Stockholm (NordSIP) – Strong engagement with, and potential exclusion of fossil fuel companies have long been on the agenda for Nordic institutional investors. Once all means of persuasion have been exhausted and companies fail to demonstrate a credible low-carbon transition plan being put into practice they tend to find themselves added to investors’ blacklists. On 26 November 2024 Sweden’s €116 billion AP7 added the US’ EOG Resources and Canada’s MEG Energy to its list of more than 50 fossil fuel companies excluded from the investment portfolio for acting against the goals of the Paris Agreement.
However, as major oil producers shift their focus towards petrochemicals and plastics in the face of declining demand in the energy and transport sectors, is it time for investors to broaden their engagement strategies accordingly? The interdependencies and the climate, biodiversity, and plastic pollution crises are becoming clearer. The international negotiations on a global plastic treaty ended on December 1 without success, an outcome that was largely attributed to the obstructive tactics of a small number of fossil fuel producing nations. On 2 December Coca Cola announced an update to its environmental goals, which revealed that it was dropping a prior pledge for 25% of its packaging to be reusable by 2030.
Coca Cola is estimated to produce more than 100 billion single use plastics bottles every year, which represents more than a fifth of the global output. The company has been ranked as the world’s number one source of plastic pollution with an 11% share of branded waste based on 5-year data from the #BreakFreeFromPlastic annual audit carried out across 84 countries. The April 2024 peer-reviewed study also found a 1:1 relationship between companies’ plastic use and their share of plastic pollution.
Commenting on Coca Cola’s decision to jettison its reuse targets and refocus on the promotion of waste management and recycling, Von Hernandez, Global Coordinator at Break Free From Plastic said: “Coke’s latest move is a masterclass in greenwashing, ditching previously announced reuse targets, and choosing to flood the planet with more plastic they can’t even collect and recycle effectively. This only reinforces the company’s reputation as the World’s Top Plastic polluter. If they can’t even keep their low-bar commitments, how can they claim to be serious about addressing the global plastic crisis?”
Coca Cola shares appear to be a mainstay of Nordic institutional investors’ global equity portfolios, including those of all of Sweden’s AP funds. This is despite the company and many of its peers’ significant contribution the triple climate, biodiversity, and plastic crises and their lack of credible transition plans. Coca Cola’s latest in a long line of instances of greenrinsing – the practice of regularly changing ESG targets before they are achieved – may be the catalyst for investors to finally hold the company to account and eventually add them to sustainability blacklists.
