Transcript provided by Kensho.

Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

Esther Whieldon: Plastics are a part of our everyday lives from water bottles to children's toys to the jars of food we keep in the fridge as well as in product packaging and more. And plastics are also in less obvious places such as medical equipment and the water pipes and air-conditioning conduits of buildings and homes.

Plastic production and the resulting plastic waste is slated to grow over the coming decades. And as we'll hear today, plastics post some major risks to human health, climate change and the environment. According to the UN, more than 400 million tons of plastic are produced every year worldwide.

But only a small share of that or less than 10% is currently recycled -- most of the rest is sent to landfills, gets burned or ends up polluting our environment. For example, every year, about 19 million to 23 million tons of plastic waste makes its way into our lakes, rivers and oceans, including as microplastics.

Lindsey Hall: Plastic pollution has been rising on the agenda of governments around the world in recent years, and this is in part driven by the UN's effort to develop an international treaty aimed at reducing plastic pollution. For 1 week, starting April 23, more than 170 countries from around the world will gather in Ottawa, Canada for a fourth round of UN negotiations, to craft an "international legally binding instrument on plastic pollution," including in the marine environment.

Now this is a big deal because if an agreement is reached, it will be the first time governments from around the world agree to address the plastic pollution problem, similar to how they agreed to address global warming through the 2015 Paris Agreement on climate change.

Esther Whieldon: Ahead of this gathering, we're launching many series on the topic. We'll explore the life cycle and impacts of plastics, what to expect from the upcoming treaty talks and what steps companies and investors are taking to address risks associated with plastics.

Lindsey Hall: In this first episode of the mini-series today, we'll hear from a scientist as well as 2 nonprofit organizations about where plastic comes from and how it's impacting human health, global warming and the environment. We'll also explore why recycling is only part of the solution.

To understand the connection between plastics and climate change, will talk with Aarthi Ananthanarayanan. She's Director of the Climate and Plastics Initiative at Ocean Conservancy, an environmental advocacy group based in Washington, D.C. Aarthi authored a study in 2023 that found most companies and their major institutional investors don't include plastics in their climate target. Aarthi talks about some of the steps companies can take to reduce their plastic risks and impacts, and she outlines how plastics are harming marine life.

Esther Whieldon: Okay, pop quiz, Lindsey. When you think about plastics, what's the first solution that comes to mind?

Lindsey Hall: Well, it's definitely going to be recycling. We have a big recycling bin right outside my house.

Esther Whieldon: Yes. And the same for me. Recycling is often the main focus around plastic waste. But as we'll hear from Richard Wielechowski, recycling plastics is only a small part of the solution. Richard is a senior investment analyst in the textiles program at Planet Tracker. Planet Tracker is a nonprofit think tank focused on sustainable finance.

But before we hear from Aarthi and Richard, let's turn to Dr. Philip Landrigan. Philip is Director of the Program for Global Public Health and the Common Good at Boston College, and he was lead author of a recent scientific study on plastics. Here's Philip, who starts off by describing his background.

Philip Landrigan: I'm a pediatrician and an epidemiologist. I have been involved pretty much all my adult life, professional life, in starting the impacts of hazardous chemicals on people's health, especially children's health. And I got specifically into the issue of plastics and their health impacts in the last 3 or 4 years, and that work culminated in the -- or at least hit a peak last year in the publication in March of 2023 of a big report called the Minderoo-Monaco Commission on Plastics and Human Health.

That commission was comprised of a highly interdisciplinary group of scientists from around the world, medical doctors, epidemiologists, oceanographers, economists, lawyers, policy people from the global North to the global South. And we looked at the impacts of plastics on human health across the whole plastic life cycle.

Esther Whieldon: So given that the study reviews the life cycle of plastics, I asked Philip to give us a sense of how plastics are made.

Philip Landrigan: About 99.5% of a plastic water bottle is fossil fuel based. There's 2 main components to every plastic, and they both come from fossil fuels. Firstly, there is what's called the polymer. That's the actual structure of the plastic, things like polyvinyl chloride, polyethylene, polypropylene, those are all polymers. They are big molecules made up of repeating carbon atoms.

And then inserted into that polymer are thousands of other chemicals that gives the plastic particular properties. So they may be dyes that give color, or phthalates affect the plastic flexible, or flame retardants that keep it from catching fire, or PFAS that enable the plastic to shed water and shed grease. And every plastic is a composite of those 2 elements, but they both come virtually in their entirety from fossil carbon.

