Monitor, adapt, win: what the plastic waste crisis tells us about monitoring risk
16 April - 3.00 pm GMT | 4.00 pm CET | 10.00 am EST
In the last 30 years, plastic pollution has gone from a minor concern to a major crisis. Growing public awareness of plastic waste's environmental impacts is shedding light on the financial, regulatory, and reputational risks for investors and corporations alike.
Policy makers, particularly in the EU, are taking a hard stand - from working towards banning the use of single-use plastic to encouraging circular economic models. Consumer preferences are also changing, with more and more people demanding plastic alternatives.Businesses need to take heed in order to get ahead of these rising risks. We spoke with Morgan Stanley and Eastman Chemical about innovative solutions companies can adopt to tackle the plastic waste challenge.
Plastic waste is a systemic challenge, and its resolution requires a multi-stakeholder approach across the value chain - there’s no silver bullet.
Matthew Slovik of Morgan Stanely emphasized that “financial services companies have an active role to play in helping to connect capital to solutions and in working with our clients and partners to help further new approaches to plastic waste.”
At the same time, Gregory Riddle of Eastman Chemical outlined what those new approaches will look like. They will be chemical in nature and commercial in scale, and are “complimentary to mechanical [i.e. traditional] recycling to meet circular economy targets - the two are not in competition”.
The costs of ignoring the signals
The plastic crisis has policy makers sitting up and paying attention. The EU banned single use plastics by 2021, and the new (as of March 6th) European Plastics Pact will create a public-private partnership to build a circular plastic economy. The UN, as well, has amended the Basel Convention on Hazardous Waste to include plastic waste.
Companies need to be paying attention in a shifting regulatory landscape. The financial costs of not doing so can be immense. In the new age of materiality, “policymakers have responded to the mounting stakeholder pressure and evidence,” meaning that direct financial penalties have begun to attach to ESG risks.
What the plastic crisis teaches us is not only the importance of sustainability-focused business models, but also the speed at which the risk landscape is changing. It also reinforces the interconnectedness of environmental, economic, social and governance issues. Monitoring the evolving business landscape has never been more important.