3M wants to purify water. The interim agreement brought a boost to the stock

3M, a Minnesota Mining and Manufacturing Company that manufactures  trade tools, has reached an interim agreement with U.S. cities worth more than $10 billion. The agreement relates to water contamination by "perpetual chemicals" related to legal disputes over contamination. Chemours Co, DuPont de Nemours Inc and Corteva Inc, which faced the same lawsuit over pollution of water systems in the United States, have done similarly in the past, setting aside US$1.19 billion for atonement.

Still unanswered for 3M is a lawsuit against the Florida city of Stuart, which the lawsuit alleges knowingly manufactured firefighting foams containing per- and polyfluoroalkyl substances (PFAS) linked to cancer and other health complications. The City of Stuart is seeking $100 million to cover the cost of dedicated water filtration. The company has appealed, claiming that the aforementioned substances in the foams are unrelated to health problems. Last December, 3M pledged to phase out PFAS substances by 2025, acknowledging their unsuitability.

The company's stock market value has reacted positively

The company's shares reacted by rising 8.4 percent after the news of the $10 billion interim agreement, surpassing $102.16 per share. 3M has seen rather negative growth in recent months, which may make it an undervalued commodity on the market. This may be due to lower demand for products of this type, supply chain disruptions and inflation combined with slowing overall economic growth. The current jump of more than eight percent could encourage investors to support the company in cleaning up the environment, and the stock could potentially return to an uptrend. [1]

Snímek obrazovky 2023-06-08 v 20.20.02

3M Company's stock performance over the past five years. (Source: Google)*

A step forward to a better future?

PFASs, subtitled "eternal chemicals", are compounds that cannot be broken down by the human body and, if present in clean water sources, pose a risk to ordinary consumers. Although they may not be directly linked to health problems, their presence in drinking water is undesirable. A settlement with cities on decontamination of water systems could mean that companies are taking a responsible approach to the problem and want to make amends for their attitude to the environment. On the other hand, it is questionable whether they will actually honour the agreement to stop the production of the substances in question and whether the billions of dollars are not just serving as a temporary solution or delaying litigation.

Olivia Lacenova, principal analyst at Wonderinterest Trading Ltd.

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.

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