Investors should be wary: Persistent chemicals are more than just PFAS
In ChemSec’s latest project – ChemScore – we analysed and ranked the world’s 35 biggest chemical companies based on their efforts to reduce their chemical footprint.
One of the main things we looked at was how many hazardous chemicals they produce. Special attention was given to a specific chemical property that is extra problematic for investors – persistence – since liability cases connected to these substances may surface a long time from now.
In chemical terms, persistence means that the chemical doesn’t degrade in the environment – or in humans for that matter – for a very long time. The most well-known group of persistent chemicals is PFAS, a group of almost 5,000 chemicals that are commonly found in everyday products such as non-stick cookware and water-repellent outdoor clothing.
Many persistent chemicals are also hazardous to human health and the environment. They are known to cause cancer, reduced sperm quality and attention deficit disorder in humans and to threaten to disrupt fragile ecosystems in nature.
“It’s not enough that the chemicals won’t degrade, they are also extremely bad”
These chemicals create a double-whammy of negative effects – it’s not enough that the chemicals won’t degrade, they are also extremely bad for anyone exposed to them.
Regulators are slowly starting to realise that persistent chemicals are a big problem – and so should investors, because in the long run they are also bad for business.
Last year, ChemSec wrote about PFAS-producing companies having to pay billions of dollars in legal fines due to PFAS contamination that happened years ago. The various lawsuits and litigations sent the companies’ stock prices plummeting to the ground.
Due to the persistent nature of PFAS, more expensive liability cases will surely surface in the future. According to Gordon Haskett analyst John Inch, the PFAS industry could be forced to face costs ranging from $25 billion to $40 billion.
“Investors would do well to convince companies to phase out persistent chemicals”
To avoid financial blows such as these, investors would do well to convince companies to phase out persistent chemicals from their product portfolios or to simply divest and focus on companies that do not produce them.
Even though PFAS have started to gain a bit more negative attention over the last years, there are other persistent chemicals that investors need to look out for as well. Here a couple of them:
Benzotriazole UV filters
High-volume chemicals used in everything from personal care products to electronics, plastics, rubber, sports equipment, coatings and paints. These bioaccumulative and toxic UV filters are included in the EU Candidate List, which means that they are up for regulation in the European Union. Six of the 35 chemical companies included in ChemScore produce benzotriazole UV filters. These are: BASF, Covestro, DSM, PPG, Solvay and Sabic.
D5 and D6
These bioaccumulative and toxic siloxanes are used in various applications such as personal care, washing and polishing products. D5 and D6 have been on the EU Candidate List since 2018. Four companies in ChemScore produce them: Dow, DuPont, Evonik and Shin-Etsu.
Chloroform and carbon tetrachloride
These chlorinated solvents are used mainly for cleaning and in manufacturing. Even though they are very toxic, they have so far escaped the regulatory radar for being water soluble. This is however part of the problem since it means that they easily spread through drinking water and other waterways. Chloroform and carbon tetrachloride are produced by three companies included in the ChemScore ranking: Dow, Solvay and Shin-Etsu.
Chemicals such as these are labelled PMT (Persistent, Mobile and Toxic), a new criterion that was introduced in the EU’s legislative framework last year.
This high-volume chemical is also PMT and used in everything from wood panels to washing powder. It is also the building block of a porcelain-like plastic used for children’s tableware. It has a history of scandals that ChemSec predicts will continue. Three companies in ChemScore produce melamine: BASF, PPG and Sherwin-Williams.