.

3 EXECUTIVE SUMMARY Executive summary Nanotechnology is a broad term that encompasses the development of products through the manipulation of matter at nano-scale levels. This science spans across many scientific disciplines such as biology, material sciences and engineering. According to experts, revenues associated to nanotechnologies should reach $1 Trillion by Offering new opportunities for numerous products, nanotechnologies are nowadays incorporated into a growing number of them without it necessarily being possible to assess the potential risks in using them in the medium- and long-term. In this study, Novethic proposes to use the prism of Corporate Social Responsibility (CSR) to analyse the quality of the information provided by the large European listed companies affected by this emerging issue. For companies, CSR involves incorporating the environmental and social impacts of their activities into their strategy whilst being as transparent as possible with their stakeholders. In principle, it leads them to reassess their model for analyzing the risks and opportunities of some of their activities. As far as nanotechnologies are concerned, their use is already sufficiently widespread to try to measure what the companies which use them or produce them say about them. The aim is to assess the quality of the information provided in their public documents which are thus accessible to all stakeholders, whether they are employees, consumers, clients, shareholders or even NGOs, who are worried about the consequences of the development of nanotechnologies. In specific terms, where the opportunities that they bring are overestimated and the risks underestimated, their impact can, over time, be very negative on the company s growth. For some companies, nanotechnologies can be linked to health risks which would greatly compromise the economic benefit from their use, in the event that the producing companies have to assume the legal consequences of them. For others, nanotechnologies are not necessarily toxic but could be rejected by European consumers in the future, just like GMOs are today and, if so, the companies will have to invest a lot in the guarantees to be provided to the consumers. There as well, the economic cost of such measures may be significant. If the various NGOs who are asking for a moratorium on nanotechnologies obtain it, the cost of such a measure for the companies involved in their production would be extremely high. Whether the consequences of the spreading of nanotechnologies are positive or negative, financial and non-financial analysts need exhaustive information on the status which the companies give to nanotechnologies in terms of risk strategy and management to be able to best advise investors, in particular those that have a long-term horizon. Insurers viewpoint on the risks associated with nanotechnologies The public debate organised in France led the FFSA (French Insurance Companies Federation) to draw up a document which summarises the vision that insurers have of nanotechnologies. Whilst, for them, they belong to the realm of innovation that they want to encourage, they "note the lack of scientific knowledge on nanotechnologies and the absence of assessment on their risks for health and the environment. This leads them to classify them in a category known as development risks which are, by nature, uninsurable because they are impossible to assess. Specifically, this means that the risks of invoking the liability of the companies involved in the manufacture, the use and the sale of nanomaterials or products including Novethic Nanotechnologies: which communication for European companies? 3

4 EXECUTIVE SUMMARY nanomaterials and also invoking the liability of an employer vis-à-vis its employees cannot be covered by current civil liability insurance policies. Considering that "only the reduction of the doubts will allow the creation of conditions favourable to the progressive development of appropriate responses on the insurance market", the FFSA thinks that, as a first stage, rules of ethics and governance should be implemented to better regulate the use of nanotechnologies. It also wants research that is "objective, cross-disciplinary and appropriate to the nanoparticulate dimension to be developed. It stresses the essential need for transparency and states that "in the context of risk prevention, it is essential that the economic stakeholders provide insurers with relevant information relating to the use, the manufacture and the release to market of nanoparticulate substances, in order to assess the risk. It also recommends the development of the prevention of professional risks in this area and the need to set up an appropriate analysis model (exposure modes and times, protective equipment, training, etc.) whilst also arranging for the traceability of professional exposures. Finally, it seems imperative to the FFSA that the regulations should be adapted to the nanotechnologies via the development of regulations for the sector or the adaptation of the national and European regulations, in particular the REACH regulations. For the association of insurers, this means "listing the nanoparticles and the production networks, with a standardisation of classification and the creation of an exhaustive database. It also proposes to "initiate close cooperation with an organisation dedicated to nanotechnologies in order to be advised, in real time, of the development of the scientific knowledge and to exchange their management and risk analysis expertise. Methodology This study analyses the transparency of the main European listed companies that produce and use nanotechnologies included in the products which they sell. This purpose of the study is to measure whether the companies talk about this and how they do so, in order to classify their communication into three categories: non-existent, basic or indepth. It is based on a panel of 92 companies belonging to about a dozen sectors, selected from the CAC 40 index and two German indices (Stoxx TMI Large and Euro Stoxx Chemicals). This study concentrates on the companies that take part in the life cycles of products including these technologies. Consequently, the companies from the banking, insurance, travel and leisure sectors or media belonging to the indices used have been excluded from the scope of the study. The transparency of the companies can only be measured by analysing their public communication, with the most accessible being that of their Internet site. All of the research has therefore been carried out on the Web sites. The assessment consisted of reviewing a set of rating criteria used to measure the degree of transparency of the companies on their use of nanotechnologies. The research done was carried out via the search fields present on the majority of the company Web sites. 4 Novethic Nanotechnologies: which communication for European companies?

5 EXECUTIVE SUMMARY A specific study was done in the chemical sector which both produces nanotechnologies and is subject to the European REACH system for assessing the toxicity of chemical products. The six main criteria were as follows: Does the world nanotechnology of nanomaterial appear on the website of the company? In its annual reports or sustainable development reports, does the company speak about nanotechnology or nanomaterial? Does the company give a direct contact in charge of nanotechnologies? Does the company explain its level of engagement with stakeholders? Has the company generated a specific document and/or a code of conduct on the use and/or development of nanotechnology or nanomaterial? Does the company list one or more products it market that incorporate nanotechnology or nanomaterial? Legislation The legislative process applicable to nanotechnologies is a complex landscape of interconnectedness between member states and EU directives. Member states are trying to drive the legislative debate, taking advantage of first-mover status. Germany and France, for example, has taken significant steps to shape national policies and directives, while spurring innovation through careful investments. At the European level, the REACH directive is a central player in the control and monitoring of chemical substances. The debate continues whether REACH is all-inclusive and implicitly covers nanomaterials. In fact, there is a lot of European legislation on the protection of workers and the environment that potentially apply to the use of nanotechnologies. Only two sectors are more specifically monitored: the cosmetic and agri-food industries, which are subject to ad hoc directives. Issues associated with the development of nanotechnologies are referred to European courts, but, for the time being, the Commission and the Parliament hold a different view, in particular regarding the notion of assessment of the associated risks. The Commission thinks that the existing mechanisms are sufficient, while the Parliament thinks that appropriate set of regulations must be created. Main results The silence of the companies is deafening: 54% of companies surveyed are silent on nanotechnology, a surprising result considering the scope and size of this nascent market. There are undoubtedly different reasons for this silence: The regulatory framework is still vague Nanotechnologies are only exceptionally an integral part of companies communication strategy Some companies are concerned about the potential toxicological and ecotoxicological risks of using such technologies and materials and hence prefer to avoid mentioning this sensitive subject, which goes against an affirmed CSR strategy Companies do not want to expose themselves in terms of risking their reputation by talking about an area where the status of the scientific knowledge and the regulations are still blurry, while some environmental NGOs are starting to sound the alarm and ask for moratoria Novethic Nanotechnologies: which communication for European companies? 5

6 EXECUTIVE SUMMARY Less than half of the companies surveyed provide information on their use and development of nanotechnologies. However, this information is too often limited to one or few catch phrases on the positive impact of nanotechnologies, with very few companies providing a real overview of possible risks and benefits. Only three companies provide an exemplary communication All these companies belong to the chemical industry. Two are Germans -BASF and Bayerand the third one is French: Arkema. These results are coherent. The chemical industry is the first link in the nano value-chain, since its produces the materials incorporated in objects that eventually become end products. These companies have transparent communication because they are speaking to their potential clients and they want to convince them. Furthermore, chemical companies are under heavy scrutiny of both national and European safety agencies and of environmental NGOs. While adding some strain on companies, this creates in parallel a positive atmosphere for a constructive dialogue with stakeholders. Stakeholders As far as nanotechnologies are concerned, the stakeholders can be classified into two main categories: the public and the industrial players. Public debate is mainly expressed through NGO and consumer groups. Its focus is mainly on the impact of nanotechnologies to the human body through direct contact, whether that is through skin exposure or ingestion of novel foods. Nanotechnologies crystallise an emerging debate on the technical movement questioning the benefits and highlighting the risks which can be associated with them. Industry stakeholders include companies, trade unions, and trade groups. Unified representation, such as the European Chemical Industry Council (CEFIC), helps to strengthen the debate and present one voice at the European level. Companies who are at the forefront of such technological innovation are the industry leaders in terms of communication. Trade unions represent an essential voice in this process to ensure that workers are protected and have their concerns addressed. Except for shareholders of the listed chemical groups, to whom nanotechnologies are presented as a strong developmental strategic focus, investors are still very unfamiliar with this new dimension. As long as it is impossible to put a price on the risks associated with nanotechnologies, it will be difficult to construct assessment models for the creation of economic value that they are likely to bring (see box on insurers viewpoint, p3). Chemicals: a key sector The results of the study not only present a current view of the European nanotechnology industry, but also where the societal, industry, and governmental trends are influencing this innovative technology. Except for the chemical sector, these results are consistent across sectors. Communication is careful and calculated, so as to strike a balance between a risky communication and the obvious dangers of not communicating on the subject. One of the key factors is the issue of the potential immediate effects of nanotechnologies on the 6 Novethic Nanotechnologies: which communication for European companies?

