In the aftermath of the Grenfell Tower Fire, the U.K.’s “Cladding Scandal” means that over half a million owners and tenants are living in unsafe buildings, according to estimates from industry experts. The crisis came about in part because combustible products, including Kingspan’s, were mis-marketed and recommended for installation in buildings for which they had not passed appropriate tests (or in some cases had failed tests). Owners have been unable to sell or re-mortgage their flats because of uncertainty about fire safety, while living in homes that no longer pass building codes, where they face ballooning insurance costs and service fees. The Financial Times estimates that there could be as many as 2 million “mortgage prisoners.”
Residents live in fear of their buildings being the next Grenfell, with 24-hour “waking watches” by fire wardens organized to alert residents to fires. Homeowners cannot sell their homes until the cladding is assessed and replaced if dangerous, but fire safety refurbishment are estimated at over $60 billion. While the UK government has pledged over $7 billion dollars towards remediation, Kingspan has yet to release a plan for paying a share.
In March, MP Michael Gove (Conservative), the UK Government’s Secretary of State for Housing, referenced Kingspan’s “shameful practices and abhorrent culture of disregard for the safety of residents” in a letter calling on Kingspan meet and propose a plan to pay for remediation for those “whose safety continues to be threatened by your products.”
Then, in April, Gove wrote directly to certain shareholders of Kingspan and other firms involved in the cladding scandal, to warn the companies would face “severe consequences” if they do not come forward with a comprehensive financial package to fix unsafe buildings. Kingspan made €833 million in profits in 2022.
Gove’s letter put the investors on notice that if the financial package was not forthcoming, then there “will likely be consequences for shareholders’ reputations, in addition to their financial stake,” should his department be forced to use “the legal and commercial tools available” to ensure the position of the cladding companies “becomes extremely uncomfortable.”