CDP Plastics Disclosures Heighten Transparency for Investors

High-impact plastic sectors have been invited to disclose through the platform, but focus on water security may undermine usefulness Planet Tracker warns. 

Non-profit CDP has increased transparency over plastics impact by enabling companies to disclose data on the production, use and disposal of plastic through its global environmental disclosure platform, but some say its focus on water security fails to tackle the issue from all angles.  

Cate Lamb, Global Director for Water Security at CDP, told ESG Investor that “when a company is not transparent about how it is addressing plastics issues, investors can never be sure about a company’s real fundamentals, true risk and the extent of their impacts”. 

The platform will allow 6,743 companies to provide investors with what the organisation calls “comprehensive, comparable” data on plastics. Corporate disclosure on plastic-related impacts will enable investors to collect “valuable information” to inform sustainable outcomes in investment decisions, Lamb said. 

Companies will disclose their plastics impacts through CDP’s Water Security questionnaire, with the non-profit saying it will enable companies to “address these two important issues, water security and plastic pollution, side by side”.

CDP underlined that the “clear” link between plastic pollution and water security “threatens the function of the world’s terrestrial, ocean, and freshwater ecosystems, which serve as sanctuaries for biodiversity, vital food sources, and major carbon sinks”.

Thalia Bofiliou, Senior Investment Analyst (Plastics) at Planet Tracker, told ESG Investor that it was a “pity” that CDP had included the disclosures under water security as plastic impact exists “way beyond freshwater and oceans”.  

“Focusing only on water and nothing else means that corporates will not tackle the issue in all possible angles that exist,” she warned. 

Transparency and accountability 

According to CDP, the new disclosure for plastics will respond to requests from more than 740 investors with US$136 trillion in AuM for companies to disclose plastic-related impacts. Data that is publicly disclosed through CDP will be made available from September 2023.  

The non-profit has invited high-impact plastic sectors, including chemicals, fashion, food and beverage, and packaging to disclose through the platform.  

The packaging sector was found to be one of the largest applications of plastics globally in 2021, using 44% of all plastics. One hundred petrochemical companies produced 90% of all single-use plastic waste generated globally. For fossil fuels, about 4% of annual total use of oil and gas globally is for plastic production.  

Last year, 81% of capital markets and supply chain members that responded to a CDP consultation said that information requested by the non-profit would be useful in informing financial or procurement decisions. 

Lamb said that companies must develop a “robust understanding” of how they contribute to the plastic pollution crisis and formulate equitable and just transition plans to address it.  

“Investors and policymakers need access to relevant, comprehensive and comparable data across the global economy on which to make better decisions,” she added. “Transparency and accountability are critical, you can’t manage what you don’t measure.” 

Fifty-five financial institutions, including CDP signatories Cardano ACTIAM, Boston Common Asset Management, Triodos Investment Management and Robeco, have formed a Plastic Solutions Investor Alliance to engage publicly traded companies on the threat posed by plastic pollution.  

The firms the alliance will engage with includes Unilever, PepsiCo and Procter & Gamble, and its initial focus will be on single-use plastic packaging.  

“The more that investors are active on the plastic pollution problem the better,” said Planet Tracker’s Bofiliou, stressing the importance of the Plastic Solution Investor Alliance in raising the issue up the corporate agenda.  

Too narrow a focus? 

Bofiliou expressed disappointment in the new disclosure standard’s focus on water security, as it fails to holistically incorporate plastic-related impacts.  

“The fact that it is unscored, unverified and voluntarily means that it is completely up to the corporation to disclose whatever they want,” she said. “We hope for full and transparent information, but we will have to wait and see. 

“There are toxins, the harmful additives in chemicals, there are so many other issues with plastics in general,” she said. “The associated costs, litigation costs around plastic are increasing massively.” 

A report released last year estimated that the legal costs for claims linked to plastics will exceed US$20 billion for the period between 2022 and 2030. It’s also estimated that the social costs associated with chemical additives that were included in plastic products will surpass US$100 billion per year globally. 

Bofiliou added that viewing plastics from “only one perspective” in oceans means that its impacts to the natural environment and wildlife are excluded by default.  

“Corporates might disclose on water because they have been requested to, but they will overlook every other issue they are creating during the plastic usage operation,” she said. 

However, disclosure on plastics will increase companies awareness of how they are used and/or produced throughout their value chain, said CDP’s Lamb. This includes setting targets in line with current and incoming plastics directives, monitoring raw material content, increasing packaging circularity, and eliminating primary use of microplastics. 

Bofiliou said that “disclosure is often seen as the solution, but I just don’t want action to stop here”. 

Action ahead at 2023 AGMs  

A report on plastics pollution is likely to be proposed ahead of McDonald’s AGM, which is expected to occur on 25 May. At last year’s AGM, 41.9% of the fast-food giant’s shareholders supported an As You Sow proposal which requested the firm develop a list of actions it could take to reduce plastic pollution.  

Last month, the firm agreed to publish a first-in-sector report evaluating the opportunities and risks posed by switching to reusable packaging, including its impacts related to single-use plastic and other single-use packaging and the environment in response to a shareholder resolution proposed by As You Sow. 

During last year’s AGM season several large companies including Amazon and ExxonMobil faced shareholder petitions requesting additional disclosures on efforts to reduce plastic waste.  

Lamb said other AGMs with reports on plastic pollution on the list of proposals include Colgate-Palmolive, Amazon, ExxonMobil and Chevron. 

A first-time shareholder resolution filed with Dow Inc by As You Sow requested the chemicals firm to report on the impact of reduced global demand for virgin plastic on its business. This resolution was supported by more than 30% of shareholders during the company’s recent AGM. 

According to Lamb, plastic production, disposal and pollution are high on the list of priorities for shareholders of major companies, following key developments this year such as the announcement of a Global Treaty on Plastic Pollution.  

Bofiliou said that she hopes that shareholder petitions on plastics will become “more persistent” this AGM season. 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2023 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top
Share via
Copy link
Powered by Social Snap