Global Plastic Treaty: Why should investors support a strong treaty?

The second, and hopefully final, round of negotiations for a strong Global Plastics Treaty will take place this August in Geneva. Investors must continue supporting a strong treaty, as it would reduce risks in the plastic value chain. A successful treaty should feature legally binding commitments to cut down plastic production, impose restrictions on harmful chemicals, tackle microplastic pollution, enhance waste management and establish financial mechanisms to ensure a fair transition. Companies across the value chain have a responsibility to uphold transparency, accountability, and align their efforts with the goals of a strong treaty.

Background

The environmental impact of plastic pollution along with hazardous chemicals in plastics generates systemic threats to human health alongside climate and economic stability worldwide. Governments together with businesses and financial institutions have endorsed the Global Plastics Treaty, a legally binding agreement that aims to tackle plastic pollution.

A landmark resolution emerged in March 2022 which established the creation of an international legal framework to address plastic pollution including in the marine environment. The Executive Director of UNEP was tasked by Resolution 5/14 to set up an Intergovernmental Negotiating Committee (INC) which will work on the development of this instrument. This instrument is to take a comprehensive approach, addressing the entire plastic lifecycle, from production to design and disposal.¹ (See figure 1 for Global Plastic Treaty timeline).

Planet Tracker’s blogs: ¹ INC-1, ² INC-2, ³ INC-3,⁴ INC 4, ⁵ INC-5

Figure 1 Global Plastic Treaty timeline / Source: UNEP, Planet Tracker

Inconclusive negotiations

As negotiations move forward, significant challenges remain including the division between countries producing plastics and those advocating for stricter and more ambitious environmental measures. The supposedly final round of negotiations (INC-5.1) in Busan, South Korea, in December 2024 exposed deep divisions between the 200 countries present with substantial disagreements about plastic production caps and chemical regulations as well as financial support for developing nations and transparency measures. Oil-producing nations such as Saudi Arabia, Iran, and Russia rejected the proposed measures to cut plastic production and enforce mandatory chemical restrictions, claiming they exceeded the treaty’s boundaries. ²  Countries were divided both on creating a financial mechanism for developing countries and implementing binding transparency measures. The High Ambition Coalition attempted to advance stronger measures, but Saudi Arabia and other similar nations blocked these efforts which revealed underlying economic interests and demonstrated the necessity of a powerful global treaty to bring about systemic change. The United Nations Environment Programme (UNEP) has arranged a new round of negotiations to take place from 5^th to 14^th of August 2025 in Geneva, Switzerland to finalize the treaty after the latest discussion round ended without achieving an agreement. ³

Investors and corporates have been vocal

Financial institutions should be cautious in downplaying risks associated with businesses within the plastic value chain. Stricter regulations could emerge from a coalition of countries, creating challenges for multinational corporations. For example, the EU’s Plastic Directive (2019)⁴ bans certain single use plastics and sets stricter recycling targets, requiring companies to adapt their practices. Similarly, China’s Operation National Sword (2018)⁵ disrupted the global plastic waste by banning contaminated plastic imports, pushing companies to innovate in sustainable practices or face rising costs. Moreover, even in the absence of an international treaty, the growing scientific research on plastic pollution could influence legal decisions, increasing litigation risks for companies exposed to the plastic value chain.³ For more details, see ‘Plastic Risk: Measuring Investors’ Risk in the Plastic Sector’ and ‘The Plastic Recycling Deception’.

A growing number of businesses and financial institutions have recognised these risks and voiced support for an ambitious global response, as reflected in the following statements:

• Petrochemical Investor Statement: 80 investors, representing more than USD 7.3 trillion combined assets, are calling on petrochemical companies to acknowledge their role in resolving plastic pollution and publicly support an ambitious, legally binding instrument to end plastic pollution. These investors state: “We expect companies to support international efforts for an ambitious plastics treaty by advocating for common legally binding measures across the full plastics life cycle, designed to reduce production and consumption, and refrain from lobbying and obstructing ambitious outcomes”.
• The Finance Statement on Plastic Pollution: 160 financial institutions called on for a treaty backed by binding rules to address the entire lifecycle of plastics, based on scientific principles. This statement specifically urges negotiators to create a framework that aligns all economic stakeholders with the treaty’s objectives.
• Business Coalition signs the Bridge to Busan Declaration: 250+ businesses, financial institutions and NGOs signed the Bridge to Busan Declaration, underscoring the need for a legally binding treaty covering the full lifecycle of plastics. This declaration calls for commitments from governments to (1) achieve sustainable production levels for primary plastic polymers, (2) ensure transparency in polymer production, and (3) establish a global objective for sustainable polymer production.
• Investor call for urgent action to reduce plastics from intensive users of plastic packaging: 185 financial institutions have also called for urgent action to reduce plastics from heavy plastic packaging users. They urge companies to support an ambitious plastics treaty by joining the Business Coalition for a Plastics Treaty and advocating for legally binding measures to reduce plastic production and consumption.

What should an effective treaty look like?

According to the Scientists Coalition for an Effective Plastics Treaty⁶, a comprehensive treaty will cover the entire life cycle of plastics, aiming to eliminate plastic pollution by 2040 while protecting human health and the environment. The treaty should include legally binding reduction targets for primary plastic production, including chemicals and alternatives, and impose restrictions on harmful plastic chemicals. Further it should address microplastic pollution, which constitutes a significant portion of global plastic pollution, and phase out non-essential plastic materials, with exemptions only for critical uses. Additionally, this instrument should apply harmonised sustainability criteria to plastics and materials, prioritise waste reduction and improved management strategies, and establish clear reporting and monitoring requirements across the supply chain. A dedicated financial mechanism, technical support, and an independent science-policy interface are necessary to ensure a just transition for affected populations and communities, while also enabling effective implementation and compliance.

What an effective treaty would mean for investors

Planet Tracker urges financial institutions, policymakers, and businesses to strengthen their efforts and stand firm in advocating for a treaty that addresses the root causes of plastic pollution. Investors should intensify their engagement with petrochemical companies to demand transparency, accountability, and alignment with the treaty’s goals.

A strong treaty would help minimise risks and volatility in the plastic supply chains, by:

• Establishing a clear guide for phased elimination of plastic pollution and reducing plastic production.
• Minimising the risk of litigation associated with toxic plastic chemicals.
• Addressing the microplastic pollution.
• Covering the entire plastic lifecycle to stop plastic pollution.
• Determining clear reporting and monitoring requirements across the supply chain.
• Prioritising waste reduction and improving waste management systems.
• Implementing global regulation on plastic production, use, and disposal.
• Phasing out non-essential plastics, with exemptions only for critical applications.
• Financial and technical support for a fair transition of affected communities.