In the wake of rising litigation and strict regulation on so-called ‘eternally chemicals’, there are rising worries amongst investors that the chemicals technically often called PFAS might be the ‘new absestos’.
“Manufacturers and users of PFAS chemicals are exposed to deep liability and insurance risks, reminiscent of those historically linked to asbestos, which could materially adversely harm the long-term value of companies involved in their manufacture and sale,” a bunch of investors warned the world’s largest chemical corporations on Wednesday (15 November).
The Investor Initiative on Hazardous Chemicals (IIHC), which is coordinated by the Swedish NGO ChemSec, entails greater than 50 institutional investors which symbolize over $10 trillion [€9.2 trillion] in property beneath administration or recommendation.
IIHC members embody Storebrand Asset Management, Allianz Investment Management, and BNP Paribas Asset Management.
Investors mentioned chemical giants ought to publish a practical phase-out plan for merchandise containing eternally chemicals and develop safer alternate options.
“Safer products that substitute the use of hazardous chemicals and support accelerated phase-out are likely to present a significant opportunity for value creation,” they wrote in a letter.
According to Eugenie Mathieu from Aviva Investors in the UK, many in the chemical business welcome investor stress and see it as an opportunity towards better sustainability.
Asbestos déjà vu?
Despite the widespread well being issues round asbestos, it was thought of a ‘magic mineral’ due to its skill to resist flames.
By the early 1900s, world asbestos manufacturing had expanded to exceed 30,000 tonnes per 12 months.
Yet asbestos shortly grew to become the topic of hundreds of lawsuits, which led asbestos producers to file for chapter in the US.
In the EU, the use of asbestos has been banned since 2005 however a number of EU nations launched restrictions in the Nineteen Nineties.
Likewise, PFAS manufacturing is right now very worthwhile, regardless of the large value to society and human well-being — that are more and more resulting in lawsuits.
“We see parallels emerging between the PFAS and asbestos issue, especially with respect to the substantial liability and insurance risks associated with asbestos in the past,” mentioned Sabrina Sanz from French asset supervisor Amundi.
Kidde-Fenwal this 12 months confronted greater than 4,400 lawsuits over the manufacturing of PFAS-based firefighting foam and specialists argue that the US-based firm will be the first of many to file for chapter to keep away from litigation, Bloomberg reported.
In Europe, the chemical large 3M reached a multimillion settlement final 12 months with the Flemish authorities, however it’s now going through contemporary litigation over PFAS air pollution in the Netherlands.
Similarly, Chemours is going through new lawsuits in the Netherlands for the contamination of soil, air, and floor water with PFOA and GenX.
‘Eroding shareholder worth’
“We have seen the effect that group litigation, such as the $10.3bn settlement by 3M this year, can have in eroding shareholder value,” mentioned Victoria Lidén from Oslo-based monetary group Storebrand.
Lidén additionally mentioned that the mishandling of hazardous chemicals is amongst the most vital and speedy environmental dangers for investors.
ChemSec’s ChemScore challenge revealed a rating on Wednesday, that includes the 50 largest chemical corporations globally. The findings expose that the main producers of PFAS (3M, AGC, Chemours, Daikin and Honeywell) rank lowest when it comes to sustainability.
BASF and Bayer, two of the largest PFAS producers in Europe, rank 25 and 23 respectively.
BASF produces round 27 persistent chemicals and Bayern a minimum of 13 eternally chemicals — being uncovered to stranded property and important legal responsibility dangers, in keeping with ChemSec.
“PFAS are the new asbestos; that is clear to us and increasingly to investors. The parallels are stark: scientists blow the whistle, and firms continue producing for decades until, eventually, the law catches up with them and it’s game over,” mentioned  Sonja Haider, from ChemSec.
In Europe, PFAS air pollution hotspots have been recognized in Germany, Belgium, Sweden, Italy, and Denmark.
The EU is making ready a ban on the non-essential makes use of of PFAS. But critics argue the ban is shifting too slowly, presumably not taking impact till 2025.
The world value to society of PFAS to society is estimated at €16 trillion per 12 months. Exposure to eternally chemicals prices Europeans between €52bn and €84bn yearly, in keeping with the Nordic Council of Ministers.