7 EXECUTIVE SUMMARY organism. Applications such as novel foods and nano-cosmetics deserve and do get much more governmental and third party oversight than the automotive or construction & materials, which does not necessarily have the consequence of making the relevant companies more transparent on the subject matter. It is also noted that manufacturers do not communicate in the same way depending on their nationality, probably because of the cultural difference in perception of new technologies. It must finally be stressed that the manufacturers in the various sectors where these types of elements are found differentiate nanomaterials and nanotechnologies because not all nanomaterials come from nanotechnologies and not all nanotechnologies are used to make nanomaterials. Specifically, the "everyday" nanomaterials (such as silica, in food or in paints which has been added for many decades for textural properties) should be excluded from any specific mechanism, since they do not use nanotechnologies. The chemical industry is the main industrial actor of the various nanotechnologies. Most of the materials currently produced begin their product lifecycle with this industry. This places the chemical industry at the centre of the nano debate. This multi-billion euro industry is associated to the bulk of legislative action, governmental lobbying, and NGOs efforts. While nanotechnologies are still by and large not known about, materials such as carbon nanotubes, nano zinc and aluminium oxides are initial raw materials transformed for example into car paints, sun creams, new foods and water filtration systems. This therefore means any type of consumer should potentially be interested in the subject matter. I. Analysis of companies' communication 1. CSR and transparency The transparency of a firm does not simply mean informing consumers on one of its activities, it is rather to ensure that the consumers can have access to a large and deep understanding of the different activities of the business. Assessing the transparency of companies on nanotechnologies is a formidable entry point to see whether or not the company is open to discuss a difficult issue that poses many challenges for the company, the consumers and the society at large. The impact of a company on society changes with the transformation of social standards and scientific progress. Being transparent and communicating with the different stakeholders on difficult subjects can be a guarantee of companies long-term survival. The representatives of two companies questioned in the study - Carrefour and Arkema confirmed that they listened attentively to the NGOs, especially those with whom they do not agree because they provide them with essential information. This listening and this debate constitute, for example, for Arkema the best way of avoiding a moratorium on all products linked to nanotechnologies. Novethic Nanotechnologies: which communication for European companies? 7

8 I. ANALYSIS OF COMPANIES' COMMUNICATION On the other hand, companies are faced with a scientific obstacle which considerably limits their ability to be transparent: the toxicological and eco-toxicological protocols currently approved by the OECD are not yet capable of fully determining the degree of danger of certain nanomaterials. This is why these companies are working, in France and in Europe, to draw up a nano-responsible standard (see interviews with Carrefour on page 21 and Arkema on page 30). Nanotechnologies: a new manufacturing method The definition of nanotechnologies cannot be limited to the size of a particle, even if it is an important aspect. The Centre for Responsible Nanotechnology defines nanotechnologies as "the engineering of the functional systems on a molecular scale. The infinitesimal size that characterises these processes gives them particular properties which differ from the properties of individual atoms and molecules and from bulk matter. A few nanometres in size, the difference in the effects produced can greatly affect the optical, electrical and magnetic behaviour of the materials. The chemical and physical properties of the nanomaterials are often fundamentally different from those of micro- or macromaterials, and the new or modified properties recorded on a nanometric scale can be used in a targeted manner and offer a myriad of possibilities. The number of products and applications using nanomaterials or nanotechnologies is rapidly growing, which shows the fact that they are not only a technology but rather a new manufacturing method. Some examples of applications of nanotechnologies: There are carbon nanotubes in the composite materials used in sports equipment, aerospace engineering or defence, and also in drug administration systems Semi-conducting nanocrystals are used in biotechnologies, the marking of products as an alternative to barcodes or the LED lighting systems which can also have a silicone nanowire component Titanium oxide nanocrystals are included in the solar filters or the solar cells of photovoltaic panels Nano argile particles appear in food packaging or unsinkable wood Source: Oddo Securities study 2006 Some examples of products containing nanomaterials: Cosmetic and body care products, paints and coatings, catalysts and lubricants, textiles, medical and health products, food and nutritional ingredients, agrichemical chemistry, veterinary drugs, construction materials, weapons and explosives, consumer electronics. 2. Company sample Although the bulk of companies dealing with nanotechnologies are either start-ups or middle-sized companies, the study focuses on listed large cap companies, for three main reasons: Firstly, the regulatory obligations specific to them force them, in principle, to provide exhaustive public information regarding their activity, their results and their financial 8 Novethic Nanotechnologies: which communication for European companies?

9 I. ANALYSIS OF COMPANIES' COMMUNICATION operations. In addition, almost all of them today have official communication on sustainability. Secondly, the level of scrutiny those companies are facing from investors, national authorities and consumer implies that these companies are more exposed than others to any negative effect on their reputation. Thirdly, these companies invest heavily in Research and Development (R&D). As an example, BASF invested in 2008 about 1.35 billion Euros in R&D projects and L'Oréal about 609 million Euros in An initial general panel The analysis firstly concerns a general panel of 83 companies, selected from the CAC 40 index (29) and a German stock exchange index, the Stoxx TMI Large (54). The companies operating in the Banking, Insurance, Travel and Leisure, and Media sectors have been excluded from the analysis given the nature of their operations. A second analysis was then carried out on a representative sample of about fifteen chemical companies belonging, on the one hand, to the general panel and, on the other hand, to a German index, the Stoxx Euro Chemicals (see page 28). Sector breakdown of selected companies Sectors Number of companies Oil and gas 8 Chemical products 15 Commodities 2 Construction and materials 5 Industrial products and services 14 Automobiles & Parts 7 Food & Beverage 5 Personal & Households Goods 8 Health Care 3 Retail 6 Utilities 14 Technology 6 3. Analysis of the quality of the communication The first stage involved analysing the companies Web sites, which are the main communication tool on their identity and their activity, to ascertain whether they spoke about nanotechnologies and, if so, how they did so. The aim was to assess the quality of that communication to their stakeholders and not the relevance of their strategy on nanotechnologies or even the technical dimensions of their use. The analysis of publicly available information has been done from May to June Assessment criteria Novethic Nanotechnologies: which communication for European companies? 9

10 I. ANALYSIS OF COMPANIES' COMMUNICATION Questions Does the world nanotechnology of nanomaterial appears on the website of the company? Does the company provide available reports that speaks about nanotechnology or nanomaterial? Objectives Identify the companies which have a public disclosure policy on nanotechnologies. See if the company commits to be transparent around the subject. 1 point 2 points Does the company give a direct contact in charge of nanotechnologies? Evaluate the willingness of a company to be active in its communication with stakeholders. 2 points Does the company provide information on its engagement with stakeholders? See if the company is positioning itself as active actor, particularly with governments and NGOs. 3 points Has the company generated a specific document and/or a code of conduct on the use and/or development of nanotechnology or nanomaterial? Identify the willingness of a company to adopt an exemplary communication on the subject. 4 points Does the company list one or more products it market that incorporate nanotechnology or nanomaterial? Prove that the company moves towards a very high level of transparency. 6 points Methodology of the analysis The number of points assigned to each question was determined based on the relative importance of a positive response to it. Question 1 Since most corporate websites contain a search tab, it was used to search for any instances of nano that might occur. In the rare instance that a website does not offer a search tab, direct search methods were used to gather information, through the analysis of their sustainability or annual reports of the last three years. For companies with active sustainability departments, we have searched in the corresponding sections for any documents relating to nanotechnology. If after a best-effort search, nothing was found, the company is marked as non-communicative on the subject. Question 2 This is used to assess whether the company considers that monitoring has to appear in the information that it publishes in its official documents. If it does, it can thus develop its use of nanos with shareholders by including them in its annual report. It should be noted that a positive response to this question means that the firm mentions nano in a report, not necessarily in every annual report. Question 3 This means that the website has a specific link where staff or a department is reachable to address specific questions on the firm s use of nanotechnology. It is, of course, understood that only firms whose use of nanotechnology is part of their core business are 10 Novethic Nanotechnologies: which communication for European companies?

11 I. ANALYSIS OF COMPANIES' COMMUNICATION likely to provide such specific contact information. For this question to be marked as yes, it is not sufficient for a firm to simply have a sustainability unit that lists its contact information, but it must also specifically designate a structure in charge of the subject matter. Question 4 Only the companies that have opted for exacting communication on the subject are likely to answer it and the following questions positively. Very few companies are proactively engaged with stakeholders on this topic, which means that these companies are contributing to, or even driving, the discussion and influencing policy decisions at governmental levels. Question 5 Very few companies provide documents establishing a set of guiding principles on its usage of such technology. Since such a document is voluntary, the company willing to be held publicly accountable to a set of standards clearly indicates its willingness to be leader in its industry. Question 6 Regarding the provision of a list one or more of the products that contain nanotechnology, one can consider that the subject may be associated to the discussions at the EU level about mandatory labelling of products that contain nanomaterials. Today, it is far from being in force and is undoubtedly very difficult to put into practice. The companies that henceforth publish lists of products have the greatest degree of transparency, showing that they are confident in the safety of their products and that they assume full responsibility for them. They receive the highest grade. Only three firms qualified positively for this question. While in some cases, companies stated that a product contained nanomaterials for commercial purposes on brochures, that did not have the same significance. For example, a car manufacturer mentions that some of its models are painted with a product that contains nanomaterials to better preserve the body of the car. In this instance, this would not qualify as listing a nanotech product. 4. Very predominantly silent companies Of the 83 companies in the general analysis (constituents of the CAC 40 and STOXX TMI Large indexes), 38 speak about the nano issue, while 45 remain silent. The quality of their communication is divided into three broad categories: Transparent, Basic communication, Silent. Novethic Nanotechnologies: which communication for European companies? 11

12 I. ANALYSIS OF COMPANIES' COMMUNICATION Classification of the companies by level of communication 12 Novethic Nanotechnologies: which communication for European companies?

13 I. ANALYSIS OF COMPANIES' COMMUNICATION Silent companies The companies appearing in this category are those for whom no mention of nanotechnologies has been found in their official communication. This means that they say nothing about the subject. While it is by nature difficult to analyse a lack of communication, some explanations can be offered. Firstly, their exposure to nanotechnologies is extremely variable. Whilst chemical companies mention them more naturally, less than 20% of companies from the construction and materials are in this category. Secondly, the image conveyed by nanotechnology is rather negative in some contexts. Whilst German motor manufacturer make a sales argument out of their use of nanomaterials explaining, for example, that their tyres last longer and cause less environmental damage, the cosmetic sector is not in the same situation. We identified at, least one mascara, produced by the German company Beiersdorf, called Mascara Volume Nano, but these words appear exceptionally on the product sold to the consumer. However, nanotechnologies are very present in some products such as sun creams. Cosmetics manufacturers still need to convince the general public that nanomaterials in cosmetics are not harmful to the body, and won t enter through the epidermis. Distributors and the agri-food industry are in a similar situation in terms of the packaging containing the nanoparticles of the products that they distribute or make. In fact, a sizeable number of companies prefer to opt for a neutral position on the subject, in the current state of play with research, especially if they only use nanotechnologies and do not produce them. It also all depends on the nature of their activity. Public communication is a lot more sensitive for large consumer companies than for those who only deal with professionals. To better understand the factors of this silence, the study offers a detailed analysis of Danone s communication and an interview with the motor manufacturer PSA, both of whom have adopted this position. The analysis: Danone An analysis of Danone s web site, which includes a search engine, shows that sustainability is one of the seven major subjects displayed on the home page. This attempts to show the company s commitment on consumers health, the protection of the environment, of water resources and of biodiversity or even the limitation of packaging. It all contributes to showing that Danone is a responsible company. Danone states that it has set up its own centre for food safety, the role of which is to anticipate and prevent biological, chemical, physical and allergenic risks from the food that it make. The word nano does not appear at any time in its reports. It can be considered that it alludes to it in its 2009 sustainability report, regarding a programme aimed at reducing the weight and the quantity of the packaging. It explains: "using a technology which injects air into the plastics to reduce their density and the volume of CO 2 that they contain and confirms that 40 production lines already us it and that more than 110 will use it in It makes clear that these benefits do not in any way aversely affect the packaging s essential functions and the food safety of the product contained in it. Whilst it is very simple to find the contact details for access to communication, investor relations and the people in charge of sustainability, it is extremely difficult to find a contact on health and safety issues. Novethic Nanotechnologies: which communication for European companies? 13

14 I. ANALYSIS OF COMPANIES' COMMUNICATION In conclusion Danone s method of communication, centred on sustainability and health through food, does not allow it to be known whether it uses nanotechnologies or not and, if it does use them, up to what point it voluntarily chooses not to speak about them. Positioning itself as a responsible and transparent company should, in principle, mean that it should explain what its strategy is in this area. 14 Novethic Nanotechnologies: which communication for European companies?