Esther Whieldon: So we have an idea of where plastics come from. So can you give us a sense of the recycling rates? How much is recycled today of plastics? And what are the challenges to recycling?

Philip Landrigan: Well, I think something that a lot of people recognize is that less than 10% of plastic is recycled, probably, depending on where you are in the world, about 7% or 8%. And it's not because people aren't conscientious. I see students at our college diligently putting their plastic waste in the proper container all the time. The problem is with the plastics themselves.

Plastics resist recycling. They don't easily recycle. There's different kinds of plastics that cannot easily be mixed together. There are toxic chemicals in plastic that make recycled plastic unsuitable for all kinds of uses. And so the other result is that more than 90% of plastic either gets burned, ends up in landfills or gets shipped overseas to poor countries that have a plastic recovery operations. Where waste pickers, often children, little kids are going through dumps and picking out the stuff that they can recover and sell.

Esther Whieldon: Do you have a sense of the trajectory for plastics, its growth pattern, what's expected?

Philip Landrigan: Plastic production is increasing exponentially. It's grown from less than 2 million tons in 1950 up to about 400 million tons per year today. It's on track to double by 2040 and triple by 2060 unless we bend the curve. So basically, plastic production is increasing astronomically.

Esther Whieldon: Now while I was in Texas last month for the big CERAWeek Energy Conference, I also spent some time at the S&P Global World Petrochemical Conference, which was held just a few blocks away. Many of the panels I attended at the conference included speakers from oil and gas companies as well as chemical companies. And it was quite clear that the petrochemical industry expects plastic production to increase going forward, which aligns with what we just heard from Philip.

I should note that I also heard discussions at that conference about improving the recyclability plastics, creating new recycling processes and steps that companies are taking to reduce or offset emissions associated with that production. We'll hear more about these measures later in this many series. But let's return to my interview with Philip, where he outlined some of the key findings of the study.

Philip Landrigan: So the Minderoo-Monaco Commission looked at the hazards of plastic at every stage of the life cycle, and we broke it down that way. So in the communities where fossil-carbon is extracted by fracking, by oil drilling, by coal mining, there are hazards to the workers. Those workers are exposed to all the hazards associated with mining: explosions, toxic dust, injuries and accidents. 

And the people in those communities are exposed to all of the toxic materials that spill out from the oil wells and the gas wells. And the result is that they have increased rates of leukemia. Women have increased rates of miscarriage, stillbirth and low birth weight. There's increased asthma in the children. 

Then when plastic components are transported by truck, by rail, by ship. A lot of those materials are flammable and explosive. And that's what happened in East Palestine, Ohio, where a train with railcar tank cars, full of vinyl chloride monomer, which is a plastic chemical, tipped over and caught fire. The whole town of East Palestine was put at risk and had to be evacuated. 

Then when plastic is in use, when we buy plastic objects at the store, bring them home and use them in our homes, all of those chemicals that are in plastic leach out. They don't stay in the plastic. They get out of the plastic, they get into the house dust, they get into us. They get especially into children just because of children's behavior patterns. And those chemicals in plastic include a number of toxic materials, include carcinogens. They include chemicals that can damage the nervous system. They include chemicals that can disrupt the endocrine system.

Then when plastics are disposed, depending on where they end up, they can have hazards there. If they're burned, fumes are emitted and those fumes can be highly toxic and can contain materials like benzene, which causes leukemia, or dioxins, which causes a wide range of cancers.

Also the burning of plastics liberates more greenhouse gases. If plastics ends up in the oceans, then we have all the hazards that we've all seen in those pictures of turtles caught in fishnets and whales and seagulls with their abdomens full of plastic waste. 

So there's a paradox in that plastics have made our lives so much more convenient in so many ways. They've helped us to advance on so many fronts. I consider myself as a medical doctor, I don't think I could practice medicine without plastic. 

But at the same time, we're now realizing that plastics are just not as cheap, as convenient as we thought they were as they seem to be for so long. In fact, they have a dark side, and they have a whole range of hazards that are becoming increasingly visible as we move into the 21st century.

Esther Whieldon: Well, it's a pretty bleak picture you paint there. What are some glimmers of hope, if any, that you've seen on addressing this?

