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Weekly Short
16 June, 2023
We have a plastic problem. Despite the backlash against single use plastic, we currently produce around 400 million tonnes of the stuff a year, almost all of which is destined to end up as plastic waste, and much of that in our oceans, in our soil and on top of the highest mountains.
It’s clear that consumers have woken up to the problems caused by plastic pollution, helped in no small part by emotive images of seabirds regurgitating household plastic waste and sea mammals tangled in plastic waste from Blue Planet II. However, it seems the financial sector may be slower in responding to the challenge.
A report from financial think-tank Planet Tracker seeks to put a cost on our plastic addiction by assessing the financial risk to 150 multinational companies that produce or use large quantities of plastic. It concludes that litigation and social liabilities linked to irresponsible plastic production and consumption could exceed $100bn globally by 2030. Add to that the cost of reputational damage, associated loss of business and the cost of business transformation needed to meet new regulation.
For investors, this could pose a significant threat to returns, as it is unlikely that this is being considered in their assessments of a firm’s value. Planet Tracker’s report suggests that investor perception of risks in the plastics sector is lower than that for other industries such as metals and mining. This is despite increasingly tight regulation around plastic use and disposal, and a global treaty on plastic pollution expected later this year.
As transparency improves, so will investor awareness, and with it more realistic pricing of risk around plastics. CDP now invites companies to report on plastic use in their carbon submissions and nature-related disclosures will be required in forthcoming TNFD. And in the meantime, as material risks go, plastics should be right at the top of a business’s list.
By Claire Jost