15 I. ANALYSIS OF COMPANIES' COMMUNICATION The interview: PSA Peugeot-Citroën It was held with Sandrine Raphanaud, in charge of PSA s corporate communication The French automobile group made it clear that if they were silent about the topic it was not because they were not dealing with nano, nor because nano had a negative image, but rather because they had still a neutral position on the topic. PSA confirmed that they were manipulating materials containing nanomaterials, and more specifically carbon nanotubes, and that PSA workers were manipulating this kind of materials on a rather experimental basis. Late 2009, the firm initiated a Hygiene, Safety and Environment study with independent industry medical experts to analyze some potential risks that could be associated with the handling of nanomaterials. This study led PSA to draft an internal scorecard, which describes specific toxicological tests to perform and proposes specific safety recommendation for its workers. PSA also developed an internal document that organizes the way the firm engage itself with nanomaterials. Finally the group has integrated nanomaterials as a specific axis in its 2010 R&D plan. PSA does not communicate on these aspects because it would not be consistent with the external communication of PSA, which emphasizes technology and environmental concerns and its ability to create the car of the future, "one that enables responsible drivers to be in motion while being safe and responsible from an environmental point of view". PSA confirmed that the group has never been solicited by an NGO on the issue. According to the group this is most certainly because, contrary to the Food and Beverages and the Cosmetics industries, PSA products are not in direct human contact, i.e. ingested or put on the skin. Novethic : Does the company look at the issue from a transparency, a sustainable development or a risk assessment perspective? PSA : PSA could look at the issue from a sustainable perspective if using nanomaterials would mean gaining 200 kg on a car. But PSA looks more at the issue from a Risk assessment perspective : i.e. check the the added value of any new technology or material. Is it a sensitive subject in terms of relations with your stakeholders? No, we are not questioned by the environment NGOs on this subject. While PSA does not communicate of the topic, there are at least 3 entities that can be considered as point of contacts within the company concerning nanotechnologies. They are, to some extent, involved with various stakeholders. These entities are: the medical staff that are looking at health considerations of workers and consumers; the legal teams that are following the regulation and homologations at the European and national levels; and the material R&D team working upstream in the development of new products. What safety policy do you have on nanotechnologies? PSA looks also at the possible risk that could potentially emerge for the use of certain kinds of materials (i.e. lifecycle of some plastics) under two dimensions : Worker s protection and Consumer s safety (in the short and long term). Late 2009, the firm has launched a HSE study with independent industry medical experts to analyze some potential risks that are associated with manipulating this kind of materials. The result of this internal study is that PSA has now drafted a monitoring sheet, which describes specific toxicological tests and proposes specific safety recommendation for its workers. Interestingly, the results of the study are the one the firm was expecting: i.e. that the risks are relatively limited since PSA is indeed not directly manipulating nanomaterials. Novethic Nanotechnologies: which communication for European companies? 15

16 I. ANALYSIS OF COMPANIES' COMMUNICATION Do you think that the use of this type of materials is going to be extended? First, it is necessary to assess the real potential of this kind of technology. What can it really bring? What is it really changing in our industry? Is the nano industry capable to produce large bulks of nanomaterials? This question is particularly relevant for PSA since we are producing and selling millions cars a year and working in real-time all over Europe. Any break in the chain would cost millions to the company. Lastly, what is the technical and financial assessment (bilan technico-éco) of nanomaterials? The position of PSA can be explained with one example : if adding some nanocoatings in our painting is not counterbalanced by some measurable savings or added value, then why should it be interesting for PSA to adopt this kind of technology? 16 Novethic Nanotechnologies: which communication for European companies?

17 I. ANALYSIS OF COMPANIES' COMMUNICATION Basic communication Industry split of the companies who mention nanotechnologies 36 companies analysed have basic communication on nanotechnologies. Most of the time, they communicate on them for marketing reasons, but it is interesting to see whether they include that using the principle of sustainability. Only 14 firms mentioned nanotechnology in their sustainability reports. The Dutch retailer Ahold implicitly admits that its products could contain nanotechnology, based on company literature on its website. Ahold also makes it clear that it complies with all rules and regulations in the country of operation, which means that since the products containing nanotechnology have been produced in accordance with all applicable laws, Ahold is not legally responsible of what s in the products they distribute. Another interesting example is that of the Austrian electricity provider, Verbund. While it does not mention nanotechnology in its annual reports, the company discussed in a recent publication the societal implications of using nanotechnology. Due to the nature of their business, some companies have to disclose their usage of nanotechnology. While for these companies, there is some risk involved in the method of communication, the fact is that this poses a delicate public relation challenge. Companies that fall into this realm are usually dealing with products that have direct human contact though ingestion or topical applications. One example of such a company is L Oreal. L Oreal uses nanoparticles in some of its skin care products. While the company realizes that the discussion of nanoparticles in skin care products is of a sensitive nature, it also understands that being silent is not an option. One of L Oreal s prior sustainability reports Novethic Nanotechnologies: which communication for European companies? 17

18 I. ANALYSIS OF COMPANIES' COMMUNICATION mentions the use of nanoparticles, preferring however, to use the term ultra-fine particles. To better understand the factors of this introductory communication, the study offers a detailed analysis of L Oréal s site in its English version and an interview with Carrefour. The analysis: L Oréal In the 2008 & 2009 Sustainability Reports, we found documents contain information on L Oreal s position and use of nanotechnology. But older reports also mention the usage of nanotechnology. L'Oréal is a stakeholder or takes part in dialogue with various organisations regarding nanotechnologies. The company was a founding member of the International Council on Nanotechnology (ICON). ICON was founded through the Center for Biological and Environmental Nanotechnology, at Rice University in Houston, Texas. The aim of this organization is to create a global stage to bring various stakeholders together and encourage further dialogue on the development of nanotechnology. ICON aims to promote effective nanotechnology stewardship through risk assessment, research and communication. The firm is also engaged with the European NanoInteract Program, through which L Oreal has delivered an experimental ecotoxicity model that has been officially recognized by the OECD. The company is heavily engaged with the International Standards Organization (ISO) to establish international standards and guidelines for defining lists of products that would be defined as nano-products. No specific code of conduct, or similar document, can be found on the firm s website. However, a 2006 Sustainability Report indicates the company s adherence to the EU s Precautionary Principle when dealing with nanotechnologies. Through ICON, it has also helped to develop a global best practices framework. The company does not list specific products which contain nanomaterials. However, both the 2008 & 2009 Sustainability Reports do mention the use of certain types of generic nanomaterials, like titanium dioxide. The 2009 report mentions the limited use of nanoemulsions and nanopigments. Nanoemulsions are formed from water and oil droplets containing active ingredients that are released on contact with the skin at the time of application. They are reduced to nanometric sizeto increase the quality and efficacy of the formula. Mineral nanopigments are present in our natural environment. Titanium dioxide, an inert, non-toxic material, is the best known for its capacity to reflect UV light and to protect human skin against the adverse effects of the sun. These nanopigments are nowadays a very effective complement in helping to provide high protection factors. The European NanoInteract programme has confirmed that titanium dioxide nanopigments are not present at the time of application as separated nanoparticles, but as larger aggregates, often in the order of several microns in size. L Oreal reports its use of nanomaterials in its annual sustainability reports. The firm is trying to provide a balanced viewpoint of the benefits of these types of ingredients, while at the same time addressing current scientific concerns. A 2008 estimate valued L Oreal s investment in nanotechnology at $600 million. At this time, the company was estimated to have about 192 nano-patents, making it the 6th largest within the U.S. Among the other companies, we found, for example, Estée Lauder ou Procter & Gamble. 18 Novethic Nanotechnologies: which communication for European companies?

19 I. ANALYSIS OF COMPANIES' COMMUNICATION The interview: Carrefour It was held with Christophe Legraverend, Carrefour s PPH (Pharmacy, Perfumery and Health) Quality Manager Carrefour is a very good example of a company that openly communicates, although cautiously, on the topic. For the leading European retailer the main challenge is to ensure that the group communicates appropriately on their distribution brands. Communication on nanotechnologies is a top priority for the group, which it associates to its societal responsibility policy. Even if Carrefour ads that although they are very open to discuss the topic with consumer s representatives, it considers that communicating on nanotechnologies with end consumer is extremely difficult given the complexity of the topic, and especially that it cannot start without a common definition of nanomaterials. This is the reason why Carrefour is involved since the beginning in the development of a nano-responsible norm. The aim of this norm is to create a central tool that will enable traceability between the different actors of the supply chain. For Carrefour, the nano-responsible norm (currently developed by the French Normalisation Agency under the leadership of the Ministry of Health) is one of the tools that will force transparency. Novethic: Does the company look at the issue from a transparency, a sustainable development or a risk assessment perspective? Carrefour: From all 3 perspectives. In a risk assessment perspective, as we are speaking about a topic that covers hundreds of end products and hundreds of nanomaterials. This is the reason why Carrefour is involved in the development of the nano-responsible norm. The nano-responsible norm is a way for a company like Carrefour to assess the risks vs. the benefits of using one type of material in one of our end products. In a transparency perspective, while we cannot control the communication of industrial groups, we as owner of our own brands can show the way and ensure that this transparency creates confidence with our final clients. The nano-responsible norm is one of the tools that will enable this transparency and a sustainable development of nanotechnologies. Are you taking part in the discussion on the definitions? We want to ensure that a definition and a characterization are available as soon as possible since the lack of definition is the bottleneck that currently blocks the whole process. Without a coherent and internationally agreed definition, we think that it is impossible to move forward and to ensure transparency and a dully-informed choice for consumers. It is not about a particular size, or a particular characterization, it is rather about being understandable by end consumers. What is your level of engagement on the subject with your stakeholders? Carrefour is involved at different levels with different kind of actors. In France, we are members of the nanotechnology-working group of the French Normalisation Agency. We are also pushing for a dialogue through the French Retail and Distribution Federation (FCD - Fédération des Entreprises du Commerce et de la Distribution) and the National Consumption s Council (CNC - Conseil National de la Consommation). At Carrefour we consider that the National Consumption s Council is a very important body in terms of the governance of the issue at the French level. This is indeed a place where consumers, Novethic Nanotechnologies: which communication for European companies? 19

