‘Dangerous complacency’: Big businesses accused of underestimating plastics-related risks
The world’s largest plastic producers are not discussing risk management with investors and suppliers regularly, leaving loopholes in understanding of major environmental and social risks.
That is according to a new analysis from Planet Tracker today (3 August). The organisation analysed more than 8,200 documents from major plastic companies and found that 83% make no mention of any kind of risk.
Documents were analysed from all parts of the plastic value chain, including fossil fuel extractors like ExxonMobil and TotalEnergies; chemical processors such as DOW and INEOS; packaging manufacturers such as Huhtamaki and consumer goods firms.
Included in this latter cohort are the likes of Unilever, Nestle, Danone, Coca-Cola, Pepsico, Modelez and Kraft Heinz. Within this category, Unilever was the most frequent discloser of information, accounting for 24% of all disclosures.
Documents covered include filings, transcripts and documents sent between companies and external contacts such as Government bodies, standard-setters, suppliers and investors.
Planet Tracker found that these documents rarely mention plastic-related risks. Of those that did, almost three-quarters (73%) mentioned risks relating to waste management at the end of the product’s use. The primary focus was recycling, not reuse.
Only 6% of the documents mentioned risks relating to environmental and social issues upstream.
Planet Tracker did uncover an increase in plastics-related risk disclosures through annual reports, but concluded that this has not yet translated into a change in everyday conversations with key stakeholders. Instead, it is more likely to result from tightening legal requirements on environmental disclosures.
The number of annual reports from the companies including some kind of plastic-related risk disclosures was six times higher than it was five years ago.
Again, disclosures were typically about recyclability and waste management than upstream risks such as pollution and greenhouse gas emissions.
Planet Tracker’s senior investment analyst Thalia Bofiliou said: “The plastics industry today faces one of the longest lists of risks of any sector, which should be on the mind of every executive and every financier. The risk disclosures of these companies should include exposure to CO2 emissions, harmful toxic discharges, visible and invisible plastic pollution and rising harm to people and nature through chemical additives exposure.
“Plastic companies across the value chain are displaying a dangerous complacency to very real, and very material, risks. We call for the capital markets to consider these factors in their investments, and push for more concrete change, challenging assumptions and raising these issues with management frequently”.
Legal challenges on the rise
Companies in the plastics value chain are increasingly being forced to pay for environmental and social impacts they have previously externalised, both in the form of new taxes and penalties from Governments, and through legal challenges.
On the legal piece, Planet Tracker previously warned that that major plastic companies could be exposed to anywhere between $20bn and $100bn in liabilities and litigation costs by the next decade. It called these “conservative estimates”.
Similarly, the UN has tracked a major uptick in legal cases filed against corporations and governments on climate grounds. Filings exceeded 2,000 in a single year for the first time in 2022, the UN revealed last week.
Related feature: How can businesses prepare for the UN’s plastic treaty?
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