Plastic Profits: 8 1

Disposable plastics, indispensable planet

English summary

FACING FINANCE | DIRTY PROFITS 8 | 2020 Contents

Summary: Companies and banks are in the same boat – and it’s made of plastic

Plastic – the last straw?

Plastic: here to stay The plastic journey: from oil and gas to waste Industry initiatives – greenwashing or rethinking?

Methodology

Features Shell’s plastic complex in Pennsylvania Let’s set the record straight and #breakfreefromplastic

Harmful investments

Financial research

In dialogue with European banks

Recommendations

Sources

Disclaimer: This report is a summary of the German Report Dirty Profits 8: Einweg ohne Ausweg? Plastikprofite von Banken und Konzernen und ihre Folgen für die Umwelt.

The full report can be downloaded here: dp8.facing-finance.org

Cover picture: The three-year-old polar bear Aurora plays with a plastic Coca-Cola bottle in Royev Ruchey Zoo, Krasnoyarsk, Russia (2013). © Ilya Naymushin, picture alliance / Reuters. Microplastics in the seas now outnumber stars in our galaxy. From remote islands to the Arctic, nowhere is untouched. If present trends continue, by 2050 our oceans will have more plastic than fish.“

António Guterres, Secretary-General of the United Nations

3 8 | 2020 PROFITSFINANCE | DIRTYFACING

FACING FINANCE | DIRTY PROFITS 8 | 2020

plastic

and it’s made of it’s made and

are in the same boat – boat same the in are

Companies and banks and Companies Summary: Summary: 4 UniCredit UBS Santander ING HSBC Deutsche Bank Commerzbank BNP Paribas IN MILLIONSOFEUR 28 511 10 651 24 655 11 456 21 693 16 905 3 341 7 161 7 756 2 404 7 714 3 293 520 43 43 72 IN MILLIONSOF FINANCING 94 566 EUROS 42 115 20 199 24 205 8 049 European banks contribute to andprofit from global plastic pollution through theirinvestments andfinancing. IN MILLIONSOF INVESTMENTS 51 653 EUROS 28 434 17 888 3 079 2 251 Consumer goods sector E-commerce TOTAL Chemical industry Oil andgas sector * Differences due to rounding.

T 2020 andwhoseeffects endanger thesocialandeconomic lives of without demandinganyenvironmental minimumstandards, total waste produced hasthusendedupinlandfillorsomewhere tonnes ofwaste thishasproduced, only9 percent hasbeenrecy- this report. Thisconnectionthis report. isvisiblealong coastlines andinother tics comes notfrom medical technology thetransport oreven Worldwide, single-use plasticmakesWorldwide, single-use uparound half of allplastics for people,nature andtheclimate go far beyond littering, asthis and reliable but alsocheap. among themostusedmaterials. They are notonlyversatile, light these banks make money outof plasticsandexacerbate the terprises like Coca-Cola orNestléto place bonds.By doingthis European plasticproduction, isusedby thepackaging industry. Despite thecoronavirus pandemic, thegreatest demandfor plas in nature. Despite thesealarmingfigures, there hasbeennosuc Plastic isbothacurse andablessing.Theongoing coronavirus Nestlé andPepsiCo thatpollutes thelandscape. Theconsequences infusion bags andpersonal protective equipment–plasticsare gas into plastics. business model.Amodelthatisbased onfast, short-lived and most remote spotsintheworld, isinlarge part aresult ofthis produced. relief. Today’s surgeries andhospitals are completely dependent people allover theworld, hasbrought thiscontradiction into sharp pandemic, whichhadinfected over 80millionpeopleby theendof report shows. 8.3 billion tonnes ofplastic since the1950s.Of6.3billion On theotherhand,plasticscorporations have produced over sector orconstruction. Thelion’s share, around 40percent of Quite thecontrary, worldwide plasticproduction isrising.Numer continuous consumption –andconsequently leads to greater ever ous new productionous new facilities are springingupto transform oiland cessful process ofrethinking abouthow to avoid plastic inindustry. cled andanother12percent incinerated. on plastics.Inmodernmedical equipment–ventilators, syringes, little to curbtheplasticpollutionthey cause. environments intheform ofproduct packaging from Coca-Cola, quantities ofcheap, disposableproducts. Theseare thesubjectof crisis. Allfourteen companies examined inthisstudydofar too companies like ExxonMobil andShell,lendto chemicals producers suchasBASF andIneos, andhelpconsumer goods en- pollution caused by companies. They invest incommodity his studyexamines eightEuropean funders of theplastic industry. Banksplayacentral role intheglobal plastic 4 Global plasticpollution, whichcan befound atthe 1 2 Almost80percent ofthe - 3 -