20 I. ANALYSIS OF COMPANIES' COMMUNICATION industrials, independent scientists and the public authorities can meet and permanently debate on the topic. This Council makes some recommendations to the Government as per the market authorisation of some products. At the European level, we also have exchanges but our involvement is not a direct one given our positioning on the supply chain. What is your point of view on the legislative approach? In 2009, both the national and the European trade representative s offices generated a position paper on the topic of nanotechnologies in order to specify their requests. They ask for a Clear and coherent EU framework on the topic, more scientific data, more public funding and more transparency. For us the regulation needs to be at minima a European one since Carrefour operates mainly in Europe and buys in many other countries. It also needs to be coherent and efficient. As an example, what is it that we do now, without a specific regulation on the topic, when we import non-food products from China? Since there is no definition available, it is difficult to control the products that are imported. With is your point of view on the assessment of ecotoxicity? With nanomaterials, it is really the 1st time that our world is confronted with a set of products already available on the market while the scientific community is not yet capable to define the entire toxicological and eco-toxicological effects. On Workers safety, to a very large extent we are in contact with an end product, already packaged with the supplier s brand or with our brand. Our workers have no direct contact with the product, only with the packaging, and in fact are not very concerned today about the issue. But an updated "nano" safety document would enable to be aware of the potential risks. What is your point of view about the perceived risks associated with nanotechnologies? Based on our experience, we consider that the risk is a possible moratorium on all the products containing nanomaterials, as may be asked by some European consumer groups. The only thing we can do to avoid such an extreme decision is to help the SMEs that are producing our distribution brand products to be more transparent and responsible on the topic. This is the reason why we support the nano-responsible standard project, after having supported the work of the CNC Conseil National de la Consommation (National Consumer Council). What are the main challenges of your company with its communication about the topic? The main challenge for us is to ensure that we communicate appropriately on our Carrefour brands. It is not that we are not willing to communicate with end consumers it is just that we cannot really communicate on it without any commonly agreed definition of what are nanomaterials. Interestingly, we have never been asked to communicate on the topic by consumers. What is your view of the development framework for nanotechnologies? It seems that the European institutions are finally taking care of the issue seriously. And it is good news since it will help the companies by having clear and consistent nano legislation. 20 Novethic Nanotechnologies: which communication for European companies?

21 I. ANALYSIS OF COMPANIES' COMMUNICATION Transparent communication The only two companies from the general panel that fall within this category are the German chemists Bayer and BASF, which also appear in the specific analysis of the chemical sector (see page 28). This is explained firstly because nanotechnologies form an integral part of their core business and represent a strategic focus of their commercial policy. Efficient communication thus enables the status of nanotechnologies to be better enhanced and they will then be considered an asset. Nano lifecycle The organisation of the life cycle appearing in this diagram shows that producers of nanotechnologies quite logically have the means of having controlled communication on the subject since they develop them. The Transformers cycle can have multiple stages. An example of this would be carbon nanotubes, which are produced and transformed several times before being incorporated in a product such as a car body where it s finally consumed. The Recyclers cycle represents the end of the lifecycle for these products. Recyclers can represent a range of industries, such as solid waste disposal systems or water treatment plants. The status of Bayer and BASF as producers does not, by itself, explain their policy of transparency. The study found that technology companies, specifically semiconductor manufacturers, do not easily communicate on nanotechnology. Semiconductor manufacturers certainly are at the beginning of the nano-electronics value chain. The chemical sector therefore plays a pioneering role in terms of communication on nanotechnologies - a policy which is limited to the dissemination of information to those that handle them or use them, i.e. the industries which it supplies Experts consider, for example, that it would be legitimate for all of the toxicological data to be included in the Safety Data Sheets for the products sent to clients of chemical companies, which is not at all the case at the moment. Nothing encourages the stakeholders in the chemical industry to do it, because, on the one hand, no regulation forces them to do it and, on the other hand, no nanotechnology producer wants to be the first one to do it so as not to be the one that will create concern in the whole industrial chain. Novethic Nanotechnologies: which communication for European companies? 21

22 I. ANALYSIS OF COMPANIES' COMMUNICATION The analysis: BASF This multinational company, based in Germany, employs over 100,000 employees worlwide and generated a turnover of 50.7 billion in The analysis of publicly available documents shows that BASF has adopted a transparent communication on the issues raised by nanotechnologies. The information provided on the use and production of nanotechnologies and the associated risks is very full. If you search for the term "nano" on BASF s Internet site, you find more than 1,300 possible hits and this is the subject displayed in the sustainable development section concerning the dialogue with the stakeholders. The subject matters dealt with concern employee safety, research or even the code of conduct regarding the use of nanotechnologies. Nanotechnologies also appear in a good place in the 2009 annual report and the company classifies them as one of the main vectors of growth. It values this market at 750 billion by Bayer thinks that it is necessary to have public discussion on these technologies and that it is its responsibility to combat the potential scepticism of public opinion by engaging in dialogue. The report mentions the company s work with the German governement on the NanoCare programme which involves bringing various stakeholders together to develop the tools for measuring the biological impact of nanotechnologies. BASF also takes part in the German Forum for dialogue on nanos which organises a discussion between consumers, those protecting the environment and the churches on ethical aspects. BASF s code of conduct, which is published on its site, highlights 4 principles: 1. The protection of human life and of safety at work and the refusal to create artificial nano-organisms. 2. The commitment to manage, at the same time, the risks associated with nanotechnologies, emerging techniques, and their development. 3. The commitment to only release to the market products that comply with the guidelines for respecting safety and the environment, as adopted by scientists, and to give priority to issues of public health and environmental protection over the financial benefits. 4. A continuous dialogue with the stakeholders to encourage transparency in respect of nanotechnologies. BASF is also one of the rare companies to list its products which contain or are based on nanotechnologies on its Internet site. 22 Novethic Nanotechnologies: which communication for European companies?

23 I. ANALYSIS OF COMPANIES' COMMUNICATION The interview: Bayer The interview was held in Leverküsen, at the group s registered office, with Dr Jacques Ragot and Markus Grünewald, who belong to Bayer s scientific centre on the environment and sustainability, Global Product Stewardship. Bayer Corporation is a global company with over 100,000 employees, with operations on every continent. The company generated 2010 sales in excess of 30 billion. Bayer s work on nanomaterials is an integral component of its overall business strategy. Bayer acknowledges that is that this topic is a very complex subject and needs to be carefully and accurately communicated. Even though Bayer deals in the main with professionals, it engages with consumers through its periodic publications and other marketing documentation it produces (mainly in the health care sector). For the chemical group, sustainability is part of the company s core strategy, not just a peripheral issue. Bayer considers that the development of nanotechnologies contributes greatly to it since, as well as the economic benefits that they bring to the company, they allow the environmental impacts to be minimised by reducing the needs for natural resources, by increasing the resistance of the products in which they are included and by allowing the weight of them to be reduced. In the specific examples given by Bayer, you have for example Baytubes carbon nanotubes, sold in Japan in an innovative heating system. Bayer stresses the conductive properties of its technology which allows large surface area heating systems to be produced that are the slimmest, the most compact and the most resistant. It is integrated with an external "giant radiator" which allows the trains to be heated when the temperature drops to -20 degrees. As for BASF, Bayer is involved in NanoCare, a public debate sponsored by the German Federal Environment Ministry aimed at discussing opportunities and risks of nanomaterials. It brings together representatives from the scientific community, specialist federal authorities, trade and industry and environmental and consumer associations. Novethic: Does the company look at the issue from a transparency, a sustainable development or a risk assessment perspective? Bayer: Sustainability is part of the company s core strategy. Bayer focuses its efforts in improving the planet and to benefit people. The work on nanotechnologies is designed to improve on modern societal issues, providing high quality food, and on issues of climate change. Products are designed as to feed down the value-chain, with the end result of addressing sustainability issues (i.e. green energy). What is your point of view on the legislative approach? Bayer s main concern is obtaining a neutral definition of nanotechnologies. In other words, the definition should not unfairly stereotype nanomaterials as hazardous simply for being nano-size. The definition should be based on the particulate substances and their engineered aspects. A distinction must also be made for intentionally versus unintentionally manufactured particles. Ultimately, the company feels that the REACH legislation full and inclusively covers all nanomaterials being currently produced. As such, a new legislation is unuseful. Novethic Nanotechnologies: which communication for European companies? 23

24 I. ANALYSIS OF COMPANIES' COMMUNICATION What dialogue do you have with your stakeholders on the subject? We take part in the NanoDialogues. They are sponsored by the German Federal Environment Ministry and brought together representatives from the scientific community, specialist federal authorities, trade and industry and environmental and consumer associations. But this programme concerns mainly Germany. Within the company, the internal stakeholders the employees are key to Bayer s success. Therefore, ensuring that they have accurate information, and that the corporation stays extremely transparent to its workforce, is important. Even though Bayer deals mainly with professionals, it engages with consumers through its periodic publications and other marketing documentation it produces (mainly in the health care sector). On the B2B front, engagement with automotive and other sectors is vital because of the alignment of sustainability and product innovations in those industries. Again, Bayer s product portfolio and strategy centers on societal sustainability issues. With respect to the recyclers that are involved in the nano value-chain, work is just beginning to engage with these entities. It s true that more involvement with this group is necessary. What is your point of view on the work to be carried out in terms of toxicology and health and safety of the employees handling the nanotechnologies? Bayer supports the activities at the International Standards Organization (ISO) for the standardization and characterization of various nanotechnologies. It is believed that international standards and consensus can only benefit not only industry but also the market place. With respect to toxicity testing, Bayer supports the discussion at the OECD level, which could enable a wide international consensus to be built up. From a company perspective, it s advantageous to have one set of criteria to test and adhere to. Bayer believes in supporting the various legislative bodies which work on the issue (EU, U.S., etc.) We want to continue to promote discussion on nanotechnologies in the context of chemical substances but by avoiding considering that they constitute a new category of such substances. What is your vision of the risks associated with nanotechnologies vis-à-vis society? The largest risk with respect to nanotechnology development is the continued investment in something that never becomes commercially viable. Additionally, the risk that society does not accept a new innovation must be managed carefully. This potential risk can be mitigated through proactive engagement with all of the stakeholders. The last risk is that of missed opportunities (missed chances). It s healthy to have debate and ensure that product innovations are safe and useful for society. If such products are rejected by society, they will no longer represent opportunities but will then be synonymous with job losses and, in such a case, it may be feared that these technologies will then still be developed outside of Europe. What is your communication strategy on the subject? The key challenge is that this topic is a very complex subject and needs to be carefully and accurately communicated. The entire company focuses on communication, not just at the management level. The code of conduct, for example, is just one form of communication about the company s vision of responsible and safe development of such technologies. The organizational chart in the 2009 Sustainability Report clearly shows 24 Novethic Nanotechnologies: which communication for European companies?