Philip Landrigan: Well, there's hope at several levels. At the local level, cities, towns, states in this country are beginning to take action. California has been a leader in this. They've passed legislation, which is banning many unnecessary uses of plastic. A lot of the local legislation takes aim at single-use plastics, stuff like plastic bags, or plastic food wrapping that are made to be really used just once and then tossed away.

Close to 40% of all the plastic that's currently being made in single-use plastic. And this single-use plastic contributes disproportionately to plastic waste, not surprisingly because it just gets tossed as soon as it's used. 

So one of the strategies that people like folks in California have been using is to distinguish between the essential uses of plastic, for example, the plastic that's used for vital purposes in medicine or the aerospace industry, and separate those essential plastics from the stuff that you just use once and then tossed that we really don't need.

And I think we're going to see more states move in that direction because right now, states are beginning to realize the plastics are costing them a lot of money. It's clinging up landfills. Cities, towns and states have to deal with that plastic waste. And the plastic producers are basically externalizing all those costs. They're basically doubling those costs onto municipalities along the states, and I think the states are going to start to push back.

There's also a hope at the international level. Two years ago, the United Nations Environment Assembly adopted a resolution to develop a global plastics treaty. And an international negotiating committee has been formed. That committee has met 3 times already and they're scheduled to meet again in Ottawa, Canada at the end of April.

And then moving forward, their target is to complete the development of the treaty by the end of this year 2024. So let's hope that goes well. It will be very important that the treaty be proactive that it really contain provisions that protect public health, that protect the planet. But if the intergovernmental negotiating committee gets it right, that treaty could be a powerful force for good.

Esther Whieldon: Great. And I know most of your focus is around human health. But can you talk about how plastics are affecting nature and biodiversity more broadly?

Philip Landrigan: Yes. Well, we actually had some people on the Minderoo-Monaco Commission who specialized in the ecologic effects of plastics. And in particular, we focused on marine effects. We had a couple of oceanographers from Woods Hole Oceanographic institution and the Monterey Bay Aquarium. 

And what they're finding is that plastics are polluting the planet. When plastics are discarded, they get into the environment. They break down over time into smaller and smaller particles, microplastics and nano plastics. And those microplastics and nano plastics move through the environment.

They get picked up by fish, by shellfish, by land animals. They get into the food chain and they eventually get into us. They get into us through our diets, they get into us through inhalation of the particles become airborne and we inhale them. There's still an awful lot we don't know about the health impacts of those microplastic articles. But we know that they can get into the human body, microplastic particles have been detected now in multiple human tissues in heart, in lung, in colon, in placenta, among others.

We know that those microplastic particles carry with them, all the hundreds of chemicals that go into plastics. And there is a big report in the New England Journal of Medicine, which is the very first report indicating that microplastic particles may actually be causing disease in humans. The report comes from Italy and a group of scientists at one of the medical schools in Italy, tracked patients who had undergone the removal of plaque tissue from inside their carotid arteries.

And they found that about 60% of the 300 patients who they examined had microplastic and anaplastic particles in their plaque tissue. 40% didn't have the particles. And they found that among the 60% of patients who had detectable micro and nano plastic particles in their plaque issue, it was twice the risk, it was a 200% increase in risk of heart disease or stroke or sudden death in the next 3 years. That's only one paper it doesn't prove cause and effect, but it's certainly a strong association and I consider it a groundbreaking finding that is going to move the field forward quite quickly.

Esther Whieldon: Thank you. I think you've covered just about everything and more. So is there anything you wanted to add?

Philip Landrigan: Maybe the one thing I could add is the economic dimension. So we had economists on the Minderoo-Monaco Commission led by Professor Maureen Cropper, who is at the University of Maryland and is a member of the National Academy of Sciences. And her team did their best to estimate the economic cost of plastic. And they look to cost under 2 broad headings. 

Firstly, they looked at the health cost of plastic production. What are the damages done in the communities where coal is mined and oil and gas are extracted, what are the hazards to the workers who make plastic. And they determined that about 170,000 deaths are caused worldwide due to plastic production and that the cost of those deaths is $592 billion in terms of health care costs and diminished economic productivity.

And then additionally, just looking at just the U.S.A., they looked at the health cost of the chemicals that are in plastic, the phthalates, the flame retardants, the bisphenols that get into plastics. And we know that those chemicals cause brain damage and children with loss of IQ. 

