ESG: Investors call on businesses to reduce plastic use or face financial consequences
The recent news that a coalition of investors that oversee $10tn in assets has called on companies including Amazon, PepsiCo and McDonald’s to drastically reduce their reliance on plastics highlights the growing importance of Environmental, Social and Governance (ESG) strategies.
The investor coalition is urging the businesses to phase out single-use plastics, significantly reduce material consumption and implement re-use systems for packaging. It is estimated that plastic pollution costs society more than $100bn a year and a study published in 2017 found that 8.3bn tonnes of plastics had been produced since the industry began to expand after the second world war. With the wave of action to tighten legislation around the world, the increasing number of lawsuits against companies, and potential threat to brand value, businesses need to be aware of the financial risks posed by plastics and take action to mitigate them.
The growing influence of ESG strategies is increasingly being seen in the investment community, with some fund managers launching funds to tap into the transformation needed when it comes to plastics and waste. Investors are sending a clear signal to companies that they will face ever-increasing pressure if they do not act soon to substantially reduce their plastic footprint. It is clear that businesses need to look more closely at their environmental credentials and consider the impact of their activities on the environment. This includes not only reducing their reliance on plastics, but also phasing out hazardous chemicals used in plastics and stopping lobbying against policy proposals aimed at reducing plastic waste and pollution. Companies should also consider the potential financial risks posed by their activities and take steps to reduce them.
Businesses should be transparent and honest about their environmental credentials and ensure that they are not ‘greenwashing’ or overstating their credentials. This will help to protect their reputation and financial returns in the long run. ESG strategies are becoming increasingly important and businesses need to be aware of the financial as well as reputational risks posed by their activities and take steps to reduce them.
A coalition of investors that oversee $10tn in assets has called on companies including Amazon, PepsiCo and McDonald’s to drastically reduce their reliance on plastics, saying a failure to do so exposes them to financial risks.
The 183-strong group has written to 30 of the world’s biggest grocery, retail and consumer goods companies to warn that continued production of plastics poses risks to public health, biodiversity, climate change and human rights.
The coalition, which includes Amundi, Legal and General Investment Management, Aviva Investors, Axa Investment Management and Rockefeller Asset Management, is the largest ever formed to put pressure on companies over plastics.
It has urged the businesses, which also include Tesco, Carrefour and Danone, to phase out single-use plastics, significantly reduce material consumption and implement re-use systems for packaging.”