25 I. ANALYSIS OF COMPANIES' COMMUNICATION somewhat of a decentralized structure, where all of the internal stakeholders contribute to Bayer s overall message on nanotechnology. What is your vision of the development of nanotechnologies in 5 years time? Bayer feels that in the long-term, growth prospects are very promising, as more and more applications are developed which use various nanotechnologies. In the short-term, no dramatic increases in growth are expected, as public opinion and legislative processes continue to form shape. From our perspective, the focus remains to try and find nano applications which can help solve current societal issues. It is believed that incremental improvements will continue to sustain growth in this market, as applications continue to improve in sectors like green energy for instance. In the health care sector, growth is seen as much more of a long-term strategy due to the obvious complexities of this market. Novethic Nanotechnologies: which communication for European companies? 25

26 I. ANALYSIS OF COMPANIES' COMMUNICATION II. The chemical industry The analysis of companies communication showed that only a few manufacturers of the chemical industry adopted an in-depth communication. It was deemed necessary to create a focus group of European chemical companies. Looking at their communication allows it to be ascertained to what extent the chemical sector as a whole has adopted this type of strategy or whether it only involves approaches specific to some companies. Products, such as carbon nanotubes, nano zinc and aluminium oxides, and other nanoparticles are all produced by the chemical industry. These companies are now in a dominant position to both construct an appropriate communication on nanotechnologies, but also to have a bearing on the future regulations. Chemical industry panel The CAC40 and STOXX TMI Large group did not provide enough samples to draw specific conclusions. So the chemical sector was expanded to include companies EU-based and of sufficient market capitalization, belonging to the Stoxx Chemicals Index, index of the German stock exchange. This enlarged set of chemical companies in the table is more representative of the sector. Ranking of Chemical Companies 26 Novethic Nanotechnologies: which communication for European companies?

27 II. THE CHEMICAL INDUSTRY The results of the analysis of the chemical industry show that, out of the 15 companies analyzed, one is totally silent, while the majority of them has a basic communication on the issue. Only three of them have exemplary communication. In spite of everything, the chemical companies analysed make more information available to the public that that of the general panel. 70% of the companies, i.e. more than twice the broad industry analysis results showed, mention the nanotechnologies in their annual reports. The chemical sector also gives more frequently an access to codes of conduct, product lists, and description of their stakeholder engagements. One can imagine that one of the main drivers of this communication is the conformity with the regulations. Many of these products fall under the European regulation called REACH, which has been described as the most comprehensive chemical legislation on the planet! These materials require to have specific documents generated on them called Safety Data Sheets (SDS). These documents provide information on the material being manufactured, relating for instance to Environment, Safety and Hygiene, but they do not today contain precise toxicological data concerning nanotechnologies. Another interesting phenomenon is the participation of governments in the implementation of nanotechnology strategies. A good example of this is Germany. Already in 1998, the German government realized the potential for nanotechnologies and started to formulate a strategy on how the country could become a leader in the industrialization of such technologies. The German Federal Ministry of Education and Research drafted Nanotechnology Conquers Markets: German Innovation Initiative for Nanotechnology, a comprehensive report detailing that government s strategy on strengthening its nanotechnology industry in three main areas : encouraging the development of specific technologies, including targeted funding at SMEs in nanoelectronics, pharmaceuticals, optics and automotive ; supporting innovation by attracting the appropriate talent to Germany ; mediating and proactively engaging on the public debate of such technologies, and managing such dialogue in a constructive manner. Arkema: an exemplary case The analysis of Arkema s publicly available documents enabled to classify the French company jointly with Bayer and BASF as a company adopting an in-depth communication. It is even more interesting that nanomaterials are still very marginal Arkema s activity. The company has decided to be as transparent as possible on its new product: a carbon nanotube (CNT) trademarked Graphistrength, which is the only nanomaterial the company is working on. The current R&D incubator phase is about to be replaced by a pilot production plant that will produce up to 400 tons a year of Graphistrength. As mentioned on the website of the company, Arkema beliefs that the chemical industry will make a difference by bringing practical solutions to the planet s challenges. The perspective of the firm vis-à-vis the nano revolution is that this represents a major economic opportunity but also a sustainable development answer to the many challenges our planet is facing. The French group believes that when producing more efficient materials (i.e. lighter, stronger, longer lifecycle, etc.) they indeed enable a more sustainable development. Novethic Nanotechnologies: which communication for European companies? 27

28 I. ANALYSIS OF COMPANIES' COMMUNICATION The interview: Arkema It was held in the presence of three Vice Presidents of the group in charge of public relations, R&D and external communication (Nicolas de Warren, Christian Colette and Gilles Galinier) and its Science and Technology Adviser, Daniel Bernard. Arkema is one of the main chemicals producer in France with sales around 4.4 billion Euros in 2009 and about fourteen thousands employees worldwide. The activities of the group are organized into three business segments, Vinyl Products, Industrial Chemicals, and Performance Products, comprising fourteen business units. The group invests about 150 millions Euros in R&D each year and has seventh research centres worldwide where more than one thousand and one hundred researchers work on new products and materials. The engagement agenda of Arkema concerning nanotechnologies shows its caution. It took about 10 years for the company to enter into a pre-industrial phase. The company was confronted to an economic obstacle associated with its production costs. In 2002, the cost of production of 1gr of CNT was about 1000 Euros. From a business point of view this had to be reduced to 100 Euros a kg to go ahead with the development phase. In 2006, Arkema started up at its Lacq facility (South of France) the first pilot laboratory capable of producing some 20 tons a year of CNT. Finally, a 400 tons a year plant is scheduled for start-up beginning of It will operate an innovative process and will be the only CNT production plant in the world to use an entirely bio-sourced raw material. Novethic: Does Arkema look at the issue from a transparency, a sustainable development or a risk assessment perspective? Arkema : Providing a satisfactory defining is not only about defining the size or the characteristics of a material, it is also about ensuring that some materials are indeed considered as such. We are using the definitions that were approved at the ISO level. Besides, we consider that it is extremely important to characterize the materials as nanoparticles, nanorods or nanoplates. It is also vital to understand that these particles agglomerate or aggregate. But we understand how difficult it is for the legislator to precisely define the term nano since it covers many complex aspects (i.e. What is it that we measure? How do we measure? How do we ensure that the measurement protocols are the same? That is why when we talk about the nanoscale control in the development of materials. What is the nature of your dialogue with your stakeholders? Arkema is in constant dialogue with many stakeholders at different levels. In France, we have a dialogue with at least seven ministerial departments. Beside, we participate in the work of AFNOR, which recently set up a nano working group on nanotechnologies. We are also discussing with AFSSET and AFSSA (now merged into ANSES). We have also a constant dialogue with the National Research Institute and the National Centre for Research. The firm is also an active member of the French Chemical Union (UIC) and of the Nano-Innov program, a top priority of the French Government. On top, at the European and international level we are part of working groups at the European Committee for Standardization (CEN), the International Standard Organization (ISO) and the Organisation for European Cooperation and Development (OECD). Arkema is also an active member of the European Chemical Industry Council (CEFIC), especially when the topic is about nanomaterials. The industry needs to ensure that there s more 28 Novethic Nanotechnologies: which communication for European companies?

29 II. THE CHEMICAL INDUSTRY coherence and coordination of the dialogue, especially between the national and the European levels. What is your point of view on the legislative approach? REACH could satisfactorily frame and organize the business if it is intelligently applied. There could, however, have some room to discuss the threshold when speaking about nanoparticles. If we speak about a threshold of 1 ton a year, a big corporate cannot viably operate such low volume. The other difficulty we have is related to the definition of the substance within the REACH regulation. Within REACH, it is important for us to ensure that companies don t need to register products and materials they are working on at an R&D stage of development. This is a very time-consuming process. The registration should only be applied when the company goes on the market. As an example, in the case of the Graphistrength, Arkema is currently beginning the registration process and this will take about a few months while we have been working on the development of this business for many years. What is your vision of the work to be done on toxicology and the safety of employees exposed to nanotechnologies? First, it is necessary to make a clear distinction between the danger and the risk of a product: the danger is intrinsically inherent to the product; the risk is related to being exposed to the hazard of this particular product. A company like ours works on all possible toxicological and eco-toxicological OECD approved protocols since what we do with Graphistrength represents a massive investment. We operate step by step and until now we haven t seen any problems. A very good example of what we are doing right now in terms of worker s safety relates to the inhalation of particles. The CNT powder we produce is so thick that it took us a lot of time and energy to be able to spread it in the air in order to test the danger of inhaling our product. To further reduce these risks, which are already close to zero, we are not distributing the CNT in powder but within master batch. On top, we have just set-up in 2010 an eco-toxicological laboratory with the National Centre for Scientific Research (CNRS) and the University of Toulouse. The only question that one could ask: are the current protocols really efficient to look into nanoparticles? What is your point of view on the risks with which society could be faced? The risk with nanomaterials could be a chronic health hazard like what has happened with asbestos in the seventies and eighties. Nobody wants to take this risk and that is why Arkema confines the nanomaterials during the production stage and asks its clients to do so during the transformation. That is also why we are selling pellets with CNT already incorporated. Another risk could be the end of life of products that incorporate nanomaterials since we don t know yet how these end products will be collected and recycled. Novethic Nanotechnologies: which communication for European companies? 29

30 I. ANALYSIS OF COMPANIES' COMMUNICATION Arkema considers that our role is therefore to generate sufficient information on the topic so that our client know what they are using. The question here is the traceability of the product. You need to understand that we produce a material that is incorporated into a sub-object, which then is incorporated into an object and later on into a final product. In terms of perceived risks we also consider that a moratorium would be very damageable for everybody in the European Union. That would inevitably lead to the end of such productions in Europe but not in the other parts of the world. And if Europe puts a halt on this business, no one in Europe would be able to further invest in toxicological and eco-toxicological tests. What is your communication strategy? It is based on the belief that Arkema is an innovative and responsible group, ready to speak openly about the challenges even if we don t sell any nanomaterials yet. On the Graphistrengths, which is the only nanomaterial we produce, it is the Graphistrength Business Unit that is now in charge of generating information to our potential clients and public authorities. This is done in partnership with the Communication Department of the Group. Our communication is also developed towards the investment community since we are a listed company. Besides, even if we were willing to communicate with end consumers, it would be impossible for a company like us to communicate with someone that buys a tennis racket that incorporates our technology. What we are speaking about is relatively complex, and I don t think that the company that buys our product would be willing to have us speaking about a sub-component. 30 Novethic Nanotechnologies: which communication for European companies?