- The research focused onatotal offourteen companies thatplaya THE ROLEOFBANKS years madeatleast someimprovements to theirsustainability tempo. who are failing to meet theirresponsibilities withtheirsingle-use tal responsibility into account. Justasfinancingandinvestment as to whichcompanies receive however, money shouldnot, bea Faced withpressure from thepublic,manybanks have inrecent Nemours**, whosynthesise theraw materials; theconsumer goods Eni, ExxonMobil andShell*,whoextract oilandgas –withoutwhich impact tomorrow’s world. Sobanks can alsocontribute to over Banks playacentral role inthe global plasticpollutioncaused guidelines inrelation to climate change andhumanrights.Butthe has acomprehensive –eitherinrelation plasticpolicy to individual plasticstrategymentary available to thepublic.Noneofbanks plastic problem hasso far played virtually norole inthevoluntary like global warming andplasticspollution,today’s decisionswill retailers Amazon andAlibaba withtheirpromise ofround-the-clock plastic products cloggingupourplanet; andfinallythetwo online plastics cannot beproduced; BASF, Ineos,Dow andDuPont de purely economic one.Itshouldalsotake socialandenvironmen- by theplasticsindustry. Plasticscorporations are part ofthereal ** * significant role inglobal plasticpollution:theenergy corporations consumer goods industries,oraboutthewholeplasticlifecycle. eight banks investigated, theDutch INGGroep, arudi- haseven commitments madeby thefinancialinstitutions. Onlyoneofthe coming contemporary andfuture crises. consumption, whichare increasing thefloodof packaging in record corporations Coca-Cola, Nestlé,PepsiCo Mondelēz, andUnilever, economy like but, allcompanies, they needcapital. Thedecision downstream industriessuchasoilandgas oronthechemicals or decisions mademanyyears ago are playingoutincurrent crises it is not always possible to distinguish them clearly. Dow and DuPont de Nemours are discussed together: their history of mergers and splits means Shell is discussed in the feature “Shell’s Plastic Complex in Pennsylvania” on p. 25. 5 -

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 6 Investments 51 653 These four banks, taken together, have provided billions financinginthedouble-digit to The financial research carried out for financings between early2017andOctober 2020and The banks selected for financial research were themajorEuropean banks BNP Paribas, This amountsto justunder65percent of theidentifiedfinancial relationships. Fresh this can beattributed to thesebanks’ lower overall balance sheet totals. finance volume isaccounted for by HSBC,DeutscheBankBNPParibas andSantander. Since 2017,theeightselected European banks have provided atotal of 95billion euros under examination during theperiodofstudy, andBNPParibas hasfinanced almost all Financing acompany isconsidered thestrongest form ofsupportfor economic activities investments asofOctober 2020 show anextremely highvolume of businessfor theeight A muchlower finance volume was recorded for Commerzbank, UBS UniCredit, andING,but because itdirectly increases thecompany’s funds. Almost80percent oftheidentified Amazon. banks alsohave particularly profitable holdingsinthemail-order companies Alibaba and FINDINGS FROMFINANCIALRESEARCH RELATIONSHIPS FOUND VALUE OFFINANCIAL Commerzbank, Deutsche Bank(includingDWS), HSBC,ING,Santander, UBS andUniCredit. of them. each ofthefirmsinthisstudy. DeutscheBankandHSBChave financed allthe companies capital was provided in theform ofparticipation inloans andissuance ofshares andbonds. euros. WhileNestléandExxonMobil were thelargest recipients ofcredit financing,the banks thefourteen vis-à-vis companies researched, amountingto over 146billion in capital to the14selected companies for thefinancing of theirbusinessmodels.

in millionsofeuros Financing 94 566 Total financing of the fourteen companies Total investments in thefourteen companies Santander Santander UniCredit UBS with highinvestments inthemail-order retailer Alibaba. Over half UBS UniCredit ING HSBC Deutsche Bank BNP Paribas ING BNP Paribas providing themwithcapital. Aslongasthisisthecase, they cannot policies andprocesses thathave beenestablished andpublished In capital highinvestment volume investment, ofalmost HSBC Deutsche Bank Considering thescale ofthefinancial relationships found, the GESAMT 52 million euros can beseenacross allsectors intheform ofheld Commerzbank environmental protection andavoidance ofplastics,banks are on thesubjectofplasticare inadequate. Withoutpractices for particularly incontrast prominent, to itspresence infinancing, Commerzbank GESAMT shares andbonds. At 29billioneuros, theSwissbank UBS of allshares andbonds found are heldby UBS. ButDeutscheBank, deliberately supportingcompanies thatproduce oruseplasticsby from January 2017tofrom October January 2020inmillionsofeuros as

of October 2020inmillionsofeuros of shares Issuance 2 333 388 938 373 317 317 is the banks withthelowest balance sheet totals, are thesmallest the companies inthestudy. ING,UniCredit andCommerzbank, the study. Moreover, allfour ofthesebanks have invested inall a responsible circular economy withtheultimate goal plastic of are currently andto developing alignthemwiththeprinciplesof all banks to overhaul commitments they have already madeor avoidance. investors –interms ofboththeamounttheirholdingsand the claim to befollowing aresponsible investment policy. Wecall on number offinancial connections to thefirmsin study. HSBC andBNPParibas alsohave large holdingsinthefirms

Bondholdings of bonds Issuance 12 964 10 916 13 166 54 053 1 918 7 056 2 216 1 115 1 977 4 701 728 954 145 147 3 Shareholdings Lending 11 318 27 558 49 676 38 181 10 727 1 290 7 588 3 148 2 143 3 595 1 125 5 601 5 521 7 567 517 43 43 72

FACING FINANCE | DIRTY PROFITS 8 | 2020 RitaE, pixabay.

