Institution Theme Category Industry
  • Wellington Management
  • Governance
  • Strategy & Risk
  • Services
Company Year Market Link
The 3M Company 2019 N/A https://www.wellington.com/uploads/2020/10/4dc06a6392f39bcacb4ae0bcaa9a5aeb/664_11_a4_wmc.pdf

Along with several of its peers, the company is facing legal claims regarding the possible environmental and health effects of various perfluorinated compounds (PFAS)…Joined by a group of equity and credit investment professionals, our ESG analyst led a meeting with the CEO/chair. We sought to better understand board oversight of strategic choices, including the company’s approach to outstanding environmental litigation.
The company has phased out the chemical, improved testing and detection technology, and embraced the US Environmental Protection Agency’s remediation plan more quickly than some peers. Given that litigation is ongoing, uncertainty remains about the range of potential outcomes. The board’s audit committee is tasked with oversight of these proceedings. The CEO appreciates that prolonged litigation could affect the company’s reputation and ability to attract talent. For this reason, the company is keen to balance the timeline to resolution with the total cost of settlement.
Our GIA and credit analyst came away from this meeting with an incrementally negative view of the PFAS situation, and some portfolio managers reduced or eliminated positions. We expect the company to be transparent about the potential risks of this situation and to prepare the balance sheet for a potential negative legal outcome.

Details

  • Proponent
  • Engagement
  • Resolution
  • Product liability
  • Vote
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  • Rationale
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  • Details
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