3M

Lawsuits alleging hidden product harm in multiple areas demonstrate ESG underperformance, reputational risk

April 3, 2019

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Industrial conglomerate 3M Company is no stranger to lawsuits, given its five business units and thousands of products. With that said, in 2018, courtroom allegations on two separate high-profile topics echoed each other in an unsettling way: Plaintiffs said 3M knew its products might be harmful and failed to disclose that.

  • Some traditional ESG raters rank 3M above the industry average; Truvalue does not, based on its timely dataset that can be examined to see underlying events that move ESG scores
  • Since 3M settled a defective earplug case with the DOJ, at least 27 civil suits in more than eight states have been filed by service members or veterans alleging hearing loss due to defective earplugs
  • For reputation risk, the fact of 3M’s acquisition of Aearo isn’t a silver bullet: News stories are regularly identifying 3M as the sole party responsible as veterans allege the company acted “willfully, wantonly, with an evil motive, and recklessly.”
  • M&A activity is typically additive to the goodwill on a company’s balance sheet, but in 3M’s case that practice may be worth scrutiny, as significant liabilities have flowed from recent acquisitions
Industry
Containers & Packaging

Material Categories
Customer Welfare
Product Quality and Safety
Waste and Hazardous Materials Management