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Rising litigation and tighter regulation risks for PFAS producers and users

Global Rising litigation, tighter regulation pose risks for PFAS producers and users

ESG Measures

 

Many PFA producers face significant costs associated with rising litigations and remediation projects and tighter regulation. Per- and polyfluoroalkyl substances (PFAS) are synthetic chemicals widely used across industry that can have long-lasting negative impacts on human health and the environment. PFAS producers are increasingly exposed to financial, legal and reputational risks associated with rising controversies and tighter regulation. Furthermore, with downstream users committing to phase-out deadlines and adapt to new regulations, PFAS producers will face greater calls to move into safer alternatives.

PFAS-related water contamination scandals and lawsuits are rising. According to our database, there were a total of 86 active PFAS-related controversies in June 2021, a sharp increase from 22 PFAS controversies in June 2018. Chemicals companies are most exposed to PFAS controversies, followed by industrial goods and services companies. Most recorded PFAS-related controversies concern activities in the US (94% of total).

Regulatory efforts to restrict or ban PFAS are also accelerating, representing an additional liability for companies. Proposed or adopted legislation can be seen across the European Union, US (both at a federal and state level) and Asia, including Korea, China and Japan. South American countries such as Brazil, Argentina, and Mexico are working independently on chemical frameworks, while Chile and Colombia published a commitment to establish chemical regimes.

Rising risks will heighten pressure on companies to enhance transparency and focus on safer alternatives. Despite the material risks associated with PFAS controversies, companies’ overall responsiveness is mostly assessed as “Non-communicative” in our analysis. However, we expect rapid and effective changes from PFAS manufacturers and users as they adapt to increased scrutiny from stakeholders and comply with upcoming regulatory frameworks. 

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