Steris

Steris provides a variety of products and services to the healthcare industry including specifically to hospitals, medical device manufacturers, pharmaceutical and biotechnology businesses as well as for food safety and industrial markets. The company’s main areas of activity are in providing hygiene, sterilisation and anti-microbial treatment services to these end markets in order to ensure a safe and hygienic operating environment.

Topic: Ethylene Oxide mitigation strategy.

Our objective: Limiting material negative social or environmental impacts.

Company objective: Steris to phase out the use of Ethylene Oxide (EtO) from its product portfolio.

Desired outcome: Successful development of alternative technology to safely and effectively mass sterilise heat sensitive medical devices. Removing the reliance on ethylene oxide entirely.

Background: Steris uses EtO for the mass sterilisation of medical devices sensitive to heat and moisture. Chronic exposure to EtO can lead to health impacts including damage to the central nervous system and brain and an increased risk of cancer. US Regulators are implementing measures to limit emissions by more than 90% to reduce health impacts¹. This creates an operational and legal risk to companies like Steris and its competitors and creates the need to expand lower-emission sterilisation alternatives. For example, in 2024, Steris was named in an EtO litigation case on claims for personal injury in the local area of a sterilisation plant.

Activity:  On news of the lawsuit, WHEB initially downgraded the funds’ position in Steris. We then engaged with the company’s Investor Relations to evaluate its risk mitigation strategy for EtO-related litigation.

Engagement outcome:

M4 - company provides evidence that the issue is being managed in line with the policy or strategy, demonstrating concerns have been addressed

Steris is ahead of the curve on EtO compliance and had anticipated the EPA’s April 2024 regulatory changes. While the company stands to gain from smaller competitors exiting the market, it is not increasing its EtO capacity and remains selective in choosing customers.

Steris is aiming to reduce its reliance on EtO in its product portfolio, however a disconnect persists between the EPA’s stricter emissions limits and the FDA’s sterilisation requirements. Despite this tension, effective sterilisation of medical devices is essential and currently, there are no viable alternatives to EtO currently in development.

A related lawsuit was resolved in Q1 2025. Meanwhile, the Trump administration is pursuing a delay or weakening of EPA enforcement, creating both potential upside and ongoing regulatory uncertainty.

We have since upgraded our position on Steris.