PFAS (per- and polyfluoroalkyl substances) are contained in a large number of industrially manufactured products. They are used in textile and leather processing, for example. PFAS enter drinking water via wastewater, exhaust air or rain and pose a threat to the human organism. The natural decomposition of PFAS takes place only very slowly, if at all, hence the term "forever chemicals". The thematic assessment "Investing in global water infrastructure", written by Daniel Fauser, reports in detail on the consequences of PFAS for humans and the environment.
Daniel, a global study on PFAS contamination has just been published. What are your findings?
This is a meta-study that analysed and evaluated 273 international studies and thus over 45,000 surface and groundwater samples worldwide. The authors were very successful in demonstrating that PFAS are already ubiquitous today. Contamination with PFAS occurs globally. In many places around the world, contamination levels are above the existing limits, which are likely to become even stricter in the future.
PFAS levels are particularly high in Australia and the USA. Why is this?
The PFAS concentration can vary greatly from region to region. For example, it is usually very high on military training grounds because large quantities of fire-fighting foam, which contains large amounts of PFAS, are generally used there. Nevertheless, the authors of the study caution against the interpretation that individual countries or regions are more heavily burdened than others. The number of samples from the supposed PFAS hotspots (e.g. Australia and the USA) is simply much higher, which may distort the representation of the actual distribution of high PFAS concentrations, according to the authors. The issue of PFAS has been much more prominent in the US than elsewhere, at least in the media, since the late 1990s due to large-scale litigations. At the beginning of this year, the US Environmental Protection Agency (EPA) proposed limits that would be among the strictest in the world.
And what is the situation in Switzerland?
Here in Switzerland, the first efforts to regulate PFAS more strictly were made back in 2011. Since then, regulation has been repeatedly tightened. For example, the use of PFOS, one of the most important PFAS, has been completely banned in Switzerland since April 2024.
How can PFAS be removed from the environment?
The most widely used method to date is activated carbon filters, such as those offered by the Japanese company Kuraray. The use of ion exchange resins also removes PFAS from drinking water. The latter method is used by the German company Lanxess and the Belgian company Solvay, for example.
To what extent is water protection in general and the elimination of PFAS in particular interesting from an investor's point of view?
Estimates of the market size for PFAS elimination are still difficult, as the extent of the problem does not yet appear to be fully understood. The above-mentioned study makes an important contribution in this respect. Any new evidence that the problem is more widespread than previously thought is likely to lead to an upward revision of market size estimates. Companies that position themselves technologically in the market at an early stage are likely to benefit from a "first mover advantage". These are established companies that are generally active in the defensive business of water treatment. PFAS elimination could represent an additional revenue stream for them. The potential of these revenue streams currently seems to be hardly or not at all priced in by the market.
And how can we invest in these technologies?
Investing in individual stocks requires a high level of expertise and a willingness to take risks, particularly given the long-term nature of the problem. Thematic funds therefore offer an alternative to consider. They permit investors to diversify their investments across a range of themes, while also allowing them to capitalize on potential returns in up-and-coming sectors.
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