Today marks the 54th annual celebration of World Earth Day ‘. In today’s campaign, EARTHDAY.ORG reminds us that it is unwavering in its commitment to end plastics for the sake of human and planetary health, demanding a 60% reduction in the production of ALL plastics by 2040. Its theme, Planet vs. Plastics, calls to advocate for widespread awareness on the health risk of plastics, rapidly phase out all single use plastics, urgently push for a strong UN Treaty on Plastic Pollution, and demand an end to fast fashion. Today on IFA Magazine, we’re aiming to share the views of people from across financial services as well as highlight some of the issues and ways in which we can make a difference, and help build a plastic-free planet for generations to come!
In recognition of World Earth Day, industry heavyweights have shared their thoughts on the importance of the day and how financial services can contribute to a better and cleaner world.
Simona Rubino, Corporate Governance Analyst, GAM Investments: “While the focus on nature loss is still at an early stage, there is a growing awareness among regulators, investors and companies that mitigating these risks is an essential component of the net-zero path, as well as the significant dependency of the economy on nature-related services and resources. The recent introduction of the Taskforce on Nature-related Financial Disclosures (TNFD), as a framework for the reporting and assessment of nature-related risks, will likely enhance stakeholder attention on these matters. With this in mind, nature-related themes have begun to form a portion of resolutions we have been voting on across our holdings. For example, in the past few years, GAM has voted on shareholder resolutions requesting companies to report on deforestation and water use but also their use of plastics. Notably, most of these resolutions received above 20% shareholder support. For the 2024 AGM season, we expect to see these trends continuing, and we are encouraging companies to enhance their disclosure on the environmental impact of their business, risks, and opportunities.”
Cordelia Dower-Tylee, Responsible Investment Analyst, EdenTree, comments: “The theme for Earth Day this year is planet versus plastic, a topic of which is related to one of our key engagement themes for the next few years: water stress. As we engage with companies to drive best practice on water stewardship and hazardous chemicals, we also wanted to highlight one of our current focusses – PFAS.
“Chemicals are inseparable from modern life and the global economy. 95% of all manufactured goods rely on some sort of chemical process, and they are critical inputs for many industries including pharmaceuticals, construction, and agriculture to name a few. Despite the critical role they play in society, the chemical sector is exposed to growing ESG risk particularly in relation to water stress.
“Water, either through abundance or scarcity is the primary way that climate change will be felt over the next decade. Water stress both through the quantity or quality of water poses a material financial risk for industries heavily reliant on freshwater supplies for manufacturing and operations – such as the chemical sector. Chemical manufacturing also faces elevated risk of water pollution, due to the potential discharge of contaminated water and the manufacture of hazardous chemicals which may end up in waterways.
“Chemical pollution is now one of the five key drivers of marine pollution, and hazardous and persistent chemicals have been linked to cancers and immune issues in both humans and animals1. Forever chemicals have been found in the ice caps and a staggering 97% of sampled human blood, due to chemicals leaking into waterways, rivers, oceans and into drinking water2. The public are becoming more cognizant of the risks associated with per- and Polyfluorinated Substances (PFAS) or forever chemicals, especially as governments and regulators are starting to legislate and as freshwater moves higher up the political agenda 3. Indeed, chemical manufacturers in the US are already facing significant litigation related to their alleged role in water pollution from hazardous forever chemicals4.
“To ensure that the chemicals which make modern life possible are not over abstracting water supplies or affecting human and environmental health, chemical companies must ensure the chemicals they manufacture, and the way in which they do this, is sustainable.
“This is why we have launched a three-year thematic engagement with our chemical company holdings to drive best practice on water stewardship and hazardous chemicals. We have undertaken a gap analysis, identifying areas of elevated risk with regards to water stress and hazardous chemicals, and have set provisional targets for each company. There are nine companies on our initial target list, and we are encouraging water stewardship through disclosures, site specific management of withdrawals and pollution, ambition on target setting and board oversight of key water-related risks. Where relevant, we are encouraging transparency and phase-out of hazardous chemicals, and research into alternatives. We have partnered with the Investor Initiative on Hazardous Chemicals to leverage the weight of the coalition and further our impact on this important topic.