We believe in a world where the land, sky, oceans, and water is home to an abundance of life, not an abundance of plastic, and where the air we breathe, the water we drink and the food we eat is free of toxic by-products of plastic pollution.

In this world the principles of environmental justice, social justice, public health, and human rights lead government policy, not the demands of elites and corporations.

This is a future we believe in and are creating together.”

Break Free From Plastic

DIRTY PROFITS 8 | 2020 PROFITSFINANCE | DIRTYFACING 8 T

the last straw? Plastic – 1970s. the burgeoning consumer society. Thesupplychainswere straight and floats inthesea currents around theGalapagos Islands.Plastic irresistible rise of plasticsbegan. quicklyrecognised Industry the is anunwanted ingredient inthediet ofhumansandanimals. model ofdisposablepackaging, based onshort-lived butfrequent lines. Whenpackaging orbottleshadbeenusedonce, they went potential ofthis cheap material anditsvalue andimportance for As theworld strove for affluence after the Second World War, the life. bag of25minutes, theproblem isconstantly present ineveryday resulted inanall-pervading global pollution.Withtheestimated Antarctic embeddedinice floes, rains over theGrand Canyon locations. Plasticrustlesinthesnow ontheAlps,driftsaround the

straight into thebin.By neglecting thepossibilityofreuse orrecy- service life for atakeaway coffee cupof15minutes and for aplastic consumption, eventually came to dominate worldwide by thelate cling, corporations were savingthemselves effort –andmoney. The 6 plastic iscovering coasts, fieldsandcities.Themarch he world isdrowning inplastic.Anever-growing layer of of 5 Theremorseless march ofplasticshadbegun, andithas plastic doesnotstop attheworld’s even mostremote (2017). Republic Czech consumption, plastic our of Excesses vchal, iStock. Scattered across bodiesofwater orland andconsumed by living Seabirds andturtles, for example, often mistake someoftheeight the environment, withnegativethe environment, effects ontheoceans andmarine to thirteen milliontonnes ofplasticthatendsupintheoceans fall sickbecause ofmarinedebrisandthebacteria thatcolonize as whales,dolphinsandsealions, dieeach year because they eat used asfertiliser inagriculture, asartificialfibres shed bysynthetic inhabitants, theclimate andthehabitats ofhumansandanimals. Plastic pollutionmanifests itselfintheaccumulation ofplasticsin its way into thehuman body. Whenoilandgas are extracted and into theenvironment notjustasdirect waste butalsoassludge in roughly similarquantities–itiseverywhere. in fish,sugar, water salt, orbeer–according to conservative Ellen MacArthurFoundation , by 2050there maybemore plastic,by roads by rain. But it is not just in microscopic form that plastic finds plastic orget caught infishingnets andsuffocate. plastic surfaces. mass, thanfishinthesea. particles ofmicroplastic peryear. Wetake plastic inthrough theair

clothing in the laundry orastyre-wearclothing inthelaundry particles washed offthe ecosystems andanimalplantspecies. can bewashed across theoceans onplasticwaste andharmnative ocean floorwhere we cannot seeit. estimates, each ofusconsumes anaverage ofaround 50,000 creatures, thenext destinationfor plastic isourplates. Whether each year for food, andstarve. 11 Mostoftheplasticwaste intheseas sinksto the 13 8 David J. Martin, shutterstock. shutterstock. Martin, J. David Over 100,000 sea mammals,such Seal with plastic in Britain. Britain. in plastic with Seal 12 According to estimates by the 10 Delicate coral colonies 14 Itmakes itsway 9 Invasive species

