Plastic use poses serious business risks – report

Food companies could face serious material business risks for their involvement in creating plastic waste, according to a new report.

Risk unwrapped: Plastic pollution as material business risk, published by law firm ClientEarth, details four types of business risk that companies may be exposed to and sets out the legal obligations on their directors to take action to deal with them.

The four main areas of material business risk include reputational damage for those perceived as a source of plastic pollution, physical risks from disruptions to supply chains, legal challenges from those suffering loss or damage from plastic pollution, and increased regulatory burden.

The report’s author, ClientEarth wildlife lawyer Tatiana Lujan, said there are serious risks for companies that don’t move fast enough in responding to the business risk associated with plastic waste.

In a matter of months there have been bans on single-use products and higher recycling targets, as well as proposals for new taxes and more expensive “polluter pays” type schemes. “Governments are acting really quickly on regulation and companies in general are unprepared,” Lujan said.

The first lawsuits for plastic pollution have already been filed too, including one against three Chinese companies that provide takeaway food but failed to enable their customers to opt out of disposable cutlery. It wasn’t successful, but this kind of case can still have a “huge impact” on reputation, ClientEarth noted.

As much as three quarters of company value can be tied to reputation, so brand damage is a significant risk for plastic-intensive companies unresponsive to their consumers, shareholders and investors. Market leaders are “particularly exposed” to this kind of risk, ClientEarth noted in the report, and “… activists may exploit the company’s prominent position to centre public attention on flagship issues, even if the targeted company is not the worst performer compared with others”.

Client Earth recommended that companies use robust methods to measure their plastic footprint, so they can then design, implement and disclose appropriate policies to manage their usage and the associated risks.

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