Not too long ago, we told you about the ongoing dangers of PFAS, or “forever chemicals,” leaking into our waterways for years. It’s been an issue for a while. Now, it’s become a problem for shareholders, namely their profits.
It turns out that money (or losing it) gets things done.
Investors from some of the world’s largest firms are pressuring chemical companies to end the production of toxic PFAS, which shareholders say represent an enormous and growing threat to manufacturers’ bottom lines.
They say lawsuits over PFAS compounds linked to cancer, kidney disease, liver problems, immune disorders, birth defects, and other serious health issues represent a growing threat to companies’ profits.
A letter circulated late last year among 54 chemical companies and signed by largely European Union investment firms holding $8 TRILLION (yes, you read that right) in assets cites an avalanche of recent lawsuits against PFAS manufacturers. In the letter to CEOs of the biggest chemical companies coordinated by Aviva Investors and Storebrand Asset Management, the 47 asset managers wrote:
“We encourage you to lead, not be led, by phasing out and substituting these chemicals. In addition to the financial risks associated with litigation, producers of persistent chemicals face the risk of increased costs associated with reformulating products and modifying processes, which can have significant implications for company performance.”
Erik Olson, a senior strategic director with the non-profit Natural Resources Defense Council, said that liability for PFAS contamination “of the entire planet is expanding.” The letter was made public ahead of a decision by 3M, one of the world’s largest PFAS manufacturers, to discontinue making the chemicals by the end of 2025.
Olson continued, “There has got to be concern in boardrooms and among knowledgable and savvy shareholders that continuing to manufacture these chemicals that are creating the Superfund sites of tomorrow is really risky for them financially. If people getting sick and dying of exposure to these chemicals wasn’t enough, the liability should be.”
The investors demand that the industry develop a plan to end their manufacture and share production data with ChemSec, a non-profit that tracks the chemical industry.
3 M’s 2021 annual report showed about $1.3 billion in PFAS sales. It also details dozens of lawsuits it faces from states, local municipalities, water utilities, school districts, other companies, along with residents. 3M was named in an average of more than three PFAS-related lawsuits a day last year, and its legal liabilities could cost well over $30 billion.
With staggering independent science showing the chemicals’ danger and strong evidence that 3M regularly hid those threats from customers, the company has already started settling. In late 2019, 3M agreed to pay Minnesota $850m over PFAS pollution and settled for another $50m over contamination in Delaware the following year.
“The pressure is mounting from every direction,” said Sonja Haider, senior business and investment adviser with ChemSec, which helped coordinate the campaign. “The lawsuits won’t go away – the companies will have to cover that – and the regulatory pressure is coming.”
For now, few companies seem willing to follow 3 M’s lead. A ChemSec analysis found just four PFAS producers – Solvay, Indorama, Sabic, and Yara – have plans to phase out “hazardous chemicals,” though the plans are not specific to PFAS.
Still, “chemical manufacturers are still lagging behind expectations when it comes to transparency and accountability,” with North American and Asian companies faring the worst, ChemSec found.
The non-profit also identified 100 major chemical producers’ downstream customers who plan to phase out their use of PFAS. Among a growing number of clothing brands no longer using the chemicals is Levi’s, while an expanding list of restaurant chains are using PFAS-free food packaging.
“If your customers want alternatives, then you should hurry up and produce the alternatives,” Haider said.
Support for the campaign to phase out PFAS has doubled since its launch when 23 investors with $4.1 trillion called for similar action in 2021.
“If you get questions by huge investors who are asking, ‘Why are you doing this and do you have a phase-out plan?”, and those investors are discussing a divestment – that makes you act,” Haider said.
Let’s hope they do, and as soon as possible!
Sources:
https://www.niehs.nih.gov/health/topics/agents/pfc/index.cfm
https://askjoedimatteo.com/cleaner/
https://askjoedimatteo.com/no-amount-is-safe/
https://chemsec.org/investors-with-8-trillion-call-for-phase-out-of-dangerous-forever-chemicals/
https://news.3m.com/2022-12-20-3M-to-Exit-PFAS-Manufacturing-by-the-End-of-2025
https://s24.q4cdn.com/834031268/files/doc_financials/2021/ar/3M_2021_Annual_Report_Web-(3).pdf
https://toxicfreefuture.org/mind-the-store/retailers-committing-to-phase-out-pfas-as-a-class-in-food-packaging-and-products/
https://www.reuters.com/markets/europe/investors-push-worlds-top-chemicals-companies-over-hazardous-substances-2021-12-13/