Producing plastics, especially for the food industry, could expose to financial risks
Finance against producing plastic. We could summarize the initiative of 185 investors with a total assets of 10 trillion dollars, coordinated by the Dutch Association of Investors for Sustainable Development (VBDO). This group joined forces to demand further action to address what they call the “plastic crisis”. These include support for the global plastics treaty under discussion at the UN: investors are calling for support for binding measures to reduce the production of this polluting material.
In a joint statement, they warn that the entire life cycle of plastics represents a serious and growing threat to the environment, climate, biodiversity, human rights and public health.
And then there is the economy. Not surprisingly, in fact, investors are worried. They see that for companies, the financial risk of producing plastic is just around the corner. A similar thing happens for the most prudent analysts in the field of climate finance, which warn fossil enterprises against “stranded asset” risk, that is, an investment that is impossible to remunerate. For plastics, the story is very similar: the signatories of the appeal argue that not addressing this problem exposes companies to financial risks that threaten the creation of value and investment returns. To substantiate this idea, the plethora of ongoing initiatives to tighten legislation worldwide, the increasing number of lawsuits against companies and a potential threat to brand value.
In particular, the threat concerns the food industry: “With growing concerns and growing awareness of biodiversity loss and environmental degradation, the food industry must move to more sustainable production and consumption – says AXA Investment Manager – An important element of this transition is the reduction of the industry’s dependence on plastics. As intensive users of plastic packaging, food and consumer goods retailers have a key role to play in bringing about scalable change and increasing the financial resilience of their business models”.