31 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE III. Nanotechnologies and civil society: great unknowns are worthy of broad public debate For a public debate to be started on nanotechnologies, it must be possible to define their scope and identify the various stakeholders involved. And yet, the area of nanotechnologies covers a multitude of aspects and economic realities. Nanomaterials cannot therefore be reduced to one economic approach. In addition, it is already nearly impossible to avoid using a little "nano", whether this is in respect of technical and technological tools or everyday consumption. The multiplicity of products and processes which can be considered to be "nano", i.e. by having been included at one stage or another of their development, make the establishing of a scope even more difficult. Thus, the French Agency for Environmental and Occupational Health Safety (AFSSET) was able to identify 246 end products available on the French market in March 2010, of which 17 were in food, 69 in cosmetic and health products and 24 in house supplies. Paradoxically, this rapid and multisectoral development is done without citizens/consumers even being aware of the term nanotechnologies and, of course, their characteristics. There are very few French players who have sufficient knowledge of the subject to act as a teacher in this domain. This is the mission given to itself by the Vivagora association, which brings together scientists and with which Novethic has built a partnership to benefit from its expertise. Its objective is to "get citizens to take part in the development of sciences and technology" by developing instruments so that the social debate can be held on scientific and technical choices. It explains that "the assessment of the risks/benefits and the utilities/purposes of innovative products requires pluralistic expertise and confrontations of values. To try to organise pluralistic governance on nanotechnologies", it started public debates, from 2006, in the form of cycles entitled Nanoforum, in which certain manufacturers (Arkema, L Oreal, Italcementi) have taken part, while others, such as the agro-food industry have preferred to abstain. As an example, the association has set up an experimental project, at the request of the French Ministry for sustainable development, of a pluralistic expertise method on surface coverings including nanomaterials, which are used to give them new properties (impermeability, anti-pollutant, etc.). By bringing together various players from the academic, economic, association, administrative and political world, it wants to carry out pioneering work on the precautionary principle notion. The idea is to distinguish both the benefits and the risks of these nanomaterials by promoting the better knowledge of civil society and the public players, so that they have the necessary elements to enable them to make decisions concerning the development of those products and the regulations that may be applied to them. The spearhead of the debate on nanotechnologies, Vivagora is not the only one to organise itself on the subject but it points out that it is urgent to progress the work on defining and identifying nanoproducts to the extent that the Grenelle I law states in its article 42 that, from August 2011, a declaration obligation for all those who make, Novethic Nanotechnologies: which communication for European companies? 31

32 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE import or release substances to the market in a nanoparticulate state or materials containing nanoparticles, as well as an obligation to inform the public or consumers will be initiated. So that the debate can flourish, it has contributed to the creation of the " Citizen s Alliance on the issues of nanotechnologies, which brings together about fifteen associations, and it launched an Internet site in June 2010: It offers answers to basic questions: Nanos: what are they? Where are they? Who do they involve? Are they controlled? List of the parties participating in the debate on nanotechnologies Association and trade union world Typology of those participating Industries and industry Public bodies representatives Environmentalist associations French Agency for Environmental and Occupational Health Safety (AFSSET) Producers of nanomaterials and the professional association representing the chemical industry: French Chemical Industry Union (UIC) Consumer associations French Standardisation Agency (AFNOR) Transformers of nanomaterials and distributors of end products such as the French Federation of the Paint, Ink, Colour and Adhesive Industries (FIPEC) Trade union representation French Atomic Energy Commission (CEA) and French National Centre for Scientific Research (CNRS) Cosmetic manufacturers and the professional association of the cosmetic industry The "official public debate" on nanotechnologies Organised at the request of the French Government as part of the Grenelle Environment, this debate was intended to clear the appropriate paths to a responsible and secure development of nanotechnologies and to answer the questions of the various stakeholders - operators and citizens - on their uses and consequences. The State expected that, from an analysis of the benefits and risks, in particular health and environmental ones, of the different applications, it would enable the clarification of the directions that it will be forced to set nationally in the following areas: arrangements for supporting research and innovations in nanotechnologies, defining the exposure to and assessment of toxicity, informing and protecting workers and consumers, organizing checking, monitoring and governance. This desire to get the public to take part in such an important debate was the response to a pressing demand from those involved on the ground but nanotechnologies are today an extremely sensitive subject in France and it has come to a sudden end. As a result, many players, in particular manufacturers, have simply decided either to no longer communicate on the subject, or to limit their public communication as much as possible. 32 Novethic Nanotechnologies: which communication for European companies?

33 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE Fortunately, this public debate has allowed a great deal of written contributions to be made by the various stakeholders (51), called Participant Handbooks. They have been used as the basis for analyzing the following different viewpoints. 1. The associations and trade unions Three types of organisations have an opinion on the issue of nanotechnologies: the environmental NGOs, the consumer associations and the workers trade unions. Their interests and viewpoints are often different. Environmental NGOs Two positions are clearly taking shape. The first one, taken by the Les Amis de la Terre [Friends of the Earth] association, is a demand for a total and immediate moratorium on all of the research and sale of nanomaterials. It considers that this attitude is the only reasonable one "in an absent regulatory framework where nanotechnologies are being developed without public debate, leaving the field free for manufacturers and researchers. The second position, expressed by the France Nature Environment (FNE) association is more qualified. The association is concerned about the risks that nanotechnologies and particles can pass on to man and nature, but it is essentially asking for "the manufacture, importing or putting into the market of substances in a nanoparticulate state or materials containing nanoparticles or coming from nanotechnologies to be subject to compulsory declaration, relating in particular to the quantities and uses, to the administrative authority and also that the public and consumers should be informed. This forms part of the provisions which should be incorporated in the Grenelle II law. In addition, FNE is asking the authorities to "put a set of measures on industrial processes in place: 1. To provide for the monitoring of installations of any sort making or using nanoparticles by representatives of the State who are responsible for monitoring and controlling waste from economic activities; 2. To set up, in respect of nanoparticles, mechanisms for monitoring the ambient air and the internal air and the surface waters close to those installations; 3. To list the chains that produce, use and dispose of nanoparticles; 4. To make an inventory and make accessible to the public the list of the nanomaterials sold or about to be sold, and also the products containing them with their characteristics. The FNE s demands are completed by a demand for a "partial moratorium on nanoobjects for non-medical use and in contact in their normal, mass market use, with the human body: food products, food packaging, cosmetic, tanning products, clothing, etc. This position is close to that of the German NGO Bund (see box on the next page). Novethic Nanotechnologies: which communication for European companies? 33

34 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE Germany: BUND wants a moratorium but not on all nanotechnologies The German branch of the environmental NGO, Friends of The Earth, like Les Amis de la Terre in France, Bund is taking a close interest in nanotechnologies, and more particularly in some substances which are included in mass market products and in drugs. It particularly stresses the health risks that the incorporation of nanotechnologies into food products would entail. This is why it supports a demand for a moratorium in this specific area, and does not want it to be extended to all types of nanotechnologies. Consumer associations Three types of demands appear in the Participant Handbooks of consumer associations. They concentrate on the notion of risk assessment and knowledge, informing consumers and the necessary adaptation of the Law to the new challenges set by nanotechnologies. The Consumer, Dwelling and Environment (CLCV) association is asking for the risks and benefits to be assessed as part of a pluralistic and independent expert assessment "to identify, and if possible, quantify the benefits and the risks of an innovation, whether they are of a health, environmental or economic nature. For the CLCV, "the balance of benefits against risks established in this way must be used as a basis for public action which can authorize, where applicable conditionally, the use of a technology or prevent it. As far as informing consumers is concerned, the French National Consumer Institute (INC), recommends advising consumers as follows: 1. Obligation for those responsible for releasing products containing nanomaterials into the market to provide the information to a referral body; 2. The setting up of a systematic procedure for the consumer to have transparent information on the product and its benefit/risk ratio; 3. The making of databanks of information on the relevant products, accessible to the general public; 4. The creation of a structure to handle claims relating to the non-communication of the information or insufficient communication thereof. Regarding the regulatory framework, the three associations are clearly asking for the current law to be adapted to meet consumers needs. The consultations organised within the French National Consumer Council during 2010 resulted in a notice that was put online during the summer of It recommends, for example, that it should be mentioned that an ingredient has a nano form on the labelling of a product in which it is included. To find out more, download the notice (see the sites to be viewed section on page 49). 34 Novethic Nanotechnologies: which communication for European companies?

35 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE Great Britain: Which? Wants more information for consumers The independent and specialist English association protecting the consumer, Which? is interested in nanotechnologies when they are included in mass market product, whether it involves cosmetics, food, health or other products. It especially campaigns to obtain more information on the toxicology and the health impacts of these types of products. It had obtained the English government s agreement to take measures to urge companies selling products containing nanotechnologies to give the information to consumers. It did this, but on a voluntary basis, which means that very few English companies have agreed to cooperate. Today Which? takes part in European debates on nanotechnologies as it considers that effective action cannot be secured nationally. Trade unions Several keywords appear clearly in the Participant Handbooks issued by the French trade unions: innovation, Corporate Social Responsibility (CSR), risks and protection of workers. Thus, as far as CSR is concerned, the CFDT is asking for "a revision of the strategic priorities. Compared to the financial investment in the research and commercial development of products, the efforts devoted to risk prevention and studies must be intensified and included in advance in companies innovation strategy, or contracted to the relevant organizations. The CFDT is also asking for the identification and the assessment of risks to be taken into account before moving on to industrial manufacture, pointing out the public health problems posed by asbestos. This last demand is taken up by the CFE-CGC which considers it "essential to have a general systematic monitoring of toxicity and the risks that are taken during the research, production and consumption of nanotechnologies, as this must be the case for any product or service. The CFDT is also asking the public authorities to make sure that the nanotechnologies do, moreover, indeed create jobs. The CFE-CGC considers that nanotechnologies will encourage innovation and is therefore implicitly asking the authorities to reflect on the means of ensuring that the men and women who work in this area can also benefit from the future economic spin-offs. The consumer associations seem to have the same view as the trade unions. They are not seeking to confront something that is unavoidable but rather to limit the risks for consumers and to make the companies more transparent via action from the public authorities. 2. Public or para-public bodies There are three public bodies: the French Agency for Environmental and Occupational Health Safety (AFSSET) which is now merged with the AFSSA within the ANSeS, the global health safety agency, the French Atomic Energy Commission (CEA) and the French National Centre for Scientific Research (CNRS), and one para-public body, the French Standardisation Agency (AFNOR). French Agency for Environmental and Occupational Health Safety (AFSSET) The AFSSET has already issued three reports: one on the characterisation des nanomaterials (2006), another on the protection of risks for workers (2008) and the last Novethic Nanotechnologies: which communication for European companies? 35

36 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE on the assessment of risks associated with nanomaterials for the population and for the environment (2010). It stresses in them the difficulties of accessing data on the nanomaterials, most particularly during their life cycle. It therefore recommends that measures should be taken concerning: 1. Informing consumers on products containing manufactured particles (nano products). 2. The limitation of the exposure of consumers and the environment (in addition to employees). 3. Encouraging research in the areas of the assessment of exposure, toxicology and ecotoxicology The list of its proposals is available in the notice accessible on its site (see the list of sites to be viewed on page 49). French Standardisation Agency (AFNOR) This structure allows a multiplicity of French players to meet to discuss the way in which their points of view will be able to be taken up and discussed within Europe via the European Standardisation Committee (ESC) and internationally via the International Organisation for Normalisation (ISO). This approach has resulted in a work group for a "nano responsible" standard which has to define the relevant criteria for the responsible development of nanotechnologies. The AFNOR points out in its Participant Handbook that "when a company participates directly in the development of the standards, it has powerful leverage to direct the market in favour of the practices that it deems preferable. Finally, it adds that "putting restrictive standards in place is an excellent way of preventing difficult to tolerate competition vis-à-vis less rigorous economic competitors. French Atomic Energy Commission (CEA) and the French National Centre for Scientific Research (CNRS) For the French Atomic Energy Commission (CEA) and French National Centre for Scientific Research (CNRS), "nanos can help us to evolve to a society that is more economical with energies and raw materials. We learn in the Participant Handbook common to both bodies that "the State has given the CNRS and the CEA the task of developing nanosciences and nanotechnologies for the national community, in association with the universities and the manufacturers. The five priority areas of the two bodies which focus the majority of the public effort in terms of researchers and investment are: 1. Energies that have little impact on the climate 2. Medical applications 3. Information and communication technologies 4. Material sciences 5. Technical safety innovations In addition, bearing in mind the possible benefits and risks that can arise out of the development of nanotechnologies, the two bodies are working on the following points: 1. Assessing the risks associated with nanomaterials and controlling them, throughout their life cycle, for the safety of people (from manufacture up to recycling) 2. Reflecting about a set of ethics to be constructed, with the help of philosophers and as an addition to the existing legal frameworks 3. Analysing the possible repercussions of innovations on society. 36 Novethic Nanotechnologies: which communication for European companies?

