Per and poly-fluoroalkyl substances (PFAS) are a group of synthetic chemicals widely used in industrial and consumer products due to their exceptional resistance to heat, water and oil. These chemicals are commonly found in firefighting foams, non-stick cookware, water-repellent fabrics and many other products.
Despite their numerous commercial applications, PFAS are also known for their persistence in the environment. They’re often referred to as ‘forever chemicals’ because they don’t break down easily and can contaminate soil, water and air, leading to widespread environmental pollution.
To help your business identify and better manage potential PFAS risks in your operations and supply chains, in this article we answer the following questions:
According to the US Environmental Protection Agency[1], PFAS are a family of more than 15,000 synthetic chemicals that don’t occur in nature, each with a common characteristic of having carbon atoms linked to fluorine atoms.
A well-known example of a PFAS plastic polymer is polytetrafluoroethylene or PTFE, which is a fluoropolymer better known under its trade name Teflon, used in non-stick cookware.
Exposure to PFAS[2] has been linked to various health issues, including cancer, liver damage, thyroid disease, decreased fertility and increased risk of asthma and other respiratory conditions.
Ignoring PFAS risks can lead to long-term environmental damage, health issues for communities and significant risks for businesses.
Industries such as aviation, chemical manufacturing and firefighting are particularly vulnerable to legal, financial and reputational risk. For example, in countries such as the US and Australia[3], several large chemical companies have already agreed in principle to set up a fund to help remove toxic perfluoroalkyl and polyfluoroalkyl substances, or PFAS, from public drinking water systems. In the UK a group of concerned residents and business owners in North Yorkshire, has recently instructed a leading law firm to work with them in relation to claims arising from PFAS contamination[4] following shockingly high concentrations detected in the area.
Given growing concerns about PFAS risks, industries may soon be required to identify and treat potential sources within their operations. The UK Drinking Water Inspectorate has already announced that new guidance on PFAS is to be issued to water companies whilst the European Union (EU) regulates PFAS through a number of regulations, including REACH, POPs, and the Drinking Water Directive. The EU's goal is to phase out PFAS use, unless it's essential to society. This includes raw materials, manufacturing processes and products (both past and present) that may contain PFAS.
Failure to manage PFAS risks effectively could lead to significant legal and financial consequences such as lawsuits, fines and cleanup costs. One major US manufacturer recently reached a settlement agreement with public water suppliers that includes a pre-tax present-value commitment of up to $10.3 billion payable over 13 years.[5]
Environmental negligence can also severely damage your company’s reputation among consumers and stakeholders.
Traditionally, casualty or environmental risks of this type have been transferred to insurers, who assess the probability and impact of such events and offer an insurance solution.
However, extensive claims experience related to asbestos exposure, for example, have made insurers cautious. The high costs associated with these claims, including medical expenses, legal fees, and compensation payouts, have led to substantial financial liabilities for insurance companies. This historical experience has made insurers wary of new risks that are difficult to quantify or qualify, such as those associated with PFAS. As a result, some insurers are not willing to cover PFAS liability and are applying retrospective exemption clauses.
Nonetheless, insurers may make some exceptions if your business can demonstrate strong risk management, giving them confidence your organisation is doing everything possible to eliminate or manage the risks.
When PFAS is in your process(es), you should consider the following measures to mitigate the risks:
Given the implications of PFAS impacts and the associated commercial risks and claims potential, identifying and managing PFAS risks as early as you’re able can play a key role in futureproofing your organization against your exposure.
The first step is to understand whether there is a likely risk. If there is, a monitoring programme for air, water and soil around industrial sites could prove crucial. For example, when acquiring a new site, ensure your due diligence addresses forever chemicals risks through site surveys that consider PFAS presence — both present and past — to avoid taking on unexpected liabilities.
To help you get a better understanding of the potential risks arising from PFAS presence in supply, production and distribution processes, and how you can manage them effectively, we’re supporting a three-part research project to:
We’ll also be publishing further updates as our research develops.
To better understand and manage your PFAS and broader supply chain risks, speak to our risk management specialists.
