Within the wake of rising litigation and strict regulation on so-called ’ceaselessly chemical substances’, there are rising worries amongst traders that the chemical substances technically often known as PFAS may very well be the ’new absestos’.
”Producers and customers of PFAS chemical substances are uncovered to deep legal responsibility and insurance coverage dangers, paying homage to these traditionally linked to asbestos, which may materially adversely hurt the long-term worth of corporations concerned of their manufacture and sale,” a bunch of traders warned the world’s largest chemical corporations on Wednesday (15 November).
The Investor Initiative on Hazardous Chemical substances (IIHC), which is coordinated by the Swedish NGO ChemSec, entails greater than 50 institutional traders which characterize over $10 trillion [€9.2 trillion] in property beneath administration or recommendation.
IIHC members embrace Storebrand Asset Administration, Allianz Funding Administration, and BNP Paribas Asset Administration.
Buyers mentioned chemical giants ought to publish a sensible phase-out plan for merchandise containing ceaselessly chemical substances and develop safer options.
”Safer merchandise that substitute the usage of hazardous chemical substances and assist accelerated phase-out are prone to current a major alternative for worth creation,” they wrote in a letter.
In keeping with Eugenie Mathieu from Aviva Buyers within the UK, many within the chemical business welcome investor strain and see it as an opportunity towards better sustainability.
Asbestos déjà vu?
Regardless of the widespread well being issues round asbestos, it was thought-about a ’magic mineral’ due to its means to resist flames.
By the early 1900s, world asbestos manufacturing had expanded to exceed 30,000 tonnes per 12 months.
But asbestos shortly turned the topic of hundreds of lawsuits, which led asbestos producers to file for chapter within the US.
Within the EU, the use of asbestos has been banned since 2005 however a number of EU nations launched restrictions within the Nineties.
Likewise, PFAS manufacturing is at the moment very worthwhile, regardless of the large value to society and human well-being — that are more and more resulting in lawsuits.
”We see parallels rising between the PFAS and asbestos concern, particularly with respect to the substantial legal responsibility and insurance coverage dangers related to asbestos previously,” 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 would be the first of many to file for chapter to keep away from litigation, Bloomberg reported.
In Europe, the chemical big 3M reached a multimillion settlement final 12 months with the Flemish authorities, however it’s now dealing with contemporary litigation over PFAS air pollution within the Netherlands.
Equally, Chemours is dealing with new lawsuits within the Netherlands for the contamination of soil, air, and floor water with PFOA and GenX.
’Eroding shareholder worth’
”We now have seen the impact that group litigation, such because the $10.3bn settlement by 3M this 12 months, can have in eroding shareholder worth,” mentioned Victoria Lidén from Oslo-based monetary group Storebrand.
Lidén additionally mentioned that the mishandling of hazardous chemical substances is among the many most vital and rapid environmental dangers for traders.
ChemSec’s ChemScore undertaking 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 by way of sustainability.
BASF and Bayer, two of the largest PFAS producers in Europe, rank 25 and 23 respectively.
BASF produces round 27 persistent chemical substances and Bayern at the very least 13 ceaselessly chemical substances — being uncovered to stranded property and important legal responsibility dangers, in response to ChemSec.
”PFAS are the brand new asbestos; that’s clear to us and more and more to traders. The parallels are stark: scientists blow the whistle, and corporations proceed producing for many years till, finally, the legislation catches up with them and it is recreation 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 getting ready a ban on the non-essential makes use of of PFAS. However critics argue the ban is shifting too slowly, presumably not taking impact till 2025.
The worldwide value to society of PFAS to society is estimated at €16 trillion per 12 months. Publicity to ceaselessly chemical substances prices Europeans between €52bn and €84bn yearly, in response to the Nordic Council of Ministers.