A leading climate charity has launched a first-of-its-kind online disclosure scheme for the use of plastics – and has urged almost 7,000 corporates working in high-impact sectors to take part. Unveiled in April, the scheme is a new feature added to the voluntary climate reporting programme operated by CDP – formerly the Carbon Disclosure Project – which encourages and enables cities, states, regions and companies to disclose their carbon impacts.
Founded in 2000 and backed by 740 investors who have more than $130trn in assets under management, CDP holds the world’s largest environmental database and is fully aligned with the Task Force on Climate-related Financial Disclosures.
In a statement announcing the scheme, the charity warned that companies and investors face “significant” financial, physical, legal, technological, reputational and regulatory risks as a consequence of the plastics pollution crisis. As governments continue to roll out regulations, companies are set to face an annual $100bn of financial risk if they are required to cover waste management costs at expected volumes and recyclability, CDP warns.
For investors, meanwhile, near-term exposures to corporate liabilities from plastics pollution are likely to exceed $20bn – and around $400bn of investments in petrochemicals and plastics are at risk of becoming stranded assets.
Engaging with the threat
CDP is positioning its plastics scheme as a facility that will pave the way for mandatory disclosure – and says investment communities have already taken action to demand that companies should disclose their plastics-related data. Last year, six corporates – including Amazon, ExxonMobil and McDonald’s – faced shareholder petitions asking for further disclosures on their efforts to reduce plastics usage, according to regulatory filings.
In December, 55 institutions – including CDP signatories Boston Common Asset Management, Triodos Investment Management and Robeco – formed a Plastic Solutions Investor Alliance to encourage publicly traded companies to engage with the plastics pollution threat. And in a recent CDP consultation, 81% of responding capital markets and supply chain members said that the plastics data that the new scheme planned to request would be useful for informing financial or procurement decisions.
With those developments in mind, the charity has calculated that the scheme would make a fitting disclosure platform for 6,743 companies operating in five high-impact sectors, which they list as:
- Chemicals: just 100 petrochemical companies produce 90% of all single-use plastic waste generated globally.
- Fashion and clothing: a notoriously slow-to-transition industry – in some online clothing stores, just 1% of items contain recycled materials.
- Food and beverages: plastic packaging in this sector is a major source of pollution.
- Fossil fuels: around 4% of annual, global oil and gas use is for plastics production.
- Packaging: used 44% of all plastics globally in 2021.
The scheme launches at a time when UN Member States are negotiating towards a legally binding treaty to end plastics pollution, with a view to signing the agreement by 2024.
CDP Global Director for Water Security Cate Lamb said: “The scale of the plastic pollution crisis is no secret, so it’s not good enough that many companies, investors and policymakers still lack the robust data needed to drive the rapid transformation we desperately need.”
To act effectively, she noted, companies must develop a “robust understanding” of how they contribute to the plastics pollution crisis and formulate equitable and just transition plans to address it. In turn, investors and policymakers need access to relevant, comprehensive and comparable data across the global economy, from which to make better decisions.
Lamb added: “As mandatory environmental disclosure gathers momentum, we encourage governments to include plastics in their mandatory disclosure regimes. However, ahead of future policy developments, CDP is pleased that our system … can accelerate plastic-related disclosure and access to data at scale: this will be the foundation of transformative action to end plastic pollution and waste. I urge all companies to disclose on plastics, and CDP stands ready to support you on your journey to do so.”
Annie Sanders, Director of Shareholder Advocacy at CDP signatory Green Century Capital Management, highlighted the critical role investors must play in addressing plastics pollution. “By engaging with companies to ensure they adequately address plastics-related risks, investors can protect shareholder value and help catalyse a circular economy where nothing we use for five minutes pollutes our environment for centuries.”
ICAEW Director, Sustainability, Richard Spencer said it was good to see that the issue of plastics is on the radar of investors, and the CDP reporting framework was a welcome development. “However,” he added, “we have to move beyond ambitions and commitments to disclose towards action and decision-making about stopping the production and use of plastics – and that also means global regulatory action with teeth. Investor pressure needs to be seen against a backdrop of companies also lobbying against prevention and reuse.”
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