We know that phthalates in BPA increase risk of heart disease and stroke. And they came to the conclusion that in just one country, the U.S.A., the annual cost of diseases caused by the chemicals in plastic is the $675 billion.

So adding those 2 figures together, it's about $1.2 trillion per year. And we know that, that is a very significant undercount of the full damage of plastics because we were just looking at the cost of plastic chemicals in only one country. 

And it's very important to point out that right now, the plastics industry externalizes all of those costs. That they shift those costs on the governments on the citizens on the taxpayers. They don't, in any way, cover those costs. And I think the recognition that plastics are costing all of us a great deal more money than we thought we were paying for them is going to help move the debate.

Esther Whieldon: So we've heard from Philip where plastic comes from and some of the risks that it poses to health and the environment. We also heard him mention how different plastics are composed of multiple chemicals and materials, which can make some of them harder to recycle. This point was also brought up by our next guest, Richard of Planet Tracker. Here is talking about why recycling is only part of the solution.

Richard Wielechowski: Recycling isn't the answer. And by that, I don't mean that it isn't part of the answer, but it isn't the only answer. Too often, the plastics industry would like everyone, consumers, regulators, governments to believe that if we all just recycle and take responsibility for our own plastic waste then all of the problems of plastic will go away. That's not true. Recycling is a long way from being 100% of the solution, and we need to think about other elements if we're going to really address the negative environmental impacts of plastic pollution globally.

Esther Whieldon: So you say recycling isn't the only answer. Can you talk about the current hurdles to recycling plastics today, kind of what's holding us back from having higher recycling rates?

Richard Wielechowski: So I think there's a range of different challenges to increasing recycling rates. And I mean, I think, firstly, we have to acknowledge that, as it stands at the moment, there are some plastics for which recycling is either close to impossible or certainly very difficult. Secondly, there's obviously the issue, of course, of getting the plastic from its point of use and disposal to a point where it could be recycled. 

Now this is where waste management is critical. And sadly, in far too many areas, waste management, full stop, is either absent or not sufficient to deal with the volumes of plastic that we're producing. So there's a real problem in terms of dealing with our end-of-life challenge.

I think the idea that recycling can pick up 100% of the waste that's being produced is fanciful. Even with more investment, even with better technology, we're a long, long way away from recycling being the 100% answer to plastic pollution.

Esther Whieldon: Okay. So then what are some of the other solutions to plastic pollution?

Richard Wielechowski: The point we're trying to make is, it's not just recycling. It's not just the responsibility of municipalities or consumers. The industry that's producing the plastic needs to step up and take much more of a responsibility for the waste footprint that it's making. And what can they do? Well, there's a number of different things that they need to take on.

We would favor things like extended producer responsibility so that they have some sort of skin in the game when it comes to improving waste management, this a critical part of dealing with plastic pollution. 

I think we have to acknowledge we need to downscale our use of plastic where it's really not necessary. And we all know there's been a lot of focus, for instance, on single-use plastic, be that things like grocery bags or whatever it may be.

But moving away from those single-use plastics that then get discarded and have to be dealt with by waste management or end up in the environment, really moving away from that is a critical part of this. And that really relies on the industry accepting that and both to the production industry. But also the, I guess, the end users, we could think of something like the fast-moving consumer goods companies moving away from using plastic concern scenarios and trying to go towards more sustainable options, be that paper base, et cetera, et cetera.

So there are a range of different points or levers that can be pulled, but we need to think across the entire value chain, the entire use life of plastic from the moment of its creation all the way to the moment of its disposal if we're going to manage plastic solution better.

Esther Whieldon: So one term you mentioned was extended producer responsibility. Can you explain what that means and sort of how that would be used or applied?

Richard Wielechowski: Yes. Well, how it supplied will depend very much on different regulations in different areas, but the basic concept is that the producer of plastic or the user of that end user of plastic takes health responsibility for after its end of life. So currently, at the moment, if I go out and I buy myself a meal to eat for my dinner tonight and it comes in a plastic tray. There's been a producer who made the plastic resin. There's been a manufacturer who's made the plastic tray.

There's then been a company that's filled it with the food I'm going to eat my dinner, I use it and then I check it in the waste, and it's the responsibility of the municipality where I live to deal with that waste that I have handed to them. Extended producer's responsibility would say, well, actually, someone further up the chain who was involved in the production of this plastic has some level of responsibility and you can talk about which of those steps might be the one who is on the hook for it.

