By Manon Stravens
The plastics problem, which not only manifests itself in widespread ocean pollution, landfills, and plastic particles detected in human blood and animal fodder, but also in rising greenhouse gas emissions, should be tackled at the roots: by reducing production and consumption. But the role which reducing plastics should play in the trajectory towards a fossil fuel free world is largely underestimated – even ignored – by large companies and investors. This undermines our ability to reach the goals of the Paris agreement.
Plastics are exacerbating the climate crisis, as 99% of this once-so-lauded material is made of fossil fuels, and most of the plastic products are burned after a short (often single-used) product life, releasing greenhouse gas emissions into the atmosphere. Efforts to reduce our dependency on fossil fuels are largely nullified as long as one major and growing segment of oil demand remains a blind spot: plastics. While we intend to move towards a fossil-free and cleaner future, the oil and gas industry is investing vast financial resources in virgin plastics production. Packaging manufacturers, consumer goods companies, and retailers bring it thereafter on the market.
Plastics and other petrochemicals are the fastest-growing sector of oil and gas demand. Demand for plastics has nearly doubled since 2000 and plastics are projected to make up 20% of total oil demand in 2050. This will further drive fossil fuel extraction in the decades to come. More single use plastics will enter our oceans, and greenhouse gas emissions will further increase. Plastics are already responsible for at least 3 to 4% of global GHG emissions. Oil demand related to plastic consumption is expected to overtake that for road passenger transport by 2050.
Reusable, recyclable and long lasting
To halt this development, companies across the plastics value chain and investors exposed to these companies should put much more effort into facilitating our economies to reduce our dependency on plastics, and especially single-use plastics. For example, they could design products that are reusable, recyclable, and long-lasting. They could take up end-of-life responsibility for the products they have put on the market by paying for their reuse and recycling. Companies could also pay for cleaning up pollution.
These options however all start with the development of clear and comprehensive climate policies by these companies and investors, in which plastics have a place. Unfortunately, the largest players across the global plastics value chain, as well as their biggest financiers, have shown a true blind eye to plastics in corporate climate and net zero commitments. This is the main conclusion from a recent study, done by Profundo, which was commissioned by Ocean Conservancy, an American-based non-profit organisation.
The study screened the climate and net zero commitments of 40 selected key value chain actors, including 28 companies from the oil & gas sector, the plastic packaging manufacturers, consumer goods companies, and retailers. Twelve institutional investors’ policies were examined to determine their commitments to exert influence over company policies in their portfolios.
Together, the companies and investors selected for this study represent a powerful multinational group possessing billions of investment capital and huge marketing power. The seven polymer producers (including ExxonMobil, Dow, and Saudi Aramco) selected for the study are the world’s top producers of single-use plastics. They jointly generate almost 34 million metric tonnes of single-use plastic waste, and three of them are projected to globally add the biggest capacity compared to their peers for polymer production between 2020 and 2025. The selected consumer goods companies, including Coca Cola, Mondelez, Danone, and Unilever, belong to the top-ten plastic polluters in their sector. Retailers included the giants Amazon and Walmart, and among the manufacturers - much less known to the general public but significant in terms of production volume– are Amcor and Aptar.
The American investors selected for this study, including asset managers and pension funds, represent US$ 334 trillion in assets under management. They invest in thousands of companies active at different stages of the single-use plastic value chain. In short, the current and future attitudes of these giant players towards climate and plastics could turn the tide in the global plastics crisis.
However, the conclusions of the report are depressing. There is no transparency on whether and how these critical actors in the production, distribution, and consumption of plastics mitigate the climate impacts of their production processes. Plastic targets are largely excluded from climate commitments: absent in the policies of 11 of 12 investors and of 25 of 28 companies. Scope 3 emissions are often not reported nor covered in reduction targets. Awareness of the impact of plastics on climate change is generally low.
While some companies demonstrate relative maturity (mostly the consumer goods companies as they are more likely to face public pressure), others hardly show any serious ambition. Plastic recycling strategies are mentioned, but generally do not include measurable and ambitious targets, and are rarely part of the climate commitments. Moreover, the significance and scale of strategies to increase recycling, recycled content, and sustainable design strategies are difficult to interpret as plastic volumes used and produced are often not communicated. Furthermore, striking is the fact that some polymer producers communicate at the same time intentions to promote a pro-plastic consumer perspective by stating that plastic production is a viable greenhouse gas reduction strategy compared to burning fossil fuels.
The above conclusions largely also apply to the selected institutional investors. Most of them have committed to net-zero portfolios by 2050. While some state pension funds have a robust climate agenda, others state they will not consider climate in their investment decisions at all. In their climate commitments, investors mostly do not mention plastics even when they prioritize engagement on fossil fuels and managing climate risks.
Divestment from fossil fuels and plastics is the least preferable option for these investors screened in this study. The stance taken by many asset managers is that by keeping their investment in the sector, they are able to positively impact companies and direct them towards the transition needed to limit climate change. But do they? Our research showed that none of the financial institutions has a policy to actively exert influence over management boards on net-zero commitments. Awareness on plastics among investors remains low, with almost no time-bound measurable commitments on phasing out investments in virgin plastic production and on increasing investments in companies with circular business models.
Despite the depressing outlook for our oceans, the air we breathe and for our bodies, it is still possible to turn the tide: to reduce the overall production and use of plastics, or produce it more sustainably. To achieve these goals, companies should, among others:
(Photo: Abir Abdullah / Climate Visuals Countdown)