3M Co. MMM -1.08% announced that by the end of 2025 it would stop manufacturing and using forever so-called chemicals, amid mounting criticism and litigation over the chemicals’ alleged impact on health and the environment.
3M Chief Executive Mike Roman said the decision was influenced by increasing regulation of the chemical known as PFAS and a growing market for substitute options.
“Customers take note of the PFAS regulations. They are looking for alternatives,” Mr. Roman said in an interview. “We find other solutions with the same characteristics,” he said.
The company’s move affects chemicals used to make nonstick cookware, food packaging and other consumer and industrial products. 3M estimated its current annual sales from the chemicals totaled approximately $1.3 billion.
Perfluoroalkyl and polyfluoroalkyl substances, or PFAS, are commonly referred to as “forever chemicals” because they take a long time to break down in the environment. These chemicals include highly resistant compounds that manufacturers have long valued for their heat resistance and ability to repel water, grease, and stains.
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Research over the past few decades has linked exposure to some forms of the chemicals to health problems, including kidney and testicular cancer, thyroid disease and high cholesterol, according to the Environmental Protection Agency. The synthetic compounds have also been found in drinking water, including some municipal systems and private wells, and in rainwater around the world.
Regulatory agencies and environmental groups have targeted the chemicals, and thousands of lawsuits alleging contamination and disease have been filed against 3M and other manufacturers in recent years.
3M stopped producing some types of PFAS chemicals in the early 2000s, but continued to make other types that the company says are safe to make and use. 3M said Tuesday it will phase out all PFAS-based fluoropolymers, fluorinated fluids and additive products by the end of 2025.
The company also said it will phase out the use of PFAS in its products by the end of 2025, and said it has already reduced its use of the substances over the past three years.
Shares of 3M lost about 0.5% in midday trade, while major US stock indexes edged higher. The company’s stock is down about 29% so far this year, compared to a 19% decline in the S&P 500 stock index.
The EPA has stated that approximately 600 PFAS chemicals are in commercial use today. The American Chemistry Council, which represents chemical manufacturers, said Tuesday that PFAS are an essential part of thousands of products in technologies including semiconductors, electric vehicle batteries and 5G technology.
The group said its members are committed to the responsible production, use, management and disposal of PFAS chemicals and that they will continue to work with the EPA on guidelines that protect human health and allow the chemicals to continue to be used.
3M’s phase-out of PFAS has been hailed as a victory by environmental groups, which have been sounding the alarm about the chemicals for years.
Scott Faber, senior vice president of government affairs at the Environmental Working Group, said he doesn’t think 3M will ever be held fully accountable for manufacturing the chemicals. “But by exiting the market, they sent a strong signal to other polluters that poisoning us all is simply unaffordable,” Mr Faber said.
3M’s net sales of PFAS chemicals account for approximately 4% of the company’s total annual sales, according to research by RBC Capital Markets. “This is a step in the right direction for 3M given the overall regulatory scrutiny of PFAS chemicals,” RBC analysts wrote in a note to investors on Tuesday.
3M expects to incur pre-tax charges of approximately $1.3 billion to $2.3 billion as a result of exiting the chemicals manufacturing business, including a charge of $700 billion to $1 billion in the current quarter. The St. Paul, Minnesota-based manufacturer said it intends to meet ongoing contractual obligations during the transition period.
The EPA proposed in August to designate two forms of PFAS chemicals as hazardous substances under the federal Superfund Act. The American Chemistry Council and companies like 3M opposed the move, saying it was not based on the best available science and would not speed up the remediation of contaminated sites.
Industry analysts said facility cleaning costs are likely to increase as the EPA uses broad discretion to impose cleaning requirements under the Superfund designation. They said hazardous substance labeling would also likely hamper sales growth for the PFAS chemicals, which 3M continues to make, as customers look for alternatives.
3M pioneered the development of PFAS chemicals in the late 1940s, building on nuclear research using fluorine gas. By combining fluorine with carbon, 3M found it could create durable compounds that could be adapted for use in consumer and industrial products.
3M plants that manufacture PFAS chemicals are increasingly the focus of soil and water pollution regulators. 3M has committed billions of dollars to clean up plant sites in recent years, including an $850 million settlement with the state of Minnesota related to a plant in Cottage Grove, Minnesota. The company also earlier this year agreed to provide about $600 million to clean up contamination connected to a facility in Belgium that produced PFAS chemicals.
3M also produces PFAS chemicals at facilities in Alabama, Illinois and Germany.
3M ceased production of two PFAS chemicals known as PFOA and PFOS in the early 2000s. These two forms of PFAS chemicals have been the focus of thousands of lawsuits against 3M and other manufacturers.
– Will Feuer contributed to this article.
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