37 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE Finally for the scientists of the CEA and the CNRS, science means scientists who have been trained and who take account of the ethics of the human societies to which they belong. The various viewpoints of these organisations show that the public approaches are paradoxical. On the one hand, they actively promote the development of nanotechnologies and nanosciences via the CEA or the CNRS and, on the other, they are concerned about the lack of information available on the subject as a guarantor for public health via the work of the AFSSET. 3. Manufacturers and their representatives Here we find three types of players: producers of nanomaterials and professional associations representing the chemical industry, nano transformers/consumers and distributors, and finally representatives of the cosmetics industry. Producers of nanomaterials and the professional association of the chemical industry The Participant Handbook of the French Chemical Industry Union (UIC) gives the impression that the industry as a whole wants to encourage exchanges with each stakeholder involved. And yet, while some companies like Arkema are in line with this, the whole of the chemical industry is far from having the same attitude. Intended to avert moratorium requests, the measures described are of a sort to encourage consistent and responsible management of the risks with which chemical industry workers and end consumers may be faced. However, when the UIC points out that the mindset of openness is already conveyed by the specific measures of manufacturers " vis-à-vis civil society, with the participation of chemical industry manufacturers in forums, studies, public debates and making information and documentation available on nanomaterials, it would still be necessary for a set of manufacturers to openly admit that they use or develop this sort of technologies and materials. Transformers of nanomaterials and distributors The main part of the wealth creating economic activity in nanos is in the hands of the transformers. These groups operate in at least eights fields of activities in the economy: Oil & Gas, Basic Materials, Industry, Consumer Goods, Health Care, Consumer Services, Public Services Sectors (i.e. water, sanitation, etc.), and Technology. In the Consumer Goods sector, the absence of the agri-food industry in all of the dialogue approaches can be noted. And yet it is involved since the AFSSET s report of March 2010 identified 17 products in contact with food, available on the French market containing nanomaterials, of which 4 are additives, 3 packages, 4 refrigerators and 6 kitchen utensils. The AFSSET identified, for example, a food ingredient - nano silica included in salt, sugar or ketchup. But no agri-food group is openly saying anything on the subject. Conversely, to some extent, even though the Carrefour group, the main European distributor and owner of the Carrefour trademarks, says little on the subject, it does participate in a series of works in particular within the French National Consumer Council and is pushing, along with others, for the nano-responsible standard to be drawn up (see page 21). Cosmetics manufacturers and their professional association Novethic Nanotechnologies: which communication for European companies? 37

38 III. NANOTECHNOLOGIES ET SOCIÉTÉ CIVILE According to the AFSSET s latest report, the cosmetics sector is the one which, with 69 products containing nanomaterials, is the most active in this area. The L Oréal group is a champion in terms of filing patents in an area where this type of material improves the texture or the properties of creams and other emulsions. The cosmetics sector has expressed itself as follows in a Participant Handbook: "The cosmetics sector has developed different innovations out of nanotechnologies. This involves liquid nanodispersions and nanomaterials. ( ) The nanoformulations group together nanoemulsions and nanocapsules. The nanoemulsions are preparations containing nanometric water or oil droplets prepared, for example, with the help of ultrasound. ( ) On contact with the skin, these nanometric structures break down and release the elements that they contain, protected from oxidation. The active ingredients thus remain effective while the product is conserved and they are released there where they act. In addition, the cosmetics industry is the one that is governed by the most recent regulations and has a common definition within the European Union (see regulatory part on page 41). The Participant Handbook of the French Federation of Beauty Companies (FEBEA) highlights the lead that they apparently have over other industries because the cosmetics industry has specific regulations. The "Cosmetics" Regulations ( ) introduce a new system for managing nanomaterials. It forces any company that wants to sell a product containing nanomaterials to advise the European Commission of this six months before it is released into the market. In case of doubt, this may require the approval of Scientific Committee for Consumer Safety. Moreover, the company must indicate the presence of those nanomaterials in the list of ingredients that already has to appear on all products. A labelling rule has been provided to that end. It must contain the name of the ingredient followed by the word [nano] for example: Titanium dioxide [nano]. Furthermore, the FEBEA s Participant Handbook includes a set of potential risks but points out that "scientific studies are being carried out to pinpoint the properties of solid nanomaterials and to confirm their safety, in particular within REACH and worldwide programmes on the evaluation of nanotechnologies. 38 Novethic Nanotechnologies: which communication for European companies?

39 IV. LA RÈGLEMENTATION SUR LES NANOTECHNOLOGIES DOIT ÊTRE EUROPÉENNE IV. The regulations on nanotechnologies must be European The introduction of new technologies often creates new challenges for the legislator, particularly if the associated consumer products, in addition to the expected benefits, raise concerns about health and environmental risks. In this case, new regulations or the adaptation of the existing ones may be required, and the regulatory authority has to define what needs to be regulated. In the case of nanotechnologies, the challenge is even bigger given that the scientific nature of nanotechnologies and the nature of the risks associated are difficult to delimit. The legislator is basically confronted with a never-ending process where legislation cannot be engendered without scientific data s; Research and Development moves ahead without legislative framework. On top, nanotechnologies is a multifaceted issue with this technology being a multiindustry one, ranging from chemicals to food and beverage, with multiple possible and increasing applications. They should therefore, in time, be extended to new sectors. In this context, the legislator faces three obstacles: the diversity of nanomaterials already available on the market, the lack of data and the lack of standardization in terms of nomenclature and metrics. 1. European legislation Different legislative acts govern the area of nanotechnologies at the European level, although not explicitly. According to the European Commission, it can be concluded that current EU legislation covers to a large extent risks in relation to nanomaterials and that risks can be dealt with under the current legislative Framework. Current legislative framework at the EU level Chemical products : REACH Classification, Labelling and Packaging Worker s protection Environmental Protection : Integrated pollution prevention and control (IPPC) SEVESO II Water framework directive A set of waste directives Products : Pharmaceuticals Food Cosmetics Textiles 1.1. Chemical products REACH REACH provides an over-arching legislation applying to the manufacture, placing on the market and use of substances on their own, in preparations or in articles. REACH is based on the principle that manufacturers, importers and downstream users have to ensure that they manufacture, place on the market or use such substances that do not adversely Novethic Nanotechnologies: which communication for European companies? 39

40 IV. LA RÈGLEMENTATION SUR LES NANOTECHNOLOGIES DOIT ÊTRE EUROPÉENNE affect human health or the environment. Under REACH, manufacturers and importers will have to submit a registration dossier for substances that they manufacture or import at or above 1 tonne per year. At or above 10 tones/year, the registrant will be obliged to produce a chemical safety report. Furthermore, if deemed necessary for the evaluation of the substance the European Chemicals Agency can require any information on the substance, independent of the minimum information requirements of REACH. There are nonetheless no provisions in REACH referring explicitly to nanomaterials. However, according to the European Commission, nanomaterials are covered by the substance definition in REACH. This approach poses two problems. The 1st is that the European Parliament disagrees with the European Commission on the fact that nanomaterials are covered by the substance definition in REACH. The 2nd is the threshold limit applied under REACH (i.e. 1 ton, 10 tons, 100 tons, 1000 tons), while it might be valid for traditional chemicals products and molecules, might exclude nanoparticles given their nature. Classification, Labelling and Packaging (CLP) The classification, labelling and packaging regulation requires companies to classify, label and package appropriately their hazardous chemicals before placing them on the market. It aims to protect workers, consumers and the environment by means of labelling which reflects possible hazardous effects of dangerous substances. The aim of this regulation is, among other objectives, to complement REACH on registration, evaluation, authorisation and restriction of chemicals. The new Regulation incorporates a Globally Harmonised System of Classification and Labelling of Chemicals (GHS). It introduces new classification criteria, hazard symbols (pictograms) and labelling phrases, while taking account of elements, which are part of the earlier EU legislation. According to the Commission, the CLP regulation provides the general framework for the classification and labelling of nanomaterials. On top, contrary to the REACH regulation there is no threshold in terms of quantities produced or imported, meaning that all the substances will fall under this regulation. However, the main operational provisions would not enter into effect before December 2010 for the substances and June 2015 for the mixtures Worker s protection The framework directive 89/391/EEC places a number of obligations on employers to take measures necessary for the safety and health protection of workers. It applies to all substances and work activities including manufacturing and use of chemicals at all levels of the production process, regardless of the number of workers involved and quantities of materials produced or technologies used. Hence according to the European Commission, this directive fully applies to nanomaterials. Employers, therefore, must carry out a risk assessment and, where a risk is identified, take measures to eliminate this risk. But there is a diverging point of view between the European Commission and the European Parliament. The Parliament explicitly asking the Commission to evaluate the 40 Novethic Nanotechnologies: which communication for European companies?

41 IV. LA RÈGLEMENTATION SUR LES NANOTECHNOLOGIES DOIT ÊTRE EUROPÉENNE need to review worker protection legislation concerning inter alia: 1. The use of nanomaterials only in closed systems or in other ways that exclude exposure of workers as long as it is not possible to reliably detect and control exposure 2. A clear assignment of liability to producers and employers arising from the use of nanomaterials 3. Whether all exposure routes (inhalation, dermal and other) are addressed 1.3. Environmental Protection The environmental regulations that may be considered applicable concern some directives which scope could be extended to nanotechnologies, but under certain conditions. Here are a few examples: The Seveso II Directive The Seveso II Directive applies to establishments where named dangerous substances (or substances falling within certain classification categories) are present above specific quantities (or thresholds). It imposes a general obligation on operators to take all measures necessary to prevent major accidents and to limit their consequences for man and the environment. If certain nanomaterials are found to demonstrate a major accident hazard, they may be categorised, together with appropriate thresholds, in the context of the Directive. The Commission considers that the same security protocols should apply to nano size substances than to bigger ones. However, it doesn't mean that the policy-maker is capable to judge further if these kinds of substances are dangerous or not. Further R&D is therefore required to check whether nanomaterials demonstrate a major accident hazard. More R&D is required to check the toxicity or the eco-toxicity of a substance. The water framework and the waste directives The Water Framework Directive (2000/60) sets common principles and an overall framework for action to improve the aquatic environment and to progressively reduce the pollution from priority substances and phasing out emissions, discharges and losses of priority hazardous substances to water. A list of 33 priority substances has been established in Nanomaterials could be included among the Priority Substances depending on their hazardous properties ( ). For groundwater, Member States will have to establish quality standards for pollutants representing a risk, in which case nanomaterials may also be included". While the Commission mapped all relevant EU law that could possibly apply to nanotechnologies and materials, it underlines the current knowledge gaps. Much still needs to be done in the development of reliable measurement methods and materials characterisation, of test methods referring to human health, safety and the environment, and of data of exposure throughout the lifecycle of nanomaterials. 1.4 Mechanisms specific to cosmetic and food products Two legislative texts are of interest within the context of this study. The first one involves the cosmetics industry; the second involves the food industry. Cosmetics "The old Directive 76/768/EEC contained prescriptive elements through positive (substances that can be used) and negative lists (substances that can not be used) of Novethic Nanotechnologies: which communication for European companies? 41

42 IV. LA RÈGLEMENTATION SUR LES NANOTECHNOLOGIES DOIT ÊTRE EUROPÉENNE ingredients. The manufacturer must in any case have available an assessment of the safety for human health of the finished product. To that end, he must take into consideration the general toxicological profile of the ingredients, their chemical structure and their level of exposure. ( ) This obligation to make an assessment of the risks has logically led to a revision of this directive so that it clearly concerns nanomaterials and nanotechnologies. Based on a web consultation, the Commission proposed in 2008 a revision of the Cosmetic Products Directive. Its main elements were: 1. Clear minimum requirements for the cosmetics safety assessment 2. A system of administrative cooperation of competent authorities (...) 3. An obligation of industry to actively report serious undesirable effects to competent authorities as part of an early detection mechanism for risks for human health caused by cosmetic products. The European Parliament accepted this revision. The new regulation introduced a safety assessment procedure for all products containing nanomaterials, which could lead to a ban on a substance if there is a risk to human health. The Parliament also pushed successfully for any nanomaterials present in cosmetics to be mentioned in the list of ingredients on the packaging. More importantly, a definition of nanomaterials has also been introduced for the first time in the regulation. This definition which must be adapted by the Commission for scientific and technological developments, is as follows: "nanomaterial means an insoluble or bioresistant and intentionally manufactured material with one or more external dimensions, or an internal structure, on the scale from 1 to 100 nm. Food Regulation 258/97 concerns novel foods and novel food ingredients. They are defined as foods and food ingredients with a new or intentionally modified primary molecular structure, or as foods and food ingredients to which has been applied a production process not currently used, where that process gives rise to significant changes in the composition or structure of the foods or food ingredients which affect their nutritional value, metabolism or level of undesirable substances. In order to facilitate implementation of the regulation, the Commission has published a series of recommendations on the scientific aspects and the presentation of information necessary to support applications for the placing on the market of novel foods and novel food ingredients and the preparation of initial assessment reports. The Commission considers that Regulation 258/97 is sufficient to assess potential risks associated with nanomaterials (i.e. new ingredients) and nanotechnologies (i.e. technology with impact on food) in relation with food and food ingredients. Next steps There is a persistent disagreement between the Commission and the European Parliament concerning nanotechnologies. The first one is firmly based on the idea that only a few clarifications need to be made to the current mechanisms. The second one continues to ask for specific regulations. As a result, the Parliament calls on the Commission to review all relevant legislation within two years "to ensure safety for all applications of nanomaterials in products with potential health, environmental or safety impacts over their life cycle, and to ensure that legislative provisions and instruments of 42 Novethic Nanotechnologies: which communication for European companies?

43 IV. LA RÈGLEMENTATION SUR LES NANOTECHNOLOGIES DOIT ÊTRE EUROPÉENNE implementation reflect the particular features of nanomaterials to which workers, consumers and/or the environment may be exposed. In addition, the European Parliament stresses that "such review is not only necessary to adequately protect human health and the environment, but also to provide certainty and predictability to economic operators as well as public confidence. 2. The French regulatory framework In France, the nanotechnology legal framework, as designed by the Legislator, is encompassed into the more general Grenelle s Acts I and II. The provisions on nanotechnologies put France at the forefront of the European Union in respect of national legislation on nanotechnologies and materials if the applicable decrees being drafted live up to the initial ambition. According to Grenelle's Act I, "The States gives itself the target that, within a period of two years of the promulgation of this law, the manufacture, importing or release to the market of substances in a nanoparticulate state or materials intended to reject such substances, under normal or reasonably expected conditions of use, will have to make a compulsory declaration of quantities and uses to an administrative authority and provide publicly available consumer information. In addition, the law calls for the development of a methodology to evaluate the risks and the profits related to the substances. It states that information provided to workers concerning the potential risk associated with these substances as well as procedures to guarantee their protection should be improved. On the 257 articles of the Grenelle'es Act II bill, adopted on June 29th of 2010, one specifically addresses the use and commercialization of nanotechnologies and materials. Limits to the ambitions of the French text are however seen: Although the term substances in the nanoparticulate state is still stated in the text, the new bill also refers to mixtures containing unbounded nanoparticular substances ; The French National Assembly has clearly mentioned that national security matters can be used by competent national authorities to derogate to the general rule; There is no specific element as per penalties for firms that would not comply with the general rule, questioning the willingness of the Government to implement the regulation; Finally, some players are questioning the compatibility of this Law with the recommendations of REACH. Novethic Nanotechnologies: which communication for European companies? 43

44 V. VERS LA GENERALISATION DE L INTEGRATION ESG? Conclusion The careful examination of the communication of about one hundred European companies involved with nanotechnologies enabled the following points to be underlined: 1. Very little communication on a major issue The fact that 54% of the companies analysed have no sort of communication on nanotechnologies jeopardises the chances of correctly assessing, on an economic level, the benefits that they bring with regard to the risks that may be associated with them. 2. The chemical sector, proactive leader The fact that only three companies have in-depth communication, according to the study s analysis grid, and that they all belong to the chemical sector shows the very strong commitment of that sector in the development of nanotechnologies. For some companies, it is a major axis of their development which justifies the lobbying that they are carrying out with the administrative authorities regarding future regulations, just like their participation in the various public debates organized within European Union. 3. Communication focused on sustainable development The very few companies that have structured their communication on nanotechnologies are highlighting their benefits in terms of sustainability. They describe technologies which enable natural resource needs to be reduced, products to be made lighter or their resistance to be increased, thus meaning that they are changed less often. They are very keen to convince the various stakeholders of the benefits that can be expected from nanotechnologies. This is the best way for them to avoid rejection from consumers, likely to mean possible moratorium requests. The silent companies seem to prefer to avoid any debate. While the communication strategies are different, their objective is probably the same: not to encourage a hypothetical rejection of nanotechnologies like the one to which GMOs are subject. 4. The relative lack of weight of independent expertise Nanotechnologies have spread very quickly in terms of research. While they are finding applications in various areas, they are still often far from having reached the stage of commercial development which would make them a flourishing market. But, the complexity of these techniques and the absence of data on human health and the environmental impact of a wide distribution pose even more problems than the extremely rare sources of independent expertise. 5. No common definition or consensus on the regulations The definition of various nanotechnologies remains an issue of major friction between the stakeholders. In one camp, that of German manufacturers, the definition must be solely limited to the threshold set by the size (100 nanometres); in the other, we have the stakeholders that want to take account of the new properties (this, for example, allows agglomerates, which contain nano elements, to be included). And yet these are key aspects for possible future regulations. For the chemical industry, nanomaterials are defined and legislated by directives such as REACH. While the European Commission to some extent approves this vision, the European Parliament, in line with the associations 44 Novethic Nanotechnologies: which communication for European companies?

45 V. VERS LA GENERALISATION DE L INTEGRATION ESG? protecting consumers and the environment, on the other hand, wants the legislation to be reinforced. 6. The "nano" labelling will be difficult to put into practice for the manufacturers Whilst the mention of "nano" will soon be compulsory for cosmetics, the consumer associations want it to be made general. The industrial sector is against it because it fears the stigmatisation of some products and wonders about the scope of application of such a measure. As an example, must the BMW group provide the purchaser or one of its vehicles with documentation explaining that its paint contains aluminium nano-oxides? If that was the case, why should the other sub-systems not be labelled and communicated to the purchaser? In addition, many substances have an equivalent which does not come under the domain of nanotechnologies. As an example, zinc oxide exists in a natural version and in a manufactured version. Still barely opened up from a point of view of CSR, nanotechnologies could constitute a textbook case. Including non-financial criteria with financial management is to be capable of comparing a company s development strategy and the anticipated economic and financial benefits with the cost that it will incur in terms of risks and any compensation for damages. It is far too early to have this type of model for nanotechnologies. It is, however, time to make investors aware of this emerging issue so that they can ask to have elements that allow them to evaluate the ability of companies to carry out this cost/benefit assessment of the nanotechnologies that they produce or use in all of their aspects economic but also environmental or social. Novethic Nanotechnologies: which communication for European companies? 45

46 Sites to be viewed Citizens alliance for issues on nanotechnologies It brings together about fifteen associations. The site offers information on the social issues raised by nanotechnologies so that the choices concerning research, their development and their sale involve citizens: nano.acen-cacen.org Notice from National Consumer Council (Conseil National de la Consommation) To view the text which details the information that a consumer must expect regarding the presence of nanomaterials in consumer products: pdf The AFSSET s recommendations In March 2010, the health agency published a set of recommendations to limit the risks of exposure for populations. D_Les_nanomateriaux_Rapport_compresse.pdf Public debate To view the 61 Participant Handbooks issued for the public debate on nanotechnologies organised in France, from October 2009 to February 2010: Nanotechnologies and health One of the CNRS s files with educational animations: Regulatory framework A specific research programme has been set up to define the legal framework applicable to nano objects: In English Inventory of definitions of nanomaterials throughout the world by the Joint Research Centre of the European Union: The official site of the industrial producers of nanotechnologies: 46 Novethic Nanotechnologies: which communication for European companies?

47 Table of contents Executive summary...3 I. Analysis of companies'...7 communication CSR and transparency Company sample Analysis of the quality of the communication Very predominantly silent companies...11 II. The chemical industry...26 III. Nanotechnologies and civil society: great unknowns are worthy of broad public debate...31 IV. The regulations on nanotechnologies must be European European legislation The French regulatory framework...43 Conclusion...44 Sites to be viewed...46

48 NANOTECHNOLOGIES Risks, opportunities or taboo: What communication for European companies? Novethic 56, rue de Lille Paris +33 (0)