DuPont’s Dirty Laundry: Why ESG Can’t Be Washed Away
ESG in Politics
If you’re questioning why ESG matters, the answer is straightforward: it’s not just about environmental protection and sustainable growth—it directly impacts companies’ bottom lines. For profit-driven corporations, failing to meet ESG standards, or falsely claiming compliance, can lead to severe financial penalties. Scandals of this nature often result in lawsuits and regulatory fines that cost millions, forcing companies to reassess their operations and, in some cases, lay off employees.
For those unconvinced of ESG’s importance, consider this: Originally founded on resistance to British taxation, the United States quickly established its own tax system to support growth. Similarly, today, many dismiss ESG as a government buzzword, especially under political figures like former President Trump. The British government once sought to extract revenue from the American colonies, and in repetition, governments will continue to push for ESG regulations to ensure long-term sustainability and financial gain. These regulations also bolster budgets for organizations and initiatives like NASA, infrastructure development, education reform, and renewable energy programs, which are essential for fostering innovation and addressing global challenges such as climate change.
Even if political shifts provide temporary relief to ESG critics, the drive for revenue and the need to fund such initiatives will ensure these regulations persist, motivating companies to comply. Billionaires have increasingly taken the reins of political discourse, a role historically dominated by lawyers and military figures. Media narratives have also become more malleable under such influence. Even if political shifts provide temporary relief to ESG critics, the drive for revenue and the need to fund such initiatives will ensure these regulations persist, motivating companies to comply. Billionaires have increasingly taken the reins of political discourse, a role historically dominated by lawyers and military figures. Media narratives have also become more malleable under such influence. For example, Elon Musk could hypothetically be dared by a friend to perform a salute, only for his publicist to spin it as, "He just meant to wave!"
Similarly, DuPont framed the proceeding spin-off of Chemours as an opportunity rather than an offloading of environmental liabilities, despite the billions in legal and cleanup costs that followed. It's a reminder that with outstanding PR, even the biggest mess can be rebranded as a strategic move—just ask Billy McFarland, who, after the infamous Fyre Festival debacle in 2017, is now promoting Fyre Festival 2, slated for May 2025 on Isla Mujeres, Mexico.
This highlights why strong regulations are essential—without them, corporations can manipulate narratives to evade responsibility while continuing harmful practices.
The High Cost of Ignoring ESG
In the context of ESG, there’s an essential lesson in corporate responsibility we can learn from the legal battle between DuPont and Chemours. When companies face lawsuits worth millions of dollars or need to let go of employees due to business challenges, it instills fear and urgency to act quickly. This was the case for DuPont, a major chemical company that faced environmental and health-related lawsuits due to chemicals it produced, such as perfluorooctanoic acid (PFOA), also known as C8.
In an effort to manage these liabilities, DuPont spun off its performance chemicals division into a new company, Chemours, in 2015. This move allowed DuPont to shift the responsibility for harmful chemicals—and the lawsuits tied to them—onto Chemours. DuPont framed this as a strategic decision to refocus on higher-growth areas like specialty products. However, critics saw it as a way for DuPont to distance itself from the financial and reputational fallout of its past actions to manage these liabilities.
By offloading these "dirty" chemicals, DuPont reduced its portfolio of environmentally harmful products and made its books appear cleaner, while leaving Chemours to deal with the legal battles, environmental cleanups, and public backlash. Chemours inherited billions in potential liabilities, and from day one, its operations were weighed down by the consequences of DuPont’s past actions.
The DuPont and Chemours case underscore the significant costs of ignoring Environmental, Social, and Corporate Governance (ESG) principles, and the long-term impact of environmental negligence on both companies and communities. In the short term, DuPont appeared to resolve its financial challenges by spinning off its chemical division. However, this move shifted the responsibility for environmental damage caused by toxic chemicals like PFOA onto Chemours, which inherited billions in liabilities. In 2017, DuPont and Chemours settled for $670 million over lawsuits related to health problems caused by PFOA, and in 2021, the companies agreed to a $4 billion settlement regarding "forever chemicals" (PFAS) to resolve further claims and avoid additional legal battles.
These substantial financial settlements emphasize the critical need for companies to embrace ESG standards, as it’s not just about being “green” or ticking boxes for investors. ESG directly affects a company's financials and ignoring it can result in costs that far outweigh any short-term gains.
In other words, companies can’t afford to treat ESG like a non-financial concern when the price tag of neglecting it can be massive—learn from DuPont. The risk is too grand, with a huge financial cost in grands. No company wants a room full of lawyers charging hundreds of dollars an hour, on top of hefty settlement fees.
For those unfamiliar with business terms, a "spin-off" is like taking one part of a company, turning it into a new company, and sending it off on its own. Imagine if a school decided to separate its art program into an independent school, but instead of handing over resources, it left all the funding problems and leftover issues behind for the new school to resolve. While the original school appears to solve its problems, the new school becomes overwhelmed by the challenges it inherited.
The DuPont-Chemours case also highlights a key point about ESG:
When companies take shortcuts to protect their image, it often results in more harm for those who are least able to bear the burden—whether that’s smaller companies, communities, or employees.
History Haunts the Present
In 2024, Chemours’s West Virginia plant continues to discharge toxic levels of PFAS into the Ohio River, violating permits despite warnings from the EPA. The plant, which was central to the Dark Waters movie, remains embroiled in legal battles, with the West Virginia Rivers Coalition filing a new lawsuit to hold Chemours accountable. Even though the companies have settled for millions in the past, the pollution persists, and the community continues to suffer. The failure to fully address environmental risks, backed by adequate support and strategic ESG practices, reveals the broader consequences of neglecting sustainability, leaving both Chemours and the local community grappling with ongoing harm.
If DuPont had provided more support to Chemours before dissolving their chemical division, the outcome could have been drastically different. Rather than offloading the environmental risks onto Chemours, DuPont might have worked together with the spin-off to tackle the lingering issues, investing in cleaner production processes and responsible disposal practices. With proper backing and a clear commitment to ESG principles, Chemours could have potentially turned the situation around, addressing pollution while benefiting from a stronger, more sustainable business model.
Unfortunately, DuPont’s decision to shield itself from the consequences of its past actions has left Chemours to face a never-ending wave of legal battles and environmental degradation, despite the lessons learned from years of litigation. This ongoing struggle highlights the necessity of corporate responsibility—when companies take shortcuts, the damage extends beyond just financial losses, affecting the health and well-being of entire communities.