“Mitigating downside risk is only part of the equation – in addition to the work above, we are also looking to engage with companies providing opportunities on forever chemical removal and clean up. Forever chemicals are aptly named given their long chain structure prevents them degrading, and given their prevalence found in the environment there are significant opportunities available for companies which provide effective clean up solutions. As the legislative landscape evolves, solutions create substantial long-term business opportunities and engaging these companies to support investment outcomes is a priority.”
Jonathan Stinton, Head of Intermediary Relationships at Coventry Building Society: “World Earth Day is a reminder that even though the here and now is crucial to any business success, we have a collective responsibility in the mortgage market to work towards a greener and more sustainable future.
“Being a better business for the planet is something we’re motivated to achieve. We’re proud to be the first B-Corp certified building society and to have reduced our emissions by 34% over the last three years. We’ve been carbon neutral in our operations at the Coventry since 2021 and at the heart of our business is the commitment to be Net Zero by 2040. We’re committed to aligning with government targets and incentivising our customers to take positive, sustainable action.
“Our industry must also play its part in being proactive in combatting greenhouse gases. The data is clear – 17% of the country’s carbon emissions come from residential housing, yet the majority of homeowners (93%) and landlords (94%) are unable to correctly identify this figure, according to our research.
“Together, we must ensure consumers are equipped with the awareness, knowledge, and ability to confidently improve the energy efficiency of their homes. Brokers have a key role to play here, educating and directing customers to green mortgage options and using helpful sources of information such as Coventry’s Home Energy Efficiency Tool to build their clients’ understanding of which home improvements can have the biggest impact. At the same time, lenders must continue to innovate and offer customers an evolving range of green propositions, products, and initiatives to help them make their homes better for the environment.”
Duncan Goodwin, Fund Manager, Premier Miton Global Sustainable Growth Fund: “In a world of higher inflation and interest rates, the focus on cost alongside environmental credentials is changing the approach to greener plastic in our economy. As higher cost, lower impact plastics appear to have taken a step back in consumers’ minds, the drive for competitive, sustainable alternative solutions is becoming more important. We see a company such as Graphic Packaging, providing a viable, cost competitive, solution to plastic within the packaging industry.
“With a clear set of objectives to reduce the environmental footprint and sustainability of their own operations and materials, as well as moving towards 100% recyclability of their products, the company can lower the environmental footprint of packaging for a wide range of industries globally such as food, beverage and other household and beauty products.
“With a growing customer list among the world’s largest providers of soft drinks, takeaway food containers and beauty products, we may not notice the difference day to day of this shift, but that may well be the point.”
Lisa Lange, Associate Director – Engagement, EOS at Federated Hermes Limited said: “Plastic packaging has a key role to play in the global food system, protecting perishable items and extending the shelf life of fresh produce. However, this is exacerbating the problem of plastic pollution, with progress to reduce plastic waste driven mainly by recycling, rather than the elimination of single-use plastic.
“Recent estimates published by climate action NGO WRAP show the gravity of the current situation: worldwide around 141 million tonnes of plastic packaging is produced annually, of which around a third is not captured by collection systems, ending up as plastic waste in our environment. The production, use and disposal of plastic accounts for about 1.8 billion tonnes of carbon emissions each year.
“Investors are concerned that a failure to account for the negative impacts of plastic has resulted in numerous interlinked challenges – from acute environmental pollution and potential human health impacts, to substantial greenhouse gas emissions across plastics value chains. We believe that the linear, take-make-waste model for plastics has become unacceptable and companies reliant on this model will face substantial new commercial risks in coming years.
“In recent years we have seen increased awareness of plastic pollution risks at the companies in our engagement programme, including food retailers and producers. While we welcome the increasing awareness that single-use plastic packaging is a problem, in our engagement dialogue with companies we also emphasise that the life cycle of alternatives must be assessed as part of a comprehensive packaging and product design strategy.
“We want companies to demonstrate that they have considered the impact of their packaging strategies on their carbon emissions and the unintended consequences of switching materials or changing packaging designs. For example, glass is approximately twice as heavy as most types of plastic, resulting in a higher carbon footprint from transportation. Switching to paper packaging and cartons may give rise to a deforestation risk.
“Ultimately we expect companies to move from treating plastic as an externalised risk, to developing strategies that consider it as a resource requiring responsible management and value preservation – in partnership with suppliers, customers, processors and regulators.”
