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TOPSHOT – Plastic waste and garbage is seen at the beach in Costa del Este, Panama City, on … [+] September 21, 2022. An environmental association inaugurated this Thursday in Panama a gigantic hydraulic wheel that collects floating solid waste from a river to prevent it from reaching the sea, in an attempt to stop the rampant garbage collection crisis plaguing the capital of the Central American country. (Photo by Luis ACOSTA / AFP) (Photo by LUIS ACOSTA/AFP via Getty Images)
Investors could face $20 billion in corporate liabilities associated with plastic-related pollution in the U.S. alone, according to a new analysis.
The report by the financial think tank Planet Tracker urges investors to review their investments and reduce their “toxicity debt”.
It also urges investors to assess the risk premium associated with toxic chemicals, which can leave companies financially exposed to lawsuits for decades.
And it claims investors face an estimated $20 billion near-term corporate liabilities from plastic-related pollution in the US. alone, as the chemical industry is increasingly exposed to fines and litigation costs.
In addition, it adds legal risks can also trigger profit warnings, asset sales and dividend cuts.
The analysis comes after California’s attorney general, Rob Bonta announced the state was filing a lawsuit against ExxonMobil for allegedly engaging in a decades-long campaign of deception that caused and exacerbated the global plastics pollution crisis.
The Planet Tracker report focuses on the financial risk posed by what are described as novel entities, which are artificial chemicals and other human-made pollutants.
The study also warns a new chemical substance is being registered every 1.4 minutes somewhere in the world with the Chemical Abstracts Service.
According to the report, there is a “significant risk” to not knowing or disclosing the toxicity of these chemicals.
In Europe and North America, it adds more than 350,000 chemicals and mixtures of chemicals have been registered for production and use.
And it warns most of these chemicals are untested.
For example, it claims around 80% of these chemicals have been in use for at least 10 years without yet having undergone an EU safety assessment.
Planet Tracker’s head of data Chris Baldock said novel entities pose a” real financial risk” to companies and their financiers in an interview.
“Novel entities are everywhere,” added Baldock. “Around 80% of all the chemical stock that has ever been produced is still in products that are currently in use.
“And then there is the pervasiveness of novel entities in all the sectors of the economy, from packaging to textiles.
“This is not an area which has had a lot of focus before, but we have tried to gather as much evidence to point investors and financiers to the risks”
Baldock told me the production of chemicals and goods containing toxic additives is not slowing down, with hundreds of companies producing new products every year.
He added Planet Tracker recently launched its petrochemical investor statement, whereby signatories call on companies to transparently disclose and define strategies targets to reduce the impacts of plastics.
The statement also calls on signatories to identify and address hazardous polymers and chemicals of concern in their products.
Planet Tracker’s director of research, John Willis said from a financial point-of-view, novel entities are a “complete and utter nightmare” in an interview.
Willis added it is “almost inevitable” that some chemical producers face litigation and pointed to the ongoing controversy of PFAS or “forever chemicals” in drinking water and the recent developments in California as two recent examples.
“The longer companies exposed to novel entities delay transitioning to sustainable alternatives, the greater their liabilities are likely to become,” added Willis.
“Investors need to ensure they are valuing these risks accurately and transition to more sustainable substances.”
