Johnson & Johnson’s $9 Billion Settlement Highlights Product Governance ESG Risk Implications for Consumer Products Companies

On April 4, 2023, Johnson & Johnson (J&J or the Company; not rated by DBRS Morningstar) announced a proposed settlement to pay up to a present value of $8.9 billion, over 25 years, to resolve all current and future claims related to the Company’s talcum powder products, potentially making this one of the largest product liability settlements ever. While J&J has not admitted any wrongdoing and maintains that the Company’s talcum powder products are safe, plaintiffs suing J&J claim that these products caused cancer. This commentary explores how concerns around a consumer product company’s Product Governance, one of the Environmental, Social, and Governance (ESG) risk factors outlined in DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings, could negatively affect a consumer product company's credit risk profile or even credit rating.

“The settlement highlights how selling products that are proven to cause harm or are alleged to cause harm to consumers could result in costly litigation, erode consumer confidence, and have a negative effect on a consumer product company's overall credit risk profile,” noted Moritz Steinbauer, Vice President, Team Lead Diversified Industries, at DBRS Morningstar.