Plastics have come under increasing scrutiny over the past several years. As public awareness of the impact of plastics on the environment grows and the sheer magnitude of the plastic pollution – on land and in the oceans – becomes increasingly clear, the calls for action have become ever more urgent.
A new report published by research network portfolio.earth now points the spotlight at a sector that, while playing a major, even enabling, role in the issue, has hitherto managed to escape attention. According to this report, between January 2015 and September 2019 banks provided $1.7 trillion (€1.39 trillion) in financing to forty key plastic chain actors. Despite public outcry over the serious impacts of plastic pollution, and efforts by some companies within the plastic value chain to reduce their impacts, the 20 banks providing the bulk of this funding to the industry have remained markedly silent.
In fact, not one of the banks analysed in this study developed any due diligence systems, contingent loan criteria, or financing exclusions when it came to the plastics packaging industry. This means banks are currently not taking responsibility to understand, measure, and reduce the impacts of their loans within the plastics value chain, the report’s authors conclude. By ‘indiscriminately funding actors in the plastic supply chain’, banks have failed to acknowledge their role in enabling global plastic pollution and have fallen far behind other actors that contribute to the plastic pollution crisis, the report says.
“Banks have fallen far behind the crowd of other actors that contribute to the plastic pollution crisis," said Liz Gallagher of portfolio.earth. "They have developed a limited number of policies on fossil fuels and forest products but nothing on plastic."
A South-East Asian survey commissioned by the United Nations found 91 percent of consumers in the region were concerned about plastic waste issues. Studies show that nearly half of all consumers worldwide now expect manufacturers to take a lead. Campaigns calling for extended producer responsibility are increasingly successful. Governments around the world have begun to introduce regulations to reduce the impacts from single-use plastic packaging and there is a significant upward trend worldwide in the amount of government policies and legislation. Partly in response, companies in the industry have made commitments and pledges to reduce the use of virgin plastics and increase the use of recycled or more sustainable materials. Yet none of the banks analysed in the study have made funding contingent on these pledges.
The banks that provided the bulk of finance included in the report are headquartered in the USA and in Europe. The ten largest financiers were Bank of America, Citigroup, JPMorgan Chase, Barclays, Goldman Sachs, HSBC, Deutsche Bank, Wells Fargo, BNP Paribas and Morgan Stanley. Together, they accounted for 62 per cent of the finance identified.
The authors of ‘Bankrolling Plastics’ call for a number of changes. Banks need to align their lending portfolios with public policy on plastic reduction, reusability, recycling and net plastic released to the environment. The funding of corporate actors within the plastic packaging supply chain should be contingent on companies implementing best practice. Banks should also be required to publicly report their historic and ongoing impact through their lending contribution to activities which create plastics waste in the environment and to cease the financing of new plants using virgin feedstock for the production of single-use plastic packaging for consumer products.
Governments can contribute by ceasing to protect banks and re-writing the rules of finance to hold banks liable for the damage caused by their lending; companies must adopt international best practice to reduce the production and use of virgin plastic and increase the reusability of plastic packaging.
In order to address global plastic pollution, banks will need to play a much more active role and lay the groundwork for a circular economy and significant reduction in the production and use of single-use plastic packaging.
The study clearly revealed that the largest lenders overall were also, with a few exceptions, the key lenders in the individual industry sectors. This means the efforts of a relatively small number of banks to make funding contingent on the implementation of strong corporate commitments to reduce and replace plastics could have significant positive impacts throughout the value chain.
“What the financial sector needs now is someone to step forward and say ‘okay, we’re going to take a look at plastics,’ and then others will follow,” said Robin Smale, director of Vivid Economics, a consultancy, which audited the report.
All in all, the authors say, considering the slow progress being made to adequately tackle the issue, banks have an opportunity and a responsibility to ensure that the recipients of their loans do not contribute to global plastic pollution.