Unpacking the Plastic Value Chain: Litigation Risks and Legal Implications

Executive summary

Companies across the plastic value chain face growing legal risks from pollution, toxic chemicals, greenwashing, and non-compliance with waste laws. Litigation costs could exceed USD 20 billion by 2030. High-profile lawsuits and stricter regulations are driving financial, reputational, and regulatory consequences. Businesses and investors must act now to reduce exposure and prepare for a global plastics treaty.

Why litigation risk matters for finance

Financial risks linked to plastic litigation continue to expand. Companies across the plastic value chain face increasing liability exposure due to a range of issues, including greenhouse gas emissions, harmful chemical discharges, widespread micro- and macroplastic pollution, and the use of chemical additives with known health impacts. ¹

Plastic pollution liability cases are expected to grow; it is estimated that the social costs associated with plastic related chemicals triggered between 2022 and 2030 will surpass USD 100 billion per annum globally. Corporate liabilities from plastics litigation between 2022 and 2030 are forecast to rise above USD 20 billion and even further beyond 2030.²

Plastic related liabilities face increasing scrutiny from investors together with regulatory bodies. Financial institutions need to quantify and monitor litigation risks and mitigate when possible.

Litigation risk across the plastic value chain

The plastic lifecycle contains multiple legal risks which affect companies throughout its stages. Companies operating during raw materials extraction and manufacturing face legal risks from pollution events such as oil spills, toxic emissions, greenhouse gas emission litigation and chemical exposure claims. The manufacturing phase exposes companies to legal challenges regarding their use of BPA chemicals and their practice of greenwashing -making false sustainability claims.³

As plastics reach the consumer goods stage, companies risk health and safety lawsuits over microplastics in food, false advertising lawsuits over misleading “biodegradable” labelling, and environmental damage lawsuits over the proliferation of single-use plastics. Finally, in recycling and waste treatment, companies can face regulatory fines, lawsuits for illegal exports of waste, and liability for soil and water system contamination – see table 1.

Table 1 Litigation risk across the plastic value chain / Source: Planet Tracker

Evolving legal landscape

The legal basis is getting increasingly complicated as environmental and consumer protection provisions gain a deeper hold. Municipal corporations and other interest groups are approaching plastic companies increasingly for plastic cleanup costs. Increased media attention surrounding microplastics has prompted an uptick in concern about contamination of our drinking water, food, and bodies. In addition, using countries without proper recycling processes to dump plastic waste is facing increased fines and lawsuits. Governments are taking charge and tightening regulations, particularly, new Extended Producer Responsibility (EPR) laws, which have made manufacturers accountable for waste. If companies continue to violate bans the serious ramifications could be legal action. Furthermore, ambiguous marketing of how biodegradable or recyclable their products could be create serious risk of greenwashing claims. To complicate matters further, businesses are under increasing risk of litigation related to consumer health and liability due to toxic chemicals like BPA, phthalates, and PFAS found in everyday products and packaging.

Financial consequences of legal exposure

The financial impacts of legal risks tied to plastics are substantial, covering direct costs such as fines, settlements, and compliance upgrades that can reach hundreds of millions of dollars. These expenses often trigger declines in share prices, downgrades in credit ratings, and increased borrowing costs. Insurance premiums are also rising as underwriters factor in environmental liability, particularly for companies heavily exposed to plastic-related pollution, toxic chemicals, or non-compliance with waste regulations. As legal risks grow, companies are also diverting capital from innovation or transition efforts to fund litigation, remediation, and crisis management.

Beyond direct financial strain, legal exposure also impacts long-term investor confidence and brand value. ESG-focused investors are increasingly divesting from plastic-intensive companies, especially those facing lawsuits or regulatory scrutiny. Ongoing litigation can damage a company’s reputation, reduce consumer trust, and hinder access to capital markets. These consequences often reinforce one another and increase financial, reputational, and strategic risk which highlights the need for companies to audit their plastic footprints, ensure regulatory compliance, and build transparent, responsible practices across the value chain.

Case studies

Solvay & PFAS litigation

The Solvay case in relation to PFAS is a clear example of the financial impacts of litigation.⁴ Because PFAS, or “forever chemicals,” are indestructible in the environment, companies are exposed to lawsuits for years after they are used. Solvay Specialty Polymers USA operated a New Jersey facility that utilized processing aids that contained PFAS, specifically PFOA and PFNA, for over three decades. Although Solvay phased out those chemicals well before the EPA deadlines—as it eliminated PFOA in 2010 and PFNA in 2013—substantial financial liabilities still remained.

