Investors demand end to ‘forever’ chemicals
A coalition of asset managers is demanding the phaseout of hazardous “forever” chemicals, the latest move by institutional investors to expand their efforts to address environmental risks beyond climate change to biodiversity and human health concerns.
Widely used in food packaging, cookware, clothing and carpets, forever chemicals are a group of more than 9,000 compounds that do not break down in the environment and are associated with human health problems including cancers and reproductive abnormalities.
Also known as PFAS (perfluoroalkyl and polyfluoroalkyl substances), forever chemicals have been found in the blood of 97 per cent of Americans, according to the US government.
Aviva Investors and Storebrand Asset Management have co-ordinated the campaign by 47 institutional investors with $8tn in combined assets. It is targeting 54 chemicals companies including DuPont, 3M, Dow, Eastman Chemical, Air Liquide, Akzo Nobel, BASF, Bayer and Solvay.
The investors want manufacturers to establish a global register of PFAS and details of the production volumes of each of the hazardous substances. While data on the production and sale of PFAS are published in the EU and US, this is not required elsewhere in the world.
Just four of the 54 companies — Indorama in Thailand, Saudi Arabia’s Sabic, Yara of Norway and Belgium’s Solvay — have a public strategy to phase out hazardous chemicals, according to ChemSec, an independent non-profit consultancy partly funded by the Swedish government.
“Most companies are taking little or no action to phase out hazardous chemicals despite the risks to public health and the environment,” said Sonja Haider, a senior adviser at ChemSec. “They are turning a blind eye to an unfolding pollution crisis.”
Eugenie Mathieu, senior ESG analyst at Aviva Investors, said the lack of transparency and accountability regarding PFAS was comparable to the denials of harm to humans made by tobacco companies since the 1950s.
“It is very difficult for consumers to avoid exposure to these harmful substances and it is vital for chemical companies to be more transparent,” she said. “Shareholders have very restricted visibility of the potential liabilities arising from forever chemicals, which is a concern given the growth in the number of PFAS lawsuits.”
Victoria Lidén, sustainability analyst at Storebrand Asset Management, said it would raise concerns about PFAS at board level, support shareholder resolutions and vote against the election of directors if engagement efforts proved unproductive.
“There has already been an impact on the share prices of chemical companies because of the reputational and litigation risks associated with PFAS,” Lidén said. “Companies have already had to make significant provisions on their balance sheets and these PFAS liabilities could become huge in the future.”
California’s attorney-general, Rob Bonta, alleged in a lawsuit last month that 18 chemical companies knew about the dangers associated with PFAS and concealed the risks in many cases. The lawsuit claims that PFAS have leached into at least 146 public water systems, serving an estimated 16mn Californians.
“We have the evidence to show that [PFAS] have harmed untold numbers of Californians,” said Bonta.
The American Chemistry Council, a trade association representing manufacturers, said its members were “dedicated to the responsible production, use and disposal of PFAS”.
It added: “We continue to work with [the US government] towards strong, science-based policies that are protective of human health and the environment while providing for the continued use of this important chemistry.”