Cladding and Insulation Makers Fall After U.K. Minister Threatens Trading Ban

Cladding and Insulation Makers Fall After U.K. Minister Threatens Trading Ban

Kingspan Group Plc fell to the lowest level in six months after the U.K. government threatened a trading ban on manufacturers of cladding and insulation if they refuse to pay to fix homes at risk of fire.

Compagnie De Saint Gobain, which owns building and construction company Celotex Group, saw its share prices drop to the lowest level in a month. Arconic Corp. also saw shares drop to one-month low, before recovering. The stocks fell along with the broader market, with the FTSE 100 suffering its largest-one day drop since Nov. 26.

Arconic, Celotex and Kingspan have been the subject of a public inquiry into the 2017 fire of Grenfell Tower in London that killed 72 people.

Michael Gove, Britain’s Secretary of State for Housing, wrote a letter to the industry group Construction Products Association, highlighting 700 million pounds ($943 million) in profits that the three companies made in the past four years and asking the companies to help pay to fix tall buildings that remain unsafe.

Gove said the government would consider regulations to prevent these companies from operating and selling their products in the U.K. unless they reach an agreement by March. The Guardian first reported on the letter.

Earlier this month, Gove stepped up his campaign to make companies pay to address and repair unsafe housing uncovered in the wake of the Grenfell disaster. An estimated three million people live in apartment blocks with dangerous materials and many tenants face huge bills for repairs.

“We are pleased that Michael Gove has officially recognized the culpability and financial liability of combustible insulation and cladding manufacturers,” said Ritu Saha, a spokesperson for the U.K. Cladding Action Group. “UKCAG is proud to be a member of the campaign to make the major investors of these three companies aware of their ESG violating actions,” referring to environmental, social and governance issues that are increasingly becoming part of investor decisions.

Saint Gobain said decisions about the design of the cladding systems used on Grenfell Tower were “made by construction industry professionals.” Kingspan, which declined to comment on the letter, has previously said that it “welcomes” the industry’s input to the government’s process. Arconic did not respond to a request for comment.

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