A Financial Market’s Perspective of INC-5 for a Global Plastics Treaty

The fifth session of the Intergovernmental Negotiating Committee (INC-5) aimed at developing an international legally binding instrument on plastic pollution, commonly called the Global Plastics Treaty, has concluded in Busan, South Korea. No agreement was reached although this was expected to be the final round. While some progress was made, unresolved disagreements on critical measures such as capping plastic production and addressing hazardous chemicals, prevented consensus. An additional round (INC-5.2) is expected to be held next year.

Why the treaty matters

The Global Plastics Treaty represents a pivotal opportunity to tackle plastic pollution. Ambitious countries, businesses, scientists, and civil society groups agree that the treaty must address the entire lifecycle of plastics — encompassing production, design, and disposal — to reduce fossil fuel dependency, eliminate hazardous chemicals, and curb the rapid growth of plastic production. Without measures, plastic production is projected to triple by 2060, driven by the petrochemical industry’s reliance on plastics as a key growth market.ⁱ Plastics contain over 16,000 chemicals, of which more than 4,000 are toxic, posing severe risks to human health.ⁱⁱ In 2015, human health costs in the USA, resulting from exposure to just three chemicals commonly used in plastic have been estimated at $US675 bn.ⁱⁱⁱ

Why the negotiations stalled?

The negotiations ended up highlighting the deep divisions among the 200 countries present. An analysis by the Center for International Environmental Law (CIEL) revealed the extensive participation of fossil fuel and chemical industry representatives.^iv This demonstrates the growing concern of these sectors of the disruption such a treaty would bring to their operations.

Critical points of disagreement were:

• Plastic Production Caps: Many nations supported reducing plastic production to sustainable levels^v, but oil-producing countries, including Saudi Arabia, Iran, and Russia, staunchly opposed this, arguing it falls outside the treaty’s mandate
• Chemicals of Concern: Despite calls from many countries for mandatory restrictions on hazardous chemicals, the current draft lacks explicit obligations or criteria for addressing them comprehensively.

• Funding for Developing Nations: A lack of consensus on creating an adequate financial mechanism to support implementation in developing countries.
• Transparency and Accountability: Calls for greater transparency in the plastic lifecycle faced resistance, with some nations prioritising voluntary over binding measures.

While many pushed for ambitious measures (the High Ambition Coalition), a small group of states (called the like-minded group) successfully disrupted the negotiations.

Saudi Arabia was a key player in stalling the talks on an ambitious plastics treaty. According to Eunomia and the Quaker United Nations Office, Saudi Arabia provides USD38 billion in subsidies to polymer production annually, which accounts for a substantial portion of the global total subsidies of USD43 billion. These subsidies lower the cost of production, discouraging the adoption of alternative materials. This reliance on subsidies ties directly to Saudi Arabia’s vested interest in expanding plastic production as a strategy to offset declining oil demand.^vi

Total price-related subsidies to polymer production (baseline scenario) 2024 & 2050

Source: Eunomia analysis

Several major oil-producing nations are opposing measures that would cap production or address the full lifecycle of plastics. Their resistance highlights the significant financial stakes these nations have in maintaining the status quo and illustrates the urgent need for systemic change driven by a robust global treaty.

Where are we now?

After a week of negotiations, countries concluded INC-5 with a draft text prepared by the Chair. This text^vii will likely serve as the foundation for discussions during the next session (INC-5.2) in 2025. No date has been set. Key shortcomings of this text include:

• Weak Language: The text lacks strong, enforceable commitments and includes too many options, leaving critical issues unresolved.
• Gaps in Scope: Insufficient emphasis on binding measures to reduce plastic production, address chemicals of concern, and ensure transparency in polymer production.
• Exclusion of Stakeholders: Many observers and communities most affected by plastic pollution, such as Indigenous Peoples and frontline workers, are largely under-represented.

Outlook

An additional negotiating round (INC-5.2) would present an opportunity to resolve outstanding issues and still deliver an ambitious, legally binding treaty. However, this is no easy task.

Financial institutions should be wary of reducing the risk associated with plastic supply chain companies for two main reasons. Firstly, there is always the possibility that a breakaway group of countries start imposing tighter plastic regulations, making the operating environment for international corporates more challenging. The Business Coalition for a Global Plastic Treaty has stated in its INC-5 outcome statement, “Disappointingly, consensus among all nations remains elusive, which further delays critical action to end plastic pollution. It also fails to deliver the certainty that business needs to mobilise investment and scale solutions”.^viii Secondly, a failure to agree an international treaty does not reduce the risk of litigation. Scientific research on many aspects of plastic pollution and health continues apace. Examples can be found on the website of the Scientists’ Coalition for an Effective Plastic Treaty.^ix Investors must decide if or when scientific evidence of plastic pollution harm on the environment and/or humans becomes accepted in law courts. Planet Tracker believes the financial risks are considerable. For further details please see ‘Plastic Risk: Measuring Investors‘ Risk in the Plastic Sector‘ and ’The Plastic Recycling Deception’.

A Call to Action

We urge 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. The Petrochemical Investor Statement, signed by 80 institutions representing USD 7.3 trillion in assets under management, highlights the need for systemic change, emphasizing:

• Transparency in plastic production and sustainability targets.
• Elimination of hazardous chemicals.
• Investment in circular economy solutions.
• Dedicated governance structures.
• Support for an ambitious, legally binding treaty.