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    Corporate Swindles Repeated (CSR)

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    Corporate social responsibility (CSR) is a nice concept.  Companies make their money providing useful goods and services while being fine corporate citizens, taking care of the society and environment in which they operate.  Unfortunately, the longer the Laundromat delves in to the murky world of greenwashing and corporate misbehaviour, the more CSR seems like some sort of fairy tale.  Through various articles, interviews and podcasts NordSIP has been delving into the “engage versus divest” debate that rumbles on in the institutional investment world.  Periodically, engagement fans are brutally reminded that CSR can be something to take with a large pinch of salt.

    Got a light?

    Let us start with cigarettes.  In a landmark ruling against four large tobacco companies in 2006, the presiding judge said that the defendants had: “Marketed and sold their lethal products with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted.”  Not only had the companies known about the full effects of their products for many decades, but they had also used every trick in the book to keep the subsequent court cases dragging on so that they could keep the cash rolling in until the very last minute.  That one of them, Philip Morris, chose to change its name to the altruistic sounding Altria in 2003 seemed to sum up the only level of positive change the industry would willingly make.

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    Fill it up!

    The next one is oil.  In recent years it has emerged that ExxonMobil, Shell and other fossil fuel companies had produced remarkably accurate modelling of the effects of burning oil, gas, and coal on the world’s climate as far back as the late 1950s.  Not only did they keep this excellent scientific research well under wraps, but they then put a lot of money and effort into a systematic programme of negative climate lobbying and disinformation.  ExxonMobil’s assessment on InfluenceMap’s LobbyMap platform remains damning: “ExxonMobil shows negative engagement on most forms of climate regulation and advocates for energy policies that would accelerate fossil fuel development.  The company retains an extensive network of memberships to industry associations that actively oppose climate-related policy globally.”

    Life in plastic, not fantastic

    This week, we found out that this illustrious club of corporate villains has a new member: the plastics industry.  Some might say that the Laundromat’s obsession with plastic waste is reaching worrying levels, but the publication on 15 February 2024 by the Center for Climate Integrity of new research into the plastics industry has revealed a sadly familiar pattern of obfuscation and deception.  The new report on The Fraud of Plastic Recycling reveals that plastic producers were entirely aware that recycling would never work as far back as the late 1980s.  They had also conspired to purposely introduce the concept of disposability and single-use plastic products as a means of maximising revenues.  Admittedly, the plastics industry is a close cousin of the fossil fuel industry, so crime appears to run in the family.

    By now we know that global average recycling rates struggle to achieve double figures.  The plastics industry is putting its whole marketing might behind the promotion of recycling and waste management as solutions to a global plastic pollution crisis that it can no longer ignore.  Plastics recycling has jumped on the otherwise legitimate “circularity” bandwagon, despite the fact that there are only two types of plastic for which there is a viable market.  These are polyethylene terephthalate (PET) and high-density polyethylene (HDPE), typically used for bottles and other containers.  Aside from these two, there are thousands of other varieties of plastic in circulation, each with its own chemical composition and in 99% of cases derived from fossil fuels.  The average recycling bin will contain many of these plastics, most of which degrade when recycled or are simply incompatible with each other.  This means that the overwhelming majority of plastic waste is either incinerated, buried in landfill, or littered.

    The Great Recycling Swindle

    An Exxon employee put recycling in proper perspective when speaking to the American Plastic Council back in 1994: “We are committed to the activities, but not committed to the results.”  Even earlier, the founding director of the Vinyl Institute cheerfully told its 1989 conference audience: “Recycling cannot go on indefinitely and does not solve the solid waste problem.”  The sheer villainy displayed by these three industries is worthy of a James Bond film.  If the American Petroleum Institute (API) was found to be building a gigantic world destroying laser I doubt we would be particularly surprised at this point.

    What is the point of this never-ending series of anti-plastic Laundromat rants?  As mentioned earlier, NordSIP has been investigating the effectiveness of the engagement process as a potential counterpoint to the divestment advocates.  Asset owners are struggling to influence all the companies in their portfolio in terms of climate action and the other issues that are rising to the top of the ESG agenda.  The large-scale collaborative engagement initiative Climate Action 100+ (CA100+) has been followed by Nature Action 100+.  The Laundromat believes it is high time for Plastics Action 100+ to join the family.  The shares of many producers of raw plastics sit in institutional portfolios, seemingly quite unchallenged, alongside some of their top clients and world’s biggest polluters like Coca Cola, PepsiCo, Nestlé and Danone.  There is also an ongoing battle within Europe over the EU Packaging and Packaging Waste Regulation (PPWR).  It has seen aggressive and potentially illegal lobbying efforts by  the likes of McDonalds, who are fighting hard to keep single use plastics in place and thereby maintain their profit margins.  We have had too many decades of corporate villainy.  It is high time for the good guys to fight back so (with apologies to Marvel) come on, Institutional Investors Assemble!

    Image courtesy of Angela Loria on Unsplash
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.
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