EOS’s engagement journey with 3M, initiated in 2020, centred on the critical issue of hazardous substance management, with a particular focus on the company’s utilisation of fluoropolymers—a subset of the environmentally persistent chemicals known as per- and polyfluoroalkyl substances (PFAS). Recognising the significant environmental and health risks posed by PFAS, which are notorious for their inability to degrade naturally, accumulating in water, soil, and living organisms, EOS urged the company to devise and implement a time-bound strategy aimed at reducing and ultimately ceasing the production of fluoropolymers. This strategy was to include the exploration and adoption of more sustainable alternatives.
In a significant move in September 2022, EOS, alongside 46 other signatories representing a collective $8 trillion in assets under management and advise, reached out to the company’s CEO through a letter that echoed a previous communication sent in December 2021. The correspondence highlighted the urgent need for enhanced transparency regarding the company’s chemical production and disclosure practices, especially in regions with less stringent regulatory frameworks than those of the US and EU. The letter emphasised the necessity for the company to discontinue its production of PFAS, citing the looming financial risks associated with potential litigation and the costs associated with product reformulation and process modification.
The company’s announcement in December 2022 to discontinue PFAS manufacturing by the end of 2025 marked a pivotal moment in the engagement efforts. This commitment to phase out the use of PFAS across its entire product range, including fluoropolymers and other PFAS-based products, was a significant stride towards environmental stewardship. The company estimated the financial impact of this decision at approximately $1.3 billion, correlating to the annual net sales from PFAS production. Further engagements in 2023 revealed the company’s dedication to ensuring a smooth transition for its customers, adhering to existing contractual obligations whilst actively developing and transitioning to non-PFAS alternatives.
3M’s decision to exit the PFAS market is seen as market leadership in addressing the challenges associated with hazardous substances. This move, influenced by EOS’s sustained engagement, reflects a comprehensive assessment of the evolving regulatory landscape and shifting stakeholder expectations. As we move forward, we will continue to monitor the company’s progress in this transition, supporting and acknowledging its efforts to innovate and lead in sustainable supply chain management practices.
At the time of publication (May 2024) Danone were held in our Passive Developed Equities and Passive Smart Beta Equities portfolios.