Investor Call for Petrochemical Reform

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    Stockholm (NordSIP) – Institutional investors are being called upon to support a joint statement on plastics aimed at 50 large petrochemical companies.  The investor letter will be published on 24 June 2024 by environmental NGO Planet Tracker.  The fifth session of the Intergovernmental Negotiating Committee to develop an international legally binding instrument on plastic pollution, including in the marine environment (INC-5) that will take place in Korea from 25 November to 1 December 2024 is scheduled to be the final such session ahead of a global treaty being signed in 2025.  The INC process has been beset by increasingly forceful lobbying by petrochemical companies concerned by the potential effect on their revenue streams.

    Alongside the global waste and pollution crisis caused by the steady growth in the production and consumption of single-use plastics, there is growing awareness and concern over the so-called ‘chemicals of concern’ that are widely employed throughout the plastics value chain.  Of the roughly 16,000 such chemicals that are used to improve flexibility, durability, or colour of plastic materials, around 11,000 have not been assessed in terms of their effect on human health and the environment.  Of the remainder, 4,200 have been identified by the scientific community as hazardous.  These include controversial ‘forever chemicals’ like per- and polyfluoroalkyl substances (PFAs), bisphenols and phthalates, traces of which have been found throughout the natural world.

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    While investor statements on plastics have previously been issued by the United Nations Environment Programme Finance Initiative (UNEP FI), the Dutch Association of Investors for Sustainable Development (VBDO), CDP, and Business Coalition for a Global Plastics Treaty, the Planet Tracker initiative differentiates itself by being targeted at the petrochemical companies that account for most of the virgin plastic produced globally.  The 50 names include familiar fossil fuel giants such as ExxonMobil, Chevron, TotalEnergies, and Saudi Aramco, as well as more specialised firms like LyondellBasell and Dow.

    With plastic production on track to triple by 2060 at current growth rates, the investor statement calls for the following actions from petrochemical companies:

    1. Transparently disclose, define strategies and set clear targets to transition to production of safe, environmentally sound and sustainable plastic
    2. Address polymers and chemicals of concern in their products
    3. Build suitable infrastructure for production of sustainable materials
    4. Establish dedicated governance
    5. Publicly support an ambitious international legally binding instrument for ending plastic pollution

    Institutional investors can put their name to the joint statement here and will only be required to provide the name and location of their institution along with its total assets under management (AUM).  The latter will be consolidated in a single AUM figure upon publication of the joint statement.  Alongside the environmental and health concerns, Planet Tracker is keen to highlight the various financially material risks to institutional investors inherent in the current petrochemical business model.  These include exposure to tightening regulations, reputational and litigation risks, as well as reduced demand fuelled by changing consumer preferences.  According to Planet Tracker, 50 institutions have already signed up to support the joint statement.

    Image courtesy of Nareeta Martin on Unsplash
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