The move by 23 investors including Aviva Investors and Storebrand comes as regulators toughen rules around their use and as analysts warn some companies could face billions of dollars in associated clean-up and compensation costs.
In a letter to the world's 50-biggest chemical producers with combined revenues of $860 billion the investors call for increased transparency around how many "substances of very high concern" they produce every year.
Whilst U.S. and European regulators have disclosure requirements on hazardous chemicals, many other countries do not, and information on the volumes produced globally are not publically available.
To help investors, companies should also share the data with the non-profit International Chemical Secretariat (ICS), which advocates for a shift to safer chemicals and tracks the performance of leading producers, the letter seen by Reuters said.
"We believe sustainable management of chemicals is key to financial outperformance," Eugenie Mathieu, senior analyst at Aviva Investors, told Reuters, citing the example of litigation tied to PFAS or perfluoroalkyl and polyfluoroalkyl substances, used in applications such as lubrication and industrial coatings.
So-called "persistent chemicals" such as PFAS - which degrade slowly and are linked to a range of illnesses after getting into local water supplies - have already led to payouts from companies including 3M, and more cases are pending.
"In recent years the financial implications for (a) company's liability for past and current production of pollution of persistent chemicals, especially PFAS, have been clear," she added, citing one analyst's estimate of potential costs in the United States of between $25 billion and $40 billion.
A spokesperson for 3M, one of the companies to receive the letter, said the company was committed to environmental stewardship, adding: "We welcome the opportunity to engage with investors and other stakeholders regarding this topic".
Belgian company Umicore said it had engaged with ICS over the group's ChemScore questionnaire in October and complies with relevant legislation where it makes, imports or sells its products, using a "risk-based" approach to chemicals management.
Given the growing regulatory and litigation concerns, the investors said they wanted to see all companies make a time-linked commitment to phase out production of the chemicals, focusing first on persistent chemicals.
The U.S. Environmental Protection Agency earlier this year laid out a plan to toughen rules for persistent chemicals, while the European Union is also looking to tighten legislation and incentivise a transition towards less hazardous materials.
Lastly, the investors said companies should set out plans to develop products that can be reused as part of a "circular economy", or which allow customers to design products that can be used in such a way - a key focus of EU lawmakers
"The chemical industry sits at the start of the supply chain so has a role to play in driving the circular economy forward," the letter said, citing examples such as using waste or bio-based material as feedstocks.
(Additional reporting by Ross Kerber; Editing by David Holmes)
By Simon Jessop