Major Investors Sign up To Address Plastic Pollution
London 11 July 2024 – 70 international financial institutions and their representatives with a combined AUM/AUA total of USD 6.8 trillion are calling on petrochemical companies to transition to safe and environmentally sound practices, by reducing fossil fuel dependency and eliminating hazardous chemicals.
The collective statement organised by financial think tank Planet Tracker commits participating investors and their representatives with exposure to the plastics value chain to request petrochemical companies producing plastic polymers to:
- Disclose and define strategies: Transparently disclose plastic impacts, establish clear strategies, and set targets for transitioning to sustainable plastic production.
- Address toxic polymers and chemicals: Commit to eliminating hazardous chemicals in their products and publicly report progress.
- Develop sustainable infrastructure: Invest in technology and infrastructure to support sustainable feedstocks.
- Establish governance: Ensure dedicated governance and accountability for sustainability commitments at the Board level, linking management compensation to circularity goals.
- Support international agreements: Advocate for a robust, legally binding international treaty to end plastic pollution, refraining from lobbying against ambitious measures.
Among the financial institutions already committed are Legal & General Investment Management, Pictet Group, Nordea Asset Management, Achmea Investment Management, Robeco, MN, Abrdn, Rockefeller Asset Management, Rathbones Group Plc, and Storebrand Asset Management.
The urgency of the Planet Tracker initiative is underscored by alarming projections:
- Plastic production is set to triple by 2060, with petrochemical companies becoming the primary driver of oil demand growth.
- Lifecycle emissions from plastics are expected to more than double, accounting for 4.5% of global emissions.
- Plastic polymers contain toxic and hazardous chemicals; of the 16,000 chemicals present in plastics, only 5,800 have been tested on their toxicity, with over 4,000 being identified as toxic.
- Health impacts include associations with diabetes, obesity, fertility issues, and various cancers due to toxic chemicals and additives. Human health costs in the USA alone resulting from exposure to just three chemicals commonly used in plastic have been estimated at USD 675bn in 2015.
These projections highlight significant plastic-related risks for petrochemical companies, encompassing regulatory, reputational, litigation, and increased consumer demand for safer, sustainable products. These risks are financially material and necessitate proactive corporate action.
Financial and Environmental Imperatives
“Petrochemical companies are the source of the raw materials plastics are made of. They take the fossil fuel feedstocks and turn them into the polymers which are then melted, extruded and formed into the plastics other corporations use. Petrochemical companies are firmly embedded in the plastics value chain and therefore in the plastic pollution crisis”, said Planet Tracker’s Head of Engagement, Nicole Kozlowski. “However, too often the focus when addressing plastic pollution lies with downstream solutions such as recycling. If we are to effectively tackle these issues there is a pressing need to focus on the entire plastics value chain, which includes these polymer producers”.
Plastics have become a key driver of oil demand, and petrochemicals, particularly those producing plastics, are the next growth market for the fossil fuel industry. The anticipated growth in plastic polymer production poses a significant threat to the environment and human health, but also to the financial stability of petrochemical companies. Under a business-as-usual scenario, plastic leakage into the environment and associated health costs are projected to rise significantly, prompting policymakers and society to demand greater corporate accountability and sustainability.
Arthur van Mansvelt, Senior Engagement Specialist at Achmea IM said: “Achmea Investment Management supports this call on the petrochemical companies as we are concerned about the mismatch between the industries plans to accommodate the ‘business as usual’ scenario of substantial growth in global plastic production, and the increasing regulatory pressure to reduce the use of single-use plastics. We therefore must address the full plastic value chain, starting with polymer production, and as such call on the petrochemical industry to support a strong and ambitious legally binding Global Plastics Treaty to fight plastic pollution”.
Over the past decade, there has been a steady increase in the number of national policies addressing plastic pollution and negotiations for a global plastics treaty are now at a crucial stage. This call to action follows a statement by the financial sector calling on governments to negotiate an ambitious treaty to end plastic pollution, emphasizing the importance of including the full life cycle of plastic. However, in the latest round of negotiations, petrochemical companies and their allies resisted calls to include the full life cycle, opposing the reduction of plastic production and opposing including polymer production in the treaty. Investors have recognised these risks and play a crucial role in driving the transition in the plastics economy to ensure long-term value creation and an alignment of business practices with global sustainability goals such as the Paris Climate Agreement and the Kunming-Montreal Global Biodiversity Framework.
Alex Burr, Senior ESG Policy & Nature Lead from Legal & General Investment Management said: “Petrochemicals are at the very source of plastic pollution, degrading our natural world and posing significant financial risks. There has been substantial progress internationally, through agreements like the Global Biodiversity Agreement and the forthcoming Global Plastics Treaty, to curb plastic use and production and we believe that effective engagement activity must consider the whole ecosystem and value chain, tackling both supply and demand of single-use plastics. Petrochemical companies should not be exempt from these policies and must understand business as usual is not an option”.
Conclusion
As the world grapples with the escalating threats of plastic pollution, climate change, and biodiversity loss, the role of petrochemical companies in driving plastic production has come under intense scrutiny.
This initiative serves as a clarion call to petrochemical companies that investors have taken note and demand decisive action of petrochemical companies towards sustainable practices. By supporting this collective statement, investors are helping to mitigate the environmental and health impacts of plastic pollution and secure a sustainable future for all.
For more information, please contact:
Nicole Kozlowski, Head of Engagement, Planet Tracker
About Planet Tracker
Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.