Let's imagine it's the company that's used it provided me with the meal that I've eaten. So maybe the kitchen company, whoever it may be, they would have some responsibility for helping to fund the solution that deals with the plastic waste when I've finished using it. So I would maybe still provide it to the municipality, but there might be some sort of tax or there might be some sort of regulation that would require the user or the company that's used that plastic to pay into or pay towards the solution, i.e., the municipality's cost of waste management.

Because at the moment, it's all falling on to municipalities, which tend to be the poorest part of the plastic value chain. I mean we can all think about local government or national governments. They don't tend to have a huge amount of spare money lying around to really improve plastic waste management, whereas the industry has got that money and EPR or extended producer responsibility is saying they should take some of their earnings, and it should be used to help manage the waste that their businesses are producing.

Esther Whieldon: Richard said plastic poses a long-term risk to companies.

Richard Wielechowski: At the moment, it would seem effectively that plastic is all the costs, if you like, of actually dealing with the plastic pollution waste has picked up by someone else because they're borne by society in terms of health impacts on humans or by the environment, which we'll see then play into sort of society more broadly as well. They're all picked up by someone other than the actual plastic producers. 

Why is that a problem? Well, we're not sure that, that's a sustainable or we're certain that's not a sustainable long-term solution. Those externalities at some point are going to come back to impact this industry. 

So we see these externalities these impacts, that's the plastic waste, that's the additives, the toxic impacts as an underappreciated and undervalued risk to the corporates who are active in this in the plastics value chain and to their investors. And when we've looked at this in the past, it really doesn't look like there's any sort of impact on the valuations of this sector for these risks.

And yet we see these impacts is becoming more and more likely to crystallize in the near to medium term, and that be that from regulation. There's also sort of local legislation. We can look at places like the EU around waste management that are starting to bring home the challenge of plastic pollution and start to make it a more of a risk to the corporates who are active.

And then there's litigation risk, as the health impacts become more evidenced by scientific data, I think that becomes more and more of a risk to these companies. It's a question of you'd be producing things that are potentially impacting fertility, potentially causing cancers, et cetera, et cetera. That's a risk to these companies longer into the future. So in our view, all of these challenges, these risks should be something that investors and the corporate should be thinking about and putting into the way that they value this industry.

Esther Whieldon: As we mentioned at the top of this episode, the UN is negotiating an international treaty on plastic pollution, including in the marine environment. Our next guest, Aarthi at the Ocean Conservancy, works with the intersection of plastics and climate change. She starts off by describing how plastics can affect marine and ocean life.

Aarthi Ananthanarayanan: Right now, there's more than a dump trucks worth of plastic going into the ocean every minute, right? And that is on track to triple the 2040. And I'll just start with the ocean is our life support system, right? It is what regulates our weather. It absorbs carbon, it produces the oxygen that we breathe. And one of the things about plastic in the ocean is that there's the potential for plastic to gum up that delicate system at every step along the way. It's also impacting a lot of the critical habitats and environments that we need for climate protection, right?

If you just think about coral reefs, 25% of marine biodiversity depends on coral reefs. They're already at high risk for bleaching from warming waters, and plastics drastically increase the incidence of disease and reduce the survival of corals, right? So you have this compounding impact in some of these critical habitats. Of the ocean biodiversity, we've already found at least 1,300 different species that have been impacted by plastic.

When I think about biodiversity, I have to link that to human health. I can't help but connect those two because if it's harming the fish and whales, it's only a matter of time until we figure out the connections of how it's also harming our own bodies. And there's increasing evidence that we are actually ingesting plastic and all of the harmful chemicals that they carry through the air we breath, through our water, through our food.

And my colleague at Ocean Conservancy, just published this study. What they found in that study was that humans may actually be consuming as much as 3.8 million pieces of microscopic plastic each year just from the protein we eat. And that's anything from seafood to fake meat. And to me, that's really worrisome because if you just look at the places where plastics are made, they already have some of the highest rates of cancer in the country.

I say these things about ocean biodiversity and our own health together because we can't look at any of these things in isolation, right? You have to think about climate and health and biodiversity together if you want to manage these risks. Because that's the only way you actually get to truly effective solutions, and that's also why we put plastic reduction at the top of that list.

