Investors Worth $8 Trillion Want Chemical Companies to Phase Out PFAS
In a letter circulated late last year, 47 asset managers worth a total of $8 trillion urged companies to phase out the production of the environmental toxins known as per- and polyfluoroalkyl substances (PFAS), citing concerns over increased lawsuits and regulations as consumers and policymakers learn more about the dangers of these chemicals.
“We encourage you to lead, not be led, by phasing out and substituting these chemicals,” the letter read, as chemical industry watchdog nonprofit ChemSec reported at the time. “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.”
PFAS are a group of around 12,000 compounds that are commonly used in stain-, heat- and water-resistant products, according to The Guardian. They have been found everywhere from rainwater to umbilical cord blood and have been linked to serious health impacts including cancer, immunosuppression and reproductive issues.
As awareness of PFAS’ prevalence and potential dangers grows, so too has the momentum against them. In 2022, the U.S. Environmental Protection Agency proposed two important regulations of two of the most prominent PFAS: setting their safety level in drinking water to near zero and considering them as hazardous substances under the Superfund law.
The corporate backlash against these chemicals follows the tightening regulations. Shortly after the letter from the investors was made public, the U.S.-based company 3M announced it would stop using and making PFAS by 2025.
In addition, the letter, which was signed by investors including Aviva Investors and Storebrand Asset Management, represents growing opposition to the chemicals, as Reuters reported. A previous effort in 2021 had only around half the backing, with 23 investors representing $4.4 trillion standing behind it.
“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,” Natural Resources Defense Council senior strategic director Erik Olson said, as The Guardian reported, “If people getting sick and dying of exposure to these chemicals wasn’t enough, the liability should be.”
The letter was sent to 54 chemical companies in September, according to Reuters. Other signatories included AXA IM, Credit Suisse Asset Management (Switzerland) AG, Resona Asset Management and Robeco, according to ChemSec. Many of the investors behind the letter were from the European Union, The Guardian noted.
The signatories called on the companies to both phase out the chemicals and share their plans and production data with ChemSec, which assigns companies a ChemScore based on their policies towards the environment and hazardous chemicals, according to ChemSec.
While 3M’s decision shows hope for the corporate turn against PFAS, this isn’t reflected in last year’s ChemScore rankings. Of the 54 companies addressed in the letter, only four had a plan to stop using dangerous chemicals.
“The global chemical industry is turning a blind eye to the unfolding chemical pollution crisis,” ChemSec Senior Business and Investor Advisor Sonja Haider said. “Most companies are taking little or no action to phase out hazardous chemicals despite the risks to public health, the environment and shareholder value.”