9 7

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 The plasticcrisiscan neitherberecycled away norovercome with various toxins suchasbenzene, heavy vital for theworld’s climate, theprecautionary principlemustkick the carbon into thedepths.Because theoceans absorb around 25 too. Itsmanufacture intheextremely whether microplastics harmthisbiological process, whichis so transported, refined andprocessed technological inventions. To tackle theproblem, plasticmust the Paris climate goals. According to thecalculations ofthecivil from atmospheric carbon dioxide into theupperwater ofthe levels from plastic in sight. Quitefrom thereverse: plasticinsight. theplasticboomcontinues uninterrupted. More produced thanhalfofallplasticever has until 2050. impact onthe“trees oftheocean”: phytoplankton. Plastic causes harminotherways, into plastic,whentheresulting in theglobal climate. industry andtheextractionindustry ofitsraw in. Thepotential harm istoo great. Because once plastichasbeenproduced, itisthere to stay. Almost it willconsume over 10percent ofthetotal CO if plasticsproduction continues onitscurrent growth trajectory, increase isincompatible plannedby theplasticsindustry with greenhouse gases are produced. Withoutaresource-saving circular metals anddioxins. products are consumed andthen Another climate-related danger thatscientistsfear isthenegative harms theclimate. When thematerial isincinerated –aprocess not decompose innature. percent ofanthropogenic carbon dioxide, they playacentral role photosynthesise, theseorganisms take thecarbon thatdissolves materials, oilandgas, contribute to production could have almost quadrupledagain. been manufactured inthe21stcentury. be systematically eliminated, rightfrom thestart ofitslifecycle. 80 percent ofthetotal plasticwaste produced before 2015has sea andtransform itinto biomass.Whenthey die,they sinkwith society organisation Center for International Environmental Law, economy, theefforts to avert theclimate crisisare undermined. euphemistically called “waste-to-energy” –huge volumes of climate change. energy-intensive plasticprocessing ended upinlandfillorsomewhere intheenvironment. disposed of, peopleare exposed to 10 17 Butitisnotjustthemanufacturing process that 16 Theproduction 15 19 Untilthere isconclusive evidence about 21 Nonetheless, there isnodeparture 22 By 2050,annualplastic 2 budget available 23 18 Whenthey 20 Itdoes 1,000 US dollars pertonne ofplasticandismadeupquantifiable with “100percent recyclable”. Butthisenvironmentally friendly to conventional plastictoo. Bioplasticismadefrom vegetable the statistics have longshown thatwaste sortingandrecycling factors suchasCO are externalising asignificant part oftheir costs to society. are notasufficient answer to thecrisis.Secondly, corporations Manufacturers inthewestern hemisphere like to advertise is recycled. industrialised monocultures. At theendofitslife, bioplastic it does.Ifthere isashift towards paper packaging, this would generally doesnotbiodegrade, thoughitsnameimplies even be recycled. Worldwide,only14percent ofplasticpackaging materials, such assugar cane, whichmostlygrow inhighly p. 15). Andthere are problems associated withthealternatives mean increased deforestation. Plasticpollution,like theclimate plastic waste andthecost ofcleaning theoceans. According to estimates by CarbonTracker , thisamountsto atleast sounding attribute does notmean thispackaging willactually systems, itissimply distracting from itsown responsibility. Firstly, champion ofrecycling, thepercentage isnotmuchhigher(see consumers orstates waste withoutwell-developed management crisis, isastructural shiftstheblame problem.to Ifindustry Microplastics found on the beach (2019). (2019). beach the on found Microplastics 24 Even inGermany, often extolled asa world 2 , airbornetoxins, collection andsortingof vchal, iStock.

25 – asresponsible, before governments (24percent), consumers (19 percent) andtheretail sector (7percent). So far, theirstatements ontheplasticcrisishave beenlittlemore than aspirations. Butallover theworld, peopleare demandinga as unpopularplastic.65percent ofconsumers associate plastic WWF International, theEllenMacArthurFoundation andBoston in autumn 2019inwhich65,000people24countries were Consulting Group come to thefurther conclusion thatnomaterial is percent) primarilyseethereal plasticpolluters –thecorporations not accept thisnarrative. Thelargest proportion ofrespondents (48 recycling-averse consumers, shows thatconsumers the survey do place. Whilecompanies allocate blamefor plasticpollutionto approach.new According onplasticwaste to asurvey published Corporations inarange ofindustries–includingoilandgas, concerns worldwide, andinEastern Europe andAsiais infirst chemicals andconsumer goods –are stillchoosingto useplastics. questioned, plasticwaste ranks second amongenvironmental directly withthe pollutionoftheseas; 57percent consider ittoxic. 26 In a joint report, Inajointreport, Protest on a landfill site in Jakarta, Indonesia (2019). (2019). Indonesia Jakarta, in site a landfill on Protest Creativa Images, shutterstock. Since 2015thisfigure hasmore thandoubled,whichunderlines (115 countries) orplansto enactsuchlawsby 2021(22countries). the listcovers 70percent ofsea waste. Themixofmeasures, for plasticexports intheBaselConvention. for packaging-free shops.Inearly 2020there were already 190such addresses theten plasticproduct residues mostcommonly found as littleplasticpackaging aspossiblewhenshopping.63percent use andthepromotion ofthecommon good isthestrong demand European Commissionenacted plasticdirective asingle-use that it seemssafe to assumethey willnotbefobbed offwithineffective both theurgency ofinstituting legal change andthereadiness to regulations andgovernment projects around theworld. Inatotal may bethepoliticsofsymbolism,butitforms part ofalonglist reusable orsuitable for cost-efficient recycling by 2030.In2019,the plastic packaging brought into circulation intheEUmarket iseither for PlasticsinA Circular Economy andthetarget ofensuringall buy brands thatreduce theirenvironmental 75percent footprint. percent ofconsumers feel better, ortend to feel better, whenthey plastic thatquestionedalmost20,000peoplein28countries, 75 measures indefinitely. According about to a2019Ipsossurvey parts ofthepublicclearly have anegative perception ofplastic,so businesses inGermany;another180were intheplanningphase. lower personal plasticconsumption. Governments have alsobeen active. Banningplasticcarrier bags Commission took further steps, for example theEuropean Strategy Consumer goods companies needabroad customer base. Large said they would beprepared to go to adifferent shopifthismeant of 137countries there are eitherexisting plastics lawsonsingle-use consumers’ desire for businessmodelsbased onlower packaging on European beaches aswell asabandoned fishingequipment; of those surveyed alsowanted,of thosesurveyed ortended to products want, with do so. 29 Inaddition,inMay2019187states agreed onstricter rules