Esther Whieldon: Aarthi went on to note how plastics contribute to climate change.

Aarthi Ananthanarayanan: Plastic also generates a lot of greenhouse gas emissions. Right now, it's about 3% to 4% of the global total, and that's growing really quickly. So what we see here is that it's a clear climate problem, but there is a real disconnect around plastics and public and private climate policies, right?

So if you just take the example of the inflation Reduction Act, the word plastic isn't mentioned once in 300 pages of historic climate legislation. And we're at a moment right now where we know that investors are thinking about climate risk as a financial risk. And so we want to think about if and how they're thinking about plastic.

Esther Whieldon: So the Ocean Conservancy launched a study seeking to answer how are companies and investors thinking about plastic.

Aarthi Ananthanarayanan: We looked at a climate commitments of 12 institutional investors and 28 of their portfolio companies. And when I said climate commitments, I'm thinking about things like net zero goals and the data that supports them. We looked at these 40 investors and companies.

And then we also looked at 15 group standards and frameworks that are used by these investors and companies to set their climate targets. So these are important framework documents that are driving that field of climate goals. 

And what we found is that plastics are missing. 11 out of 12 of the investors we looked at and 25 out of 28 of the companies didn't include plastics in their climate commitments. The other big takeaway that we got from this was that the commitments don't actually give investors the transparency and data they need to be able to understand the risks associated with plastics. 

So in broad terms, when you're thinking about the climate risks associated with plastics, you have to know how much, what they're made of, where they're coming from, and where they end up. And a huge part of that is understating Scope 3 or supply chain emissions. And most of the climate commitments were reviewed didn't include full reporting of Scope 3. And that means you can't manage what you don't measure.

Esther Whieldon: Can you give us a sense of the pool of companies and investors you looked at and how you narrowed that down?

Aarthi Ananthanarayanan: We started that by looking at the research that the Minderoo Foundation put out called which is called the Plastic Waste Makers Index. And they looked at some of the largest producers of single-use plastic as well as the investors in those companies. And then we also looked at companies that were involved at other points of the plastic supply chain. So these are container manufacturers, retailers that are selling a large amount of plastic products. So we picked representative companies from each part of the value team and then looked at the investors that were most exposed across those companies.

Esther Whieldon: From your experience covering this topic and dealing with this issue for a number of years, how aware would you say companies and investors are about the risks of plastics?

Aarthi Ananthanarayanan: That's a great question. There is just a huge gap in the understanding of plastic. There is a common misconception that plastics sequester carbon. And this was something that you even saw in some of the targets -- the standards and frameworks that are coming out from people who are trying to do the hard work of figuring out how to transition companies to a low carbon economy.

And even in those standards, they have statements like "plastics are a great transition for oil and gas" and "plastic sequester carbon and therefore, have no greenhouse gas emissions associated with them." So there's a lot of misinformation out there about the actual climate risks of plastic, and we're seeing those propagated within the investor space and also within the policy space.

Esther Whieldon: Thank you. So why should companies and investors care about plastics?

Aarthi Ananthanarayanan: Well, I'll start with climate-related financial risks. And by that, I mean, how climate change impacts financial performance. And when you think about plastics, there's a pretty wide range of risks, right? First, you've got the plastic production facilities themselves. And in the U.S., they're mostly located along the Gulf Coast, in the path of stronger hurricanes and extreme weather. And if you combine that with toxic chemicals at major industrial facilities, you've got a recipe for dangerous accidents or environmental disasters.

And then there's the emissions piece. And what's driving emissions is production and disposal. Plastics are incredibly energy-intensive to produce. And it's a sector where we're way behind on reducing emissions. It's been in this category of "hard to abate sectors" and plastics are way behind. And actually decarbonizing plastic production is really expensive.

And on top of that, it's estimated that we could burn half of all plastic waste by 2050. So that, of course, means more emissions at the disposal end of the life cycle that we don't have a plan for. 

So if you're a company that's navigating new disclosure rules or climate policies, that's something you need to pay attention to. I'd say the policy space in plastics is changing really quickly right now as well, and we're in the process of negotiating a global agreement on plastics. People are calling the UN plastics treaty, which is basically seen as a Paris Agreement for plastics. And what we can expect is this is going to have implications for what plastics are made of, how they're used and where they end up. We don't know where that's going to land, but it will definitely have impacts.

