It is also aligned with two key events taking place later this year: the UN Biodiversity Conference in China, which aims to agree on a post-2020 global framework to prevent biodiversity loss, and COP26 in Glasgow, which will bring together governments to accelerate climate action towards the goals of the Paris Agreement. Plastic pollution is indirectly an element in both.
Cheap and easy-to-make plastics have become so prevalent in packaging that their use has increased twenty-fold since the 1970s and is expected to double again in the next two decades. Virtually every supermarket product is packaged with plastic in some form, the majority of which is single use.
This comes at a huge environmental price, since it creates a waste mountain of drinks bottles and food bags, much of which ends up in the ocean. Scientists estimate that at the current rate of pollution, by 2050 there will be more plastic in the oceans than fish.
“Today, nearly everyone, everywhere, comes into contact with plastic packaging every day, and it is mostly only used once,” says Van Waveren. “Reducing single-use plastic is now a priority for tackling the tsunami of waste that it is causing.”
“Apart from the many environmental problems that are caused by plastic waste, there are also many economic consequences of this kind of pollution. Marine litter is already affecting tourism by making certain areas less attractive to go to, and thus decreasing economic prosperity in coastal areas.”
“In a circular economy for plastics, we reduce the need for single use products, and we innovate so all the plastic we do need is reused, recycled or composted. This means we can circulate everything that we use, keeping it in the economy and out of the environment.”
Calls for such a treaty are backed by the Ellen MacArthur Foundation and the World Wildlife Fund, and a large group of household name retail businesses that are major users of plastic packaging. There is now a push for the financial industry to sign up to it as well.
The core aim is for the UN’s 193 member states to commit to the development of a global treaty on plastic pollution and to urgently begin international negotiations. The issue is set to be discussed at the first International Ministerial Conference on Marine Litter and Plastic Pollution on 1-2 September 2021.
Robeco’s Active Ownership team is now stepping up its engagement efforts as it enters the third year of an engagement program that encourages companies in the plastic packaging value chain to move to a circular economic model. It focuses on five key areas: innovation, recycling, plastic harmonization, responsible lobbying, and industry collaboration and partnerships.
“We expect companies to collaborate with each other along the global plastic value chain, as well as with governments and NGOs, to achieve systemic change towards creating a more circular plastic packaging system,” Van Waveren says.
“Exposure to plastic waste and pollution within an investor’s portfolio leads to many material ESG risks that could hurt returns. These include existing and future regulatory changes, reputational issues, and litigation resulting from pollution of waterways and oceans, such as marine degradation and biodiversity loss. It is in our interest to reduce such negative impact.”
The engagement program which began in the second quarter of 2019 is yielding some good results. “We found that most companies were able to show good progress on three of the engagement objectives covering innovation, responsible lobbying and industry collaboration and partnerships, but they were lacking on recycling and plastic harmonization,” she says.
“We found for example that the development of responsible packaging sometimes conflicts with other solutions. One issue is that the development of bioplastics is seen as a major solution to waste, since they degrade more easily than regular plastics… but this then complicates the recycling system even further.”
“The problem here is that bioplastics are made of non-fossil fuel-based feedstock, which is positive to reducing its impact on the climate, but these compostable materials are in general not of sufficient quality to protect food.”
“We also found that there is an urgent need to improve the supply and demand dynamics for recycled plastic. Recycling plastic into new packaging costs money. Household plastic waste has to be sorted, melted into pellets and reformed into new packaging. That is why recycled plastic is often more expensive than new plastic.”
“So, by recycling more efficiently, and creating an efficient market for recycled plastics, companies can seize the opportunities and adapt their business model accordingly.”
While a treaty may be some time away, the PRI’s Working Group on Plastics recently developed new guidance to both investors and companies across four relevant sectors: petrochemicals, containers and packaging, fast-moving consumer goods and waste management. The initiative brings together 39 institutional investors, including Robeco.
It offers practical ideas on how to assess performance on waste management and gives examples of best practice. The pioneering guidance will help investors to assess companies’ performance, and spur them to take bolder action towards a circular economy for plastics.
“Businesses and investors have been a key driver of previous UN treaties,” says Van Waveren. “By acting together for a common good we think we can shape the agenda for a new treaty on plastic pollution and so make a difference.”