Kraft Heinz and Church & Dwight responded to shareholder proposals with new goals to cut virgin plastic use; now, 185 investors have called on 30 other CPG brands and retailers to accelerate their action on plastic.
Investors with $10T AUM call on corporates to pick up the pace on reducing plastic
Image credit: Sergei Tokmakov
185 investors with US$10 trillion in combined assets, coordinated by the Dutch Association of Investors for Sustainable Development (VBDO), have joined forces to call for more corporate action to address the plastics crisis.
In a joint statement sent last week to executives at 30 of the world’s biggest consumer goods firms — including The Coca-Cola Company, Danone, Kellogg, Keurig Dr Pepper, L’Oréal, Mondelez International, PepsiCo and Nestlé — and retailers including Sainsbury’s, Tesco, Target, Marks & Spencer and Carrefour, the investors decry the serious and growing threat that the whole plastics lifecycle poses to the environment, climate, biodiversity, human rights and public health. The estimated costs to society from plastic pollution — including environmental clean-up, ecosystem degradation, shorter life expectancy and medical treatment — exceed US$100 billion per year.
The signatories — which include As You Sow, Aviva Investors, Domini Impact Investors, Rockefeller Asset Management and Trillium Asset Management, to name a few — argue that failing to address these impacts exposes companies to financial risks that threaten value creation and investment returns, given the wave of action to tighten legislation around the world, the increasing number of lawsuits against companies and the potential threat to brand value.
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The Ellen MacArthur Foundation projects companies will ‘almost certainly’ miss existing targets, instead increasing their use of single-use plastic packaging overall and failing to demonstrate credible and ambitious plans for reuse.
“It’s worrying to see most companies in the FMCG and grocery retail sectors are taking limited action to mitigate the financial risks posed by plastics,” says VBDO executive director Angélique Laskewitz. “Investors are sending a clear signal to these companies they will face ever-increasing pressure if they don’t act soon to substantially reduce their plastic footprint.”
There are between 75 and 199 million tonnes of plastics in the ocean; but the problem goes far beyond impacts to the marine environment. Cradle-to-grave greenhouse gas emissions from single-use plastics in 2021 were equivalent to the total annual emissions of the UK. The plastics lifecycle is also inextricably linked to growing concern about exposure to toxic chemicals; over 3,000 potentially harmful chemicals have been identified in food packaging.
The signatories are urging companies to adopt a more radical approach. To deal with the scale of the plastics crisis, they want companies to significantly reduce material consumption, eliminate single-use packaging and scale reusable packaging systems. Companies need to show an action plan with clearly defined timescales and report progress subject to external verification.
Additionally, they are calling for companies to publicly support — rather than lobby against — ambitious policy on plastic reduction including the UN’s Global Plastics Treaty and the EU’s Packaging and Packaging Waste Regulation (PPWR) proposal, which is currently being overhauled. A recent analysis showed that lobbying efforts by industry associations on the PPWR already managed to considerably weaken some of the measures.
Arthur van Mansvelt, Senior Engagement Specialist at signatory Achmea Investment Management, said: “Most companies are not acting fast enough in the face of the unfolding plastics crisis. The Global Plastics Treaty offers a unique and historic opportunity to tackle the problem at the source — we need companies supporting its ambition on prevention and reuse, not lobby against it. It’s their chance to be part of the solution.”
Finally, investors expect companies to commit to identifying and eliminating the use of hazardous substances contained in plastics, given the significant risks these pose to human health and related risks to financial value.
Kraft Heinz, Church & Dwight latest to accelerate plastic-reduction goals following investor engagement
Super concentrated detergent formulas have helped Church & Dwight cut plastic use in packaging | Image credit: Arm & Hammer
Meanwhile, As You Sow recently announced successful engagement with Kraft Heinz and Church & Dwight that resulted in both setting new goals to cut their use of virgin plastic packaging. The announcements fulfill commitments made to As You Sow by each company and are in accordance with the withdrawal of As You Sow’s 2022 shareholder proposals at each company on plastic pollution.
Kraft Heinz has committed to cut its use of virgin plastic by 20 percent by 2030 over a 2021 baseline; Church & Dwight has committed to cut plastic use by 30 percent by 2025 over a 2017 baseline. The companies' new goals cannot be directly compared to one another due to their different products, packaging and market sizes; though the goals do signal a positive trend among major consumer goods companies to cut the use of virgin plastic use. They are among companies that have committed to achieving these goals through material elimination or reduction, replacement with recycled plastic, use of fiber or biobased alternatives, transitions into refillable and reusable packaging, or a combination.
In 2021, five other large companies — Keurig Dr Pepper, Mondelez, PepsiCo, Target and Walmart — all agreed to virgin plastic reductions after the filing of shareholder proposals by As You Sow. Target and Keurig Dr. Pepper agreed to reduce virgin plastic in brand packaging by 20 percent, Walmart agreed to a 15 percent cut, and Mondelez agreed to cut 5 percent — all by 2025. PepsiCo agreed to a 20 percent cut by 2030.
“Setting a virgin plastic use-reduction goal has become a common practice among leading companies,” said Kelly McBee, circular economy sr. coordinator at As You Sow. “We hope to see these companies pair their new goals with commitments to financially invest in the collection and recycling of their packaging to ensure it never becomes waste.”
As You Sow is also actively urging Amazon and Kroger to match the efforts of their peers and cut the use of plastic. As You Sow filed similar resolutions with both companies last season, though neither company has taken significant action to cut plastic use despite support from nearly 50 percent of investors at Amazon.com and nearly 40 percent of investors at Kroger. Both resolutions will go to a vote before shareholders over the next couple of months.
The largest cut in overall plastic use to date by a major consumer goods company was a 2019 commitment by Unilever to cut virgin plastic use by 50 percent, including a total elimination of 100,000 tons of plastic packaging by 2025.