And then on top of that, not a day goes by without a new story about the dangers of plastic, right, how they contain harmful chemical additives, how they're showing up in everything from sea turtles to our own bodies. There's growing reputational and legal risks that are pointing to some of the foundational issues of the industry. And when I look at all of that together, if I were an investor, all of this would be a flashing red light winning to the need to take stock of all of these financial risks in the plastic value chain.

Esther Whieldon: Great. Thank you. So what can investors do to manage these risks?

Aarthi Ananthanarayanan: Well, I think the first thing you need to do is to get your arms around having the data that allows you to understand and manage the climate risk of plastic, right? You just know how much, where they come from, what they're made of, and where they end up.

And then for the companies that they're overseeing, they need to be sure that the climate plans that they're looking at address plastics, look at petrochemicals as a high emission sector and are looking at plastic reduction as a piece of that climate target or goal that's being set. And when you're looking what the solutions are, need to have sort of a combination of making less, managing better and cleaning up plastics.

Esther Whieldon: Okay. And then what can the companies do?

Aarthi Ananthanarayanan: So I'd start with this making less piece. And part of that is just that reducing plastics is the cheapest way to reduce emissions. And when they're thinking about making less, it's important to understand that you can't go from one single use problem to another. We can't just all choose the alternatives to plastic on the basis of climate. You'll see a lot of life cycle assessments that are going to be looking at a really narrow frame of, okay, we replace this other thing, and on a planet basis, that's better. But we have to think about biodiversity and health impacts hand-in-hand because all of these are interconnected issues. 

When we think about managing better, that means for the materials I do need to use, we have to maximize materials efficiency and recovery. So planning for products that allow innovation in the way we're delivering products. Think about what you see with dry soaps, laundry detergents or reusable cups at sports stadiums, right? Like we mean that innovation in terms of product delivery. 

We also need innovation in terms of the design of products from the start to be recyclable, to be reusable or long lived. And we need to do that product redesign with an eye towards the toxic additives that are currently in plastics as well. And it also means supporting the policies around climate and plastics that actually create incentives and a level playing field. 

I mean, plastics are dangerously cheap right now, and that is because they are subsidized by the production of oil and gas. And so it's very hard for any alternatives to compete with plastics, and we need that type of innovation to be able to compete in order to actually shift the trajectory we're on. 

And then cleaning up is obviously a big piece of this. We see this in the climate space with all of the work around carbon removal. We have to think about plastics in that way as well, right? And part of that is being able to take responsibility for the plastics created by a company's business activities.

And when you're doing that, you need to think about the end of life and strategies for dealing with that, that doesn't rely on the use of high emission technology. So this is something like incineration or waste to energy or chemical recycling which are all essentially using plastic, which is oil as a fuel.

And it also means thinking about the communities that are impacted by plastic and trying to figure out opportunities for just transition for the workers in those communities and for the people who have been hurt by plastic waste and production in those spaces. So making less, managing better, cleaning up, are the 3 tenets of what we have to do here.

Esther Whieldon: Thank you. I think we covered just about all the topics I wanted to. Was there anything we didn't get to that you wanted to mention?

Aarthi Ananthanarayanan: Just like a closing thought is that the climate news coming out right now is pretty dire, and plastics are often looking at choices between bad and less bad. And I think we need to think about this challenge differently, right? We have to see it as an opportunity. And we've done a lot of that work in the climate space already, but we haven't included plastics in that conversation yet.

And I think that we can break our minds out of the idea that we're sort of on this inevitable trajectory with plastics and instead, we're planning for a future where what's good for investors, is also good for our climate and our health and our ocean, there's a different range of goals and commitments you make. There's a different type of innovation that you actually be thinking about. And those are the conversations we need to be having right now because that's, honestly, in my opinion, the only thing that gives us a fighting chance.

Esther Whieldon: What Aarthi said just now about how we have to reframe the discussion around solving the plastic pollution and emissions problem really stood out to me.

Lindsey Hall: I'd also like to point out what she said about how would we consider solutions, we have to think of them holistically across the spectrum of health, social aspects, climate and environmental implications and benefits. That's a theme we've talked about quite a bit on this podcast, how we can't treat sustainability issues in silos.

Esther Whieldon: Please stay tuned for part 2 of the series on Wednesday, where we take a look at the forthcoming end plastic treating negotiations.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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