Publicly, Solvay claimed it only used, but did not produce, PFAS-containing materials. Internally, however, it began making financial provisions for PFAS-related risks by 2019, totalling around EUR 700 million. Meanwhile, it continued using fluorosurfactants at the New Jersey site until 2021. Legal consequences soon followed: Solvay agreed to a USD 175 million settlement with New Jersey’s environmental agency in 2022, and in 2023, a court confirmed a USD 179 million judgment covering environmental damage and remediation.

Despite these settlements, Solvay still faces 35 lawsuits and continues using fluorosurfactants at facilities in Spain and Italy, with phase-out plans extending to 2026. The case highlights key lessons: proactive compliance does not eliminate long-term risks; PFAS liabilities can persist for decades; mere use, not just production, can lead to legal exposure; financial provisions often underestimate true risks; and reputational damage can be significant.

Coca Cola & greenwashing claims

Greenwashing and false environmental claims create legal and financial risks for companies. Companies will be creating lots of risk if they label their products as “biodegradable” or “recyclable” without meeting objective guidelines and testing. Companies face the prospects of lawsuits, regulatory penalties, class-action lawsuits, and most importantly, reputational damage, when they mislead consumers. Notably, Coca-Cola is currently facing significant legal risk over its sustainability claims.⁵

In 2021 the Earth Island Institute sued Coca-Cola, alleging the company had misled consumers about the environmental benefits of its products and overstated its commitment to reducing plastic waste, increasing recycling, and decreasing its carbon footprint. Initially, the case was dismissed in 2022 by the DC Superior Court because it found that Coca-Cola’s statements were merely aspirational and not enforceable promises or representations under the DC Consumer Protection Procedures Act (CPPA). Notably, Planet Tracker had flagged concerns about the credibility and risks associated with Coca-Cola’s environmental targets as early as 2022.⁶ In 2024 though, the DC Court of Appeals overturned the dismissal and allowed the case to proceed. The Court of Appeals found that even aspirational statements, such as Coca-Cola’s public commitment to have 100% packaging recyclable by 2025 and incorporate 50% recycled materials by 2030, could mislead consumers if not substantiated by real actions.

The financial and reputational risks of cases like these can be substantial, including possible fines, damages to brand, loss of investor confidence, and more. This case established a further marker that highlights growing corporate pressure to provide actual benefits for sustainability claims, especially as consumers, regulators, and investors demand better transparency and accountability regarding claims of sustainability.

Nestlé & EPR lawsuit

In 2020, Nestlé was sued by the California Attorney General for allegedly violating the state’s Extended Producer Responsibility (EPR) laws, specifically regarding plastic waste from its bottled water products. ^7,8 This lawsuit, part of a broader global movement, highlights the growing trend of governments holding companies accountable for the lifecycle of their products, including waste management and recycling.

Nestlé’s case underscores a larger issue facing the plastic value chain: manufacturers, including consumer brands, can face severe legal and financial consequences if they fail to implement proper recycling programs or use non-recyclable packaging without accompanying recycling initiatives. Companies that violate EPR laws risk hefty fines, reputational damage, and declining market share. Additionally, non-compliance can harm brand credibility, reduce consumer trust, and make it harder for companies to secure investment, particularly from ESG-focused investors.⁹ As governments globally tighten regulations on plastic waste, companies in the plastic sector are increasingly vulnerable to legal action, which could severely impact their financial standing and long-term viability.

Conclusion: A growing storm for plastics

The plastics sector is faced with growing waves of risk litigation and cost as individuals increasingly develop awareness on environmental concerns, regulatory oversight, and public concern about plastic contamination grows. The sector has to act to proactively mitigate risks of environmental pollution, product safety, regulation compliance and company disclosure. If not, they should prepare to face costly lawsuits, hefty financial penalties, and reputational loss.

Financial institutions cannot afford to take this lightly either. As insurers, lenders, and investors, they are at risk of suffering an actual financial cost as they are exposed to penalty and litigation costs incurred by companies manufacturing plastic products. Institutions that neglect the liabilities in their portfolios attributed to plastics risk lower asset values, possible legal enforcement by virtue of green finance regulations, and reputational loss to themselves. The ongoing negotiations for a Global Plastic Treaty, for new global agreements on managing and limiting plastic waste, prove the world-wide regulations are near.¹⁰

Call to action

The time for passive observation has passed. As litigation risks and regulatory pressures increase, both financial institutions and companies must take immediate and strategic action.

For financial institutions:

• Screen investments and portfolios for exposure to plastic-related risks
• Integrate litigation and liability assessments into ESG and credit risk models
• Engage with clients on transition strategies away from high-risk plastic practices
• Press for transparency, safer materials, and accountability

For corporates:

• Audit and disclose plastic use, chemical additives, and environmental impacts
• Address polymers and chemicals of concern in their products and phase out toxic substances¹¹
• Ensure accurate sustainability claims to avoid greenwashing litigation
• Collaborate with regulators and recyclers to ensure EPR compliance