A close look at PFASs
Luc Olivier, CFA, Manager, La Financière de l’Échiquier
PFAS is an acronym behind which hide chemical molecules also known as “persistent pollutants”. Their highly resistant properties have contributed to the development of many industrial sectors since the 1950s. Whether in textiles, food packaging, cosmetics, semiconductors, inks, non-stick pans or toothpaste, persistent pollutants are everywhere. Persistent and robust, they accumulate in our ecosystems, in the air and water. Their concentration is such that they have become a societal and economic challenge: the cost of the health consequences of air pollution, to which PFASs contribute, is estimated at more than 6% of global GDP.[1] Given the interrelated nature of the challenges, particularly in terms of biodiversity, the main cause of biodiversity loss in Europe due to pollution,[2] companies are rolling out innovative solutions. Some are supported by impact investment, notably through investing and engagement strategies.
Aware of the challenges and impacts of PFASs on biodiversity, pioneering companies are contributing to research and the development of solutions to replace persistent pollutants. One of them is Finnish chemical company Kemira, which is deploying its expertise alongside 11 industrial and research partners as part of the ZeroF project. Funded by the European Union and the Swiss State Secretariat for Education, Research and Innovation, and supported by nine countries, the ZeroF project aims to provide viable alternatives to persistent pollutants while addressing the reluctance of industry and consumers. A pioneer in this field, Veolia announced last April the launch of its thirtieth PFAS treatment site project. The new programme, located in the State of New York, will help provide more than 140,000 Americans with water with PFAS levels below regulatory thresholds through the use of technologies such as activated carbon and nanofiltration. A leader in this field, Veolia is also applying its expertise in Europe, with large-scale analysis of water distributed to consumers.
More and more companies and governments are taking action. Last March, for example, the European Chemicals Agency, at the initiative of Germany and the Netherlands, launched a consultation with a view to banning PFASs in the European Union. And the US Environmental Protection Agency is following the same path, introducing new standards that will help reduce exposure for nearly 100 million people.
Aware of the importance of the issues at stake, players in the asset management industry are also taking action, through engagement and exclusion initiatives. Among the pioneers is LBP AM, the parent company of La Financière de l’Echiquier (LFDE). In July 2023, LBP AM launched a due diligence process, led by Camille Bisconte De Saint Julien, Human Rights Officer. The approach comprises four commitments: stop the impact, remedy the impact, consult and communicate, and deploy robust, dedicated policies. This mobilisation around persistent pollutants is aimed primarily at the manufacturing companies that cause the pollution.
Given the convergence of these challenges, we believe that the role of listed impact investing is crucial. It is helping, now and to a greater extent in the future, to channel capital to companies committed to researching and developing alternative solutions that respect biodiversity. Its action is decisive.