which includesbans, extended producer with completion scheduledfor December 2024. as well assomecompanies, have longbeen In addition,there are plansfor on aplasticslevy introduced successively inallmemberstates responsibility and increased recycling, isbeing non-recycled plasticwaste intheEUfrom 2021. prevention ofplasticpollution. Governments andcivilsociety organisations, calling for acomprehensive UN convention on 27 Aperfect illustration of 30 In2018,theEuropean 32 11 28 31

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 This jointdeclaration iswelcome butshouldnotbe years ago, whichbegan ofchlorofluoro thephase-out with toxic additives, andreuse systems andacircular to curb. Improvements inwaste management are to learn from: theMontreal Protocol, signedover 30 for reducing plasticpollutionworldwide, along with for the first time, they called for a UN treaty on plastics. and nationallegislative projects unnecessarily. an international agreement butimplementthemlo anisms, itbecomes possibleto formulate measures in and planningcertainty. There isalready onemodel used asanexcuse to delayindividualcompany targets Plastic pollutionisaworldwide problem andneedsa In October 2020, someofthecompanies researched itoring ofcompliance. Plasticproducts thatare diffi- PepsiCo –drafted andUnilever a manifesto inwhich, ing plasticuse.There needs to beabindingtarget in thisreport –BASF, Coca-Cola, Nestlé, Mondelēz, reduction plans andsolidarity-based financingmech- be contained ifthere isaglobal agreement onavoid- long since grown too vast for individualmeasures plastic placed dailyonthemarket worldwide has is longoverdue! solved by anyonecompany. Themassofsingle-use standardised procedures for measurement andmon- ernment orcivilsociety organisation. Norcan itbe of ourenvironment cannot besolved by anyonegov cross-border solution.Theever-increasing pollution cally. economy mustbepromoted. Withnationalactionand cult orimpossibleto recycle mustberestricted, along of plasticbeingproduced. Plasticpollutioncan only essential, butcannot keep upwiththesheervolume ozone layer. carbons (CFCs) andthuscurbedthedestructionof A UNconvention onplastic 12 33 Harmonisedlegislation offers companies legal - - 34 -

2027. Itsanalystsseetoo wideagulfbetween, ontheonehand, warned ofavast miscalculation (totalling upto 400billionUS the demandfor plastic–asforecast by CarbonTracker –shrinks,in their emissions, the plastic industry shouldnotbeincreasingtheir emissions,theplasticindustry the take ofplasticsandset aholisticview avoidance ofsingle-use transformation to acircular economy andto aneconomic their bottom linelater –ifthey blockthetransformation orfail to While consumers andsomegovernments are clearly turning away When banks provide capital to plasticscorporations without from plastics,thepetrochemicals single-use remains industry actively supportit. also banks thatwillsuffer losses– to theirimage now and to and, ontheother, theprioritiesofconsumers andgovernments. until 2040 – and the industry sometimes placesuntil 2040–andtheindustry thefigure at3 to 4 It istherefore inbanks’ own interests to actquickly. They must Financial experts from thethinktank CarbonTracker recently However, associeties place higherdemandsandgovernments imposing anyenvironmental standards, they blockthe incompatible withtheParis climate goals. is inevitable, notonly because plasticwaste intheenvironment industry’s expectations ofplasticasthelastdriver for oildemand Energy predicts Agency percent anannual2 increase inplastic remarkably positive initsforecasts for theoilandplasticmarket. line withaturn towards acircular economy. Suchatransformation legislation,plan new along-term scenario isemerging inwhich little incentive to avoid it. manufactured plasticischeap, theconsumer has goods industry lifecycle. At atimewhenallindustries are beingrequired to reduce plastic asacondition ofallloans andinvestments alongtheplastic percent. ButCarbonTracker expects demandto begin stagnating in plants are continuously thoughthere beingbuilteven isalready production capacities. Quite thereverse; petrochemicals new have aninterestnor thechemicals industry inlower plastic

