* 23 investors with $4.1 trln write to 50 companies
* Call for transparency on volumes, phase-out plan
* Comes ahead of tougher rules, threat of clean-up costs
LONDON, Dec 13 (Reuters) – Investors managing $4.1 trillion
in assets are urging the world’s biggest chemicals companies to
phase out production of hazardous substances which linger in the
environment and have been linked to serious health problems.
The move by 23 investors including Aviva Investors
and Storebrand comes as regulators toughen rules around
their use and as analysts warn some companies could face
billions of dollars in associated clean-up and compensation
costs.
In a letter to the world’s 50-biggest chemical producers
with combined revenues of $860 billion the investors call for
increased transparency around how many “substances of very high
concern” they produce every year.
Whilst U.S. and European regulators have disclosure
requirements on hazardous chemicals, many other countries do
not, and information on the volumes produced globally are not
publically available.
To help investors, companies should also share the data with
the non-profit International Chemical Secretariat (ICS), which
advocates for a shift to safer chemicals and tracks the
performance of leading producers, the letter seen by Reuters
said.
“We believe sustainable management of chemicals is key to
financial outperformance,” Eugenie Mathieu, senior analyst at
Aviva Investors, told Reuters, citing the example of litigation
tied to PFAS or perfluoroalkyl and polyfluoroalkyl substances,
used in applications such as lubrication and industrial
coatings.
So-called “persistent chemicals” such as PFAS – which
degrade slowly and are linked to a range of illnesses after
getting into local water supplies – have already led to payouts
from companies including 3M https://www.reuters.com/business/3m-agrees-pay-98-mln-resolve-suits-over-forever-chemicals-2021-10-19
, and more cases are pending.
POTENTIAL COSTS
“In recent years the financial implications for (a)
company’s liability for past and current production of pollution
of persistent chemicals, especially PFAS, have been clear,” she
added, citing one analyst’s estimate of potential costs in the
United States of between $25 billion and $40 billion.
A spokesperson for 3M, one of the companies to receive the
letter, said the company was committed to environmental
stewardship, adding: “We welcome the opportunity to engage with
investors and other stakeholders regarding this topic”.
Belgian company Umicore said it had engaged with
ICS over the group’s ChemScore questionnaire in October and
complies with relevant legislation where it makes, imports or
sells its products, using a “risk-based” approach to chemicals
management.
Given the growing regulatory and litigation concerns, the
investors said they wanted to see all companies make a
time-linked commitment to phase out production of the chemicals,
focusing first on persistent chemicals.
The U.S. Environmental Protection Agency earlier this year
laid out a plan to toughen rules https://www.reuters.com/world/us/biden-administration-moves-curtail-toxic-forever-chemicals-report-2021-10-18
for persistent chemicals, while the European Union is also
looking to tighten legislation https://eur-lex.europa.eu/procedure/EN/2021_340
and incentivise a transition towards less hazardous materials.
Lastly, the investors said companies should set out plans to
develop products that can be reused as part of a “circular
economy”, or which allow customers to design products that can
be used in such a way – a key focus of EU lawmakers https://www.reuters.com/article/us-eu-economy-circular-idUSKBN20C2CU.
“The chemical industry sits at the start of the supply chain
so has a role to play in driving the circular economy forward,”
the letter said, citing examples such as using waste or
bio-based material as feedstocks.
(Additional reporting by Ross Kerber; Editing by David Holmes)
Read More: Investors push world’s top chemicals companies over hazardous substances | MarketScreener