Asset Owners Back Global Plastics Treaty
Joint industry letter says binding rules are essential to tackle global plastic pollution efficiently.
Institutional investors and asset owners were among the 160 financial institutions that signed a statement calling for an “ambitious” international treaty to end plastic pollution ahead of the fourth session of the Intergovernmental Negotiating Committee on Plastic Pollution (INC-4).
Taking place in Ottawa, Canada, INC-4 opened on 23 April with goal of advancing negotiations far enough for the committee to finalise the treaty during the next session. INC-5 will take place in late November in South Korea and is expected to bring the INC process to an end, with a follow-up diplomatic conference where heads of state will sign the agreement.
The statement underlined that increased production and consumption of plastic in recent decades has driven plastic waste and pollution, which poses a “significant and growing threat” to climate change, biodiversity, human rights, and public health.
“The impact of biodiversity loss and climate change create serious risks for companies: directly – through lower production and higher costs, and indirectly – through supply chain disruption,” Mariet Druif, Responsible Investment Officer at UK defined benefit pension scheme Cardano, told ESG Investor. “Consequently, financial institutions will be increasingly exposed to risks if biodiversity loss and climate change are not addressed.”
Cardano is one of a number of institutional investors who signed the statement calling for a global plastics treaty. Signatories represented a total US$15.5 trillion in combined assets.
The statement specifically requested that the treaty be supported by binding rules and obligations for governments to address the full life cycle of plastic, and that it be based on a scientific approach. It also recommended the creation of a framework to align all economic participants with its objectives.
In addition, it asked for the inclusion of harmonised targets across the plastics value chain, and of a requirement for companies to assess and disclose plastic-related risks and opportunities.
“A key element of the statement is that it highlights the interconnectedness between governments, corporations, and the financial sector in addressing environmental challenges,” said Andres van der Linden, Senior Advisor for Responsible Investment at pension provider PGGM. “All stakeholders need to align to achieve meaningful progress on this topic.”
The statement co-signatories stressed the importance of promoting an enabling policy environment to end plastic pollution, suggesting initiatives such as extended producer responsibility schemes.
“We are hopeful that countries understand the gravity of the situation and will be willing to jointly act,” van der Linden added. “A robust international legally binding instrument agreement would, for example, promote an enabling policy environment for the transition to a sustainable and equitable economy that addresses plastic pollution.”
A systemic risk
Plastic is projected to account for 15% of greenhouse gas emissions by 2050, while plastic pollution has been identified as an important issue in the seventh target of the Global Biodiversity Framework: ‘reduce pollution to levels that are not harmful to biodiversity’.
“The use of plastics is expected to double by 2050, which is why Cardano calls on governments for an ambitious instrument to end plastic pollution,” said Druif. “A legally binding international treaty will create a level playing field and will ensure companies adopt measures to reduce, reuse and redesign plastics.”
Known as one of the world’s largest user of plastic packaging, Unilever recently rowed back on a previous pledge to halve its use of virgin plastics by 2025. Instead, it is now aiming for a 30% reduction by 2026 and 40% by 2028. The reduced target equates to an extra 100,000 tonnes of fresh plastic per year.
Unilver’s commitment to make all of its packaging recyclable, reusable or compostable by 2025 has also been pushed back to 2030 for rigid materials, and 2035 for flexible components.
“We believe that plastic pollution poses systemic risks to investors which need to be managed effectively,” UK-based local government pension scheme LGPS Central told ESG Investor. “The various calls made in the statement will enable the financial sector to make more informed, policy-driven finance decisions about their activities related to the plastics value chain. It will also supplement existing engagements with companies on managing their plastic risk.”
Companies including Costco, Disney, Hilton and Marriott are among those that have committed to disclosing their plastics footprint, in addition to other reduction pledges.
This year, the theme of the Earth Day campaign was ‘Planet vs. Plastics’. Similarly to the financial institutions’ statement, the organisation called on the UN and governmental organisations to back a “highly ambitious” global plastic treaty binding all to the same standards, and for a 60% of reduction of all fossil fuel-based plastic production by 2040.
It also recommended putting in place a ‘producer pays’ principle, per which plastic producers and retailers would be made liable for the cost of any environmental or health damages related to their activity.
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