And ultimately itisnotonlycompanies inthereal economy but system based onsustainability. Neitheroilandgas companies stagnate orcollapse, builtfactories thenewly willbeworthless. can nolonger actually beconverted into money. emissions values ofportfolios. Ifplasticdemanddoesindeed over-capacity, whichresults inlow prices. dollars) instranded assetsthat is,assets – stillonthebooksthat directly harms habitats butalsobecause production increases are 37 And when newly Andwhennewly 35 TheInternational 36 Total financing of the fourteen companies from 2017 January to October 2020 (Lending andissuance ofshares andbonds) (Bonds andshares held) Investment flows as of October 2020 Deutsche Bank:11456 Deutsche Bank:21694 Commerbank: 2405 BNP Paribas:16904 BNP Paribas:3293 Commerbank: 2 Santander: 10651 UniCredit: 3341 Santander: 518 UniCredit: 43 SBC: 24653 SBC: 14 UBS: 28510 UBS: 160 ING: 5 ING: 43 in millionsofeuros

in millionsofeuros

Eni: 339 ExxonMobil: 132 Shell: 1009 Alibaba: 14882 Mondelēz: 1527 Ineos: 48 Amaon: 13551 PepsiCo: 3112 Coca-Cola: 2822 Dow undDuPontdeNemours:9 Unilever: 2563 Nestlé: 863 BASF: 1224 Ineos: 2684 Unilever: 343 Alibaba: 3145 Nestlé: 1548 PepsiCo: 9262 Dow &DuPontdeNemours:590 Amaon: 4904 Coca-Cola: 6588 Mondele: 313 BASF: 9926 Shell: 11533 ExxonMobil: 8814 Eni: 3855 ** Diagrams created usingSankeyMATIC. * Differences due to rounding. 13

FACING FINANCE | DIRTY PROFITS 8 | 2020 RAW MATERIAL ETRACTION

RAW MATERIAL PROCESSING here to & PLASTIC PRODUCTION Plastic:stay DISTRIBUTION

PRODUCT MANUFACTURING

CONSUMPTION

WASTE REMOVAL 5.35 million tonnes of plastic waste from private and commercial end consumers in Germany, 2019 0 Landﬁ ll sites

Waste in the environment Recyclate for manufacture 0 of plastic products I (incl. exported recyclate)

Export overseas

Waste collectors on a refuse dump with smouldering fires and grazing cattle in Siem Reap, Cambodia (2016). I Dgmorn, shutterstock. 02 Feedstock recycling

DIRTY PROFITS 8 | 2020 PROFITSFINANCE | DIRTYFACING 14 The plastic journey:

from oil and gas to waste T Recyclate for manufacture through prospecting for andextracting raw materials. It continues its energy-intensive journey inthe irreversible damageirreversible caused to theenvironment people, environment andclimate. Itbegins inthe chemical conversion ofoiland gas first into plastic (incl. exported recyclate) the plasticslifecycle –withreal dangers for waste problem. Itisconstantly present throughout he global plasticscrisisismore thanpurely a of plasticproducts PRODUCT MANUFACTURING RAW MATERIAL ETRACTION 5.35 milliontonnes ofplasticwaste RAW MATERIAL PROCESSING end consumers inGermany, 2019 from private andcommercial & PLASTIC PRODUCTION WASTE REMOVAL waste incineration plants.In rare cases, it isrecycled. the endofitsstory. Itendsupinthelandscape oris granules andtheninto endproducts. Itenters our bodies intheform ofminute particles andpollutants released into theairin form oftoxic smoke from during use.Itiseventually disposedof, butthatisnot

Feedstock recycling 02 I Export overseas I 0 Landﬁll sites 0 DISTRIBUTION CONSUMPTION Waste intheenvironment 15

Export values are net.

