Shareholders say lawsuits over PFAS compounds related to cancer and other diseases represent escalating threat to firms’ profits
Investors from some of the world’s biggest firms are pressuring chemical companies to halt production of toxic PFAS “forever chemicals”, which shareholders say represent a significant and escalating threat to manufacturers’ bottom lines.
PFAS are a class of roughly 12,000 compounds commonly used to make products that resist water, heat, and stains. They are referred to as “forever chemicals” because they do not naturally break down, and are linked to cancer, liver problems, kidney disease, birth defects, immune disorders, and other serious health issues.
A letter made public late this year and signed by mostly European Union investment firms holding $8tn in assets mentions a tsunami of recent litigation brought against PFAS manufacturers, ever-increasing regulation that enforces strict limits on the chemicals’ use, and the compounds’ public health threat.
Liability for PFAS contamination “of the entire planet is expanding”, said Erik Olson, a senior strategic director with the non-profit National Resources Defense Council. The letter was circulated ahead of a decision by 3M, one of the world’s biggest PFAS manufacturers, to stop making the chemicals by the end of 2025.
“There has got to be a concern in boardrooms and among knowledgeable and savvy shareholders that continuing to manufacture these chemicals that are creating the Superfund sites of tomorrow is really risky for them financially,” Olson added. “If people getting sick and dying of exposure to these chemicals wasn’t enough, the liability should be.”
Among the 47 investors signing on to the letter are Axa, Robeco, Credit Suisse, Aviva, and Storebrand, and the letter was made public among 54 chemical companies. The investors are pushing for the industry to develop a plan to halt their manufacture and share production data with ChemSec, a non-profit that tracks the chemical industry.
“We encourage you to lead, not be led, by phasing out and substituting these chemicals,” the letter reads. “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.”
Industry observers say the math on 3M’s PFAS profits and liabilities casts light on why the chemical giant decided to wind up production, and why investors in other PFAS manufacturers are worried over liabilities.
3M’s 2021 annual report shows about $1.3bn in PFAS sales, and lists dozens of lawsuits it faces from states, local municipalities, school districts, water utilities, other companies, and residents. 3M was cited in an average of more than three PFAS-related lawsuits a day last year, and its legal liabilities could amount to as much as $30bn.
With compelling independent science showing the chemicals’ danger and hard evidence that 3M regularly concealed those threats from customers, the company has already begun settling: in late 2019, 3M agreed to pay Minnesota for $850m over PFAS pollution, and settled for another $50m in 2020 over contamination in Delaware.
“The pressure is mounting from every direction,” said Sonja Haider, senior business and investment adviser with ChemSec, which helped organize the campaign. “The lawsuits won’t go away – the companies will have to cover that – and the regulatory pressure is coming,”
3M also mentioned new regulations that make it difficult to continue polluting without suffering the consequences. Among those is the designation of PFOS, a compound that 3M developed and sold for decades, as a hazardous substance. Linked to new advisory US drinking water limits that found virtually no level of PFOS in drinking water is safe, the company faces the possibility of further litigation and cleanup costs in the coming years.
”When we look forward at some of those factors, we don’t see a viable business in the future,” 3M’s chief executive, Mike Roman, told Bloomberg. “This is a portfolio decision that allows us to move into other, higher growth opportunities.”
However, for now, a handful of companies seem ready to follow 3M’s lead. A ChemSec analysis found just four PFAS producers – Solvay, Yara, Indorama, and Sabic– are planning to phase out “hazardous chemicals”, though the plans are not specific to PFAS. Meanwhile, most of the industry has made slight progress in transparency, and Asian and North American companies are faring the worst, ChemSec found.
Buy Crypto NowThe non-profit also identified 100 downstream customers of top chemical producers who are making plans to phase out their use of PFAS. Among an increasing number of clothing brands no longer using the chemicals is Levi’s, while a growing 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 in 2022, when 23 investors with $4.4tn supported a similar call.
“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.
