Consumers Misled on Plastic Recycling
Investors urged to engage on the issue, with regulation and taxation required for sustainable solutions likely required to address risk.
Planet Tracker has warned consumers and policymakers that they are being misled on recycling in the plastics industry, with the majority of it currently not being recycled, despite misleading claims.
Worth more than US$500 billion, the plastics industry has promoted recycling as a key solution to pollution issues while continuing to expand production to protect profit margins, the NGO claimed in a new report.
In 2019, an estimated 91% of plastics were not recycled, matching UN environment programme calculations – per which less than 10% of the seven billion tonnes of plastic waste generated globally that year were reprocessed. An estimated 19% were incinerated, while almost 50% went to a sanitary landfill.
“The plastic industry’s tactics have successfully shifted focus away from upstream measures, such as limiting production and adopting alternative materials,” said John Willis, Director of Research at Planet Tracker. “By promoting the illusion of recyclability, the industry has effectively passed the financial burden of waste treatment onto local municipalities and waste-pickers, often the financially weakest link in the plastic supply chain”.
For the report, Planet Tracker analysed the top 148 corporates – ranked by market capitalisation – from the three main segments of the plastic value chain. Upstream firms included Chevron, Exxon, INEOS and Total Energies, while midstream included Rio Tinto and Vale, and downstream Anheuser-Busch, Coca-Cola, Diageo, and Nestle.
Although plastic suppliers often blame consumers for the flaws in recycling and point the finger at the public’s poor habits, much of household waste is not actually recyclable, Planet Tracker said – either due to the nature of the product itself, or a lack of waste collection or management infrastructure.
“The plastic industry has not earned the right to call plastic recyclable,” the report read. “While the organisation accepts recycling’s role in improving circularity, [that] has so far proven a flawed solution, with global plastic pollution overwhelming the existing recycling infrastructure while production of virgin plastics continues to grow.”
Responsibility through regulation
A proper solution to plastic pollution would likely include an upstream element targeting production, Planet Tracker suggested, with a need for investors to recognise that recycling alone is not enough.
Last October, a five-year progress report from the Ellen MacArthur Foundation on global plastic pollution commitments found that investors needed to increase engagement with investee firms on improving research and development efforts.
Upstream solution such as extended producer responsibility schemes and the regulation or taxation of production are needed, Planet Tracker’s Willis suggested, and other mechanisms should be examined to create a sustainable path in the sector.
“Plastics is a sector with a significant risk register and for equity investors, holders of bonds and loans, as well as insurers, these risks should be priced into the cost of capital now,” the report read. “Keeping the spotlight away from the growing rate of plastic production as the driver of pollution has allowed the industry to maintain its expansion plans.”
Later this month, the fourth session of the UN Environment Programme’s (UNEP) Intergovernmental Negotiating Committee (INC-4) is due to develop an international legally binding instrument on plastic pollution – including in the marine environment.
Some headway had been made during INC-2, with a ‘zero draft’ agreed by more than 165 countries in June last year. There was, however, disappointment and frustration at INC-3 in Nairobi last November, as policymakers allowed oil-dependent countries to lower their ambitions on ending plastic pollution, thereby risking derailing progress towards the adoption of a global treaty.
In February, the UNEP Finance Initiative, the Principle for Responsible Investment, and the Finance for Biodiversity Foundation were among several organisations that called on financial institutions to sign up to an open statement ahead of INC-4, urging governments to take strong measures on plastic pollution.
However, in the report Planet Tracker expressed scepticism about what UN-led negotiations on an international legally binding agreement could achieve.
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