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 to thisobvious ecological damage to the the hunger for fossil energy. Inaddition these are onlythevisible sideeffects of tanker wrecks andaccidents ondrilling while the industry profits. Theenergywhile theindustry for almostathird oftheworld’s business- as oilandnatural gas. and raw materials sector isresponsible always beenan invisiblethreat to the Plastic issynthetically produced; 99 it isnotonlytheenvironment thatsuffers gigantic oilslicksinthesea caused by greenhouse gas emissionssince 1965are percent isbased onfossil fuels such related humanrightscomplaints. rigs, orlandscapes destroyed by fracking: Raw material extraction: Oilandgas as oil leaking from ailingpipelinesonland, contamination ofentire regions by crude companies intheenergy sector. climate. Around 35percent oftheworld’s thefossilenvironment, fuel businesshas building blocksfor plasticproduction directly attributable to 20oil,gas andcoal 16 53 Thecreeping 54 However, 55 “most energy-intensive process inthe valuable raw materials rightfrom thestart! the total CO the production andcombustion ofplastic three years. were stillalmostcompletely intact after the US alone. the 1.5-degree target would beused for theclimate. However, according to a 2019study, researchers attheUniversity as steam cracking, isconsidered the and deforestation) andtheoverall up. Asapioneer intheproduction and use bioplasticsoralternatives madeof In aseriesofcomplex extraction and is likely to have emitted aboutasmuch Center for International Environmental Law, Change. Sotheplasticscrisismust industry hasaspecialresponsibility industry its packaging, thisdoesnotinanyway into thebasic chemicals required for greenhouse gases as189coal-fired power Intergovernmental Panel onClimate Environmental Law in2019,about300 guarantee itwillbeusedattheend plants. By 2050,more than10percent of plants in2019,andby 2030thematerial’s by the non-governmental organisation primarily beunderstood asalsoaclimate because aproduct has“recyclable” on rethink theirhunger for plastics.Just plastic production. processing processes, naphthaproduced being exposed to windandweather for plastic bags advertised asbiodegradable primarily for theproduction ofplasticsin petrochemicalnew plantsare beingbuilt Avoid plasticandrely ontrulyreusable paper. However, asissooften the case, the Consumer goods companies are systems –theonlyway to conserve emissions ofsome300coal-fired power climate damage could correspond to the Product manufacturing: consumer Raw material processing andplastic crisis. According to conservative estimates consumption ofplastics,thechemical coming underincreasing pressure to companies proudly advertise thatthey of itslife to make products. new Many chemical industry”, environmental outcome isnobetter. elsewhere (e.g.towards landcompetition environmental consequences simplyshift goods companies under pressure data from theCenter for International during natural gas extraction are split during oilextraction andethane produced production: aclimate-damaging industry industry of Plymouthreported thatsupermarket 60 2 budget available to meet Whatisthealternative? 58 56 57 Thisprocess, known according to the 59 In The vast majorityofplasticwaste was 75 percent –eventually became waste. 2018. Packaging accounts for around 40 waste ispackaging: according to astudy this transmission route isconsidered to transferred from packaging to food and touted assafe andhygienic.However, which 6.3billiontonnes –more than worldwide between 1950and2015,of as juice, milkandhoney, there are Europe totalled 51.2milliontonnes in Demand for plasticsfrom industriesin it contains manyadditives thatcan be in consumer behaviour. In2018,39 increasing. Asthegraphic onp. 15shows, Consumption: plasticineveryday life proportion was incinerated (12%)and per person inGermany. kilograms ofplasticwaste were generated be influenced, to an extent, by changes percent ofthis–aproportion thatcan recycling andalotofincinerating. packaging waste was thrown away in more than3.2million tonnes ofplastic by theGermanEnvironment Agency (UBA), plastic isclearly notalways thesafer be themainsource ofplastic-associated reuse isentirely possible.Packaging-free 8.3 billiontonnes ofplastic were produced Germany doesrelatively littleactual Germany alonein2018,andthetrend is shops, where customers bringtheirown Disposal: outof outof sight, mind even lessrecycledeven (9%). containers andbags, are booming. even therecyclingeven world champion choice. exposure to pollutants for humans.So eventually into thehumanbody. Infact, established systems thatshow that disposed ofinlandfills(79%),asmaller 62 For manyfood products, such 61 63 Plasticisoften Mostofthe Industrial initiatives – rethinking or greenwashing?

None of the initiatives Many large plastics sees companies as producers and consumer under an obligation to goods companies join bear the risks posed by alliances and initiatives their products to the to combat plastic waste, environment and health. A diver asks plastic companies whether this plastic bottle, filled with moss animals, nudibranchs, crabs and funding organizations barnacles and floating in the Great Pacific Garbage Patch, belongs to them (2018). It is still local authorities in dozens of countries © Justin Hofman, Greenpeace. that have to live with that purport to promote the consequences and environmental protection. costs resulting from Many companies take voluntary measures to make their products irresponsible business decisions and the huge quantities of plastic more recyclable or to use less new plastic in packaging. However, that is used only once.64 Moreover, if corporations simultaneously most of these initiatives and pledges continue to focus mainly oppose bans, deposit-return systems, standardised labelling and on consumers and recycling. None of the initiatives see the higher recycling rates, then even the best corporate initiative manufacturers as responsible for where their products end up. cannot have much to offer.65

A SELECTION OF INDUSTRY INITIATIVES THAT ADDRESS THE GLOBAL PLASTIC WASTE PROBLEM.

All the industry measures in the table are voluntary, and there are no sanctions for failure to meet the targets.

Initiative Measures and objectives Assessment66 Companies (selection)

New Plastics By 2025: ⊕ Starts with the companies BASF Economy Global · Elimination of problematic or ⊕ Increases transparency Coca-Cola Commitment unnecessary plastic packaging ⊕ Addresses the use of toxic chemicals Mondelēz (Ellen MacArthur · Switching from disposable to ⊕ Wide reach (over 500 companies)67 Nestlé Foundation) reusable models where relevant PepsiCo · 100% reusable, recyclable or ⊖ Voluntary obligations without enforcement mechanism; no consequences Unilever compostable plastic packaging in the event of non-compliance. Many companies have missed similar · Increasing the proportion of targets multiple times in the past. Greenwashing danger.68 recycled content in plastic ⊖ Companies do not have to publish all the data they share with the packaging Foundation.69 ⊖ No auditing of the data.70 ⊖ Chemical and mechanical recycling are considered equivalent in a circular economy.71 ⊖ There are efforts to find reuse models, but they are not consistent. Despite declaring that the crisis cannot be recycled away,72 the wording remains too vague and the third obligation does not favour reusable over recyclable. Moreover, the percentage of reusable packaging produced by signatories has improved in practice by only 0.1 percentage point in a year and is still only 1.9 percent.73 ⊖ There is space for greenwashing: for example, Coca-Cola meets the third target by 99 percent – but less than 3 percent of the plastic is considered reusable.74 At the same time, no other company is behind so much found plastic waste in Clean-Ups.75

17 8 | 2020 PROFITSFINANCE | DIRTYFACING FACING FINANCE | DIRTY PROFITS 8 | 2020 Plastic Waste Alliance to End Conservancy) Alliance (Ocean Trash Free Seas Fund Infrastructure Closed Loop Partnership The Recycling 18 · · · · · · · · · · · · Only intheUS: ways regions, inparticular onwater Clean-up operations inaffected businesses andlocal authorities and inclusionofgovernments, Mobilisation through education ment andrecycling Innovations inwaste manage Asia (e.g.citypartnerships) waste collection andrecycling in Infrastructure for development by 2025 waste entering thesea by 50% reducing theamountofplastic cooperation withtheaimof Establishing practical donations andinvestors to bequadrupledby industry 100 millionUS dollars from economy ofacircularthe development as aninnovation centre for investment firmandseesitself Closed Loop Partners isan infrastructure ofrecyclingdevelopment and others, including for the Loans to local authorities acceptance ofbestpractices Scalability: increasing reach and leadersindustry authorities, companies and Partnerships, e.g.withlocal best practices Research, data collection and recycling programmes technical supportfor municipal Provision offunding, grants and 80 - - ⊖ ⊖ ⊕ ⊖ ⊖ ⊖ ⊕ ⊖ ⊖ ⊖ ⊖ ⊖ ⊖ ⊕ ⊖

initiative, whichalsoshifts responsibility to consumers Strong parallels withtheUS’s KeepAmerica Beautiful greenwashing Encourages investments inchemical recycling. producer responsibility were introduced. for companies thanthey would incurifdeposit-return lawsandextended themselves have noresponsibility to avoid plastic.Thisleads to lower costs is passed onto consumers orcitiesandlocal authorities.Companies make seriousefforts to avoid theiruse. Responsibility for plastic waste Is funded by companies thatcontinue to focus onplasticsandstilldonot Loans are low- orno-interest. donors. only to improve, notreplace, theexisting system –to thesatisfaction ofits While RPnotes theinadequate recycling arrangements intheUS, itseeks disagreement between companies onthisissue. unsuccessful extensions ofthecurrent deposit-return laws intheUS andto they lead to asignificantly higher return ofPETbottles.RPpoints to not recommend deposit-return systems thoughitacknowledges even Global Commitment.However, TheRecycling Partnership (RP)does 2025 goals undertheEllenMacArthurFoundation’s New PlasticsEconomy Argues there isnotenoughrecyclate available to meet thecompanies’ blocked legislation onplastic. Association andtheAmerican Council,whichhave repeatedly Chemistry from organisations, leading industry includingtheAmerican Beverage make seriousefforts to avoid theiruse.Theboard isalsostaffed byfigures Is funded by companies thatcontinue to focus onplasticsandstilldonot Is acredible advocate for recycling intheUS. a reduction inplasticproduction by partner companies. plastic production, whichispresented asinevitable; nodemandfor withattimesapositive depictionofincreasesUncritical ofindustry in have strongly rejected. ofairpollution,anapproachhigh levels thatmore than200organisations Promotion ofincineration incountries thatare already strugglingwith than halfoftheplasticwaste in theworld’s oceans Unbalanced narrative thatfive Asian countries are responsible for more areConservancy initiative. notpart oftheindustry no cataloguing by company. Theclean-ups carried outby theOcean make upaparticularly highproportion ofplasticpollution.Unfortunately, plastic. Thismakes itpossibleto seewhichtypesofdisposableplastic outextensiveCarrying coastal clean-ups andcataloguing thetypesof Isolated projects; nosustainable financing plastics, for whichthere are nodisposaloptionsinmostcountries. companies themselves, whichchooseto continue producing single-use on consumers andcities.Norequirements orobligations are placed onthe The namesumsitup:focus isonalready produced plasticwaste and by 2024 increasing plasticproduction: thepromised funding ofUSD 1.5billion initiative aimsto combatIndustry plasticwaste atthesametimeas corporations onthesteering committee ofthereports published. possible reduce thelargest possibleamountsofplasticintheoceans intheshortest 89 billiondollars by 2030 companies continue to invest in plastic production facilities (approximately human health. 76

time, for theinitiative isnegligible compared to whatthesignatory 84 thesemustnotbeattheexpense oftheenvironment and 83 AlthoughtheAlliance isinfavour ofsolutionsthat 77 ). As a result, lastingresults). Asaresult, are unlikely. 86 88 78 89 87 81 82 79 85 Numerous Shell PepsiCo ExxonMobil Eni /Versalis Dow BASF Unilever PepsiCo Nestlé Waters Coca-Cola Amazon PepsiCo Nestlé ExxonMobil Dow Coca-Cola Amazon PepsiCo Nestlé Waters Dow Coca-Cola Methodology Supermarket inUbud,Indonesia. Plastic asfar astