According to socialfunds.com, both consumers and investors are increasingly asking about cosmetic product safety. Consumers are worried that they’re putting toxic products on their skin while investors wonder about legal liabilities the products’ manufacturers may face.

Three new reports on toxic cosmetics shed new light on these problems.

The Investor Environmental Health Network’s February 2007 report, "Beneath the Skin: Hidden Liabilities, Market Risk and Drivers of Change in the Cosmetics and Personal Care Products Industry" focuses on the cosmetic industry's lack of regulation in the U.S. The report states that the FDA only regulates nine ingredients in cosmetics. The FDA only takes action when cosmetic companies themselves report consumer exposure to chemicals.

At the same time, Innovest Strategic Value Advisors released a report called, "Cross-Cutting Effects of Chemical Liability from Products". This report says that consumers are becoming concerned about the level of toxic chemicals in personal care products and cosmetics, and are increasingly buying products that don’t contain these ingredients.

The third report, "Toxic Chemicals, Asian Investors are at Risk," was released January 2007 by the Association for Sustainable & Responsible Investment in Asia. This report notes that Asia has lagged behind chemical reforms passed in other areas of the world, so that products manufactured in Asia often contain even more harmful ingredients than those produced in the U.S. or Europe.

Concerns over toxic chemicals in products come from recent scientific studies of the effects of chemicals on the body. The common ingredient phthalate has been linked to underdeveloped reproductive organs in males. Another area of concern is the cosmetics industry’s use of nano-particles that can enter the bloodstream and cause tissue damage.

In 2005, the European Union passed a law banning over 1,000 chemicals for use in cosmetics. The same year, California Governor Arnold Schwarzenegger signed the California Safe Cosmetics Act of 2005 which requires companies to report the ingredients in their products. Similar legislation is pending in at least five other states including Washington, Oregon, Maryland, New York, and Massachusetts.

Companies’ responses to this mounting pressure vary. Over 500 personal health care and cosmetic companies have signed the Campaign for Safe Cosmetics’ pledge called Compact for Global Production of Safe Health and Beauty Products. When companies sign the pledge they promise to replace hazardous materials with safer alternatives within three years.

Other manufacturers, however, are defending their current practices, hiring former FDA employees, and lobbying heavily against state regulation. Many of the larger cosmetic companies have not signed the Compact, but instead have created the Consumer Commitment Code which works with companies to create an ingredient review process with voluntary reporting to the FDA. Procter and Gamble was one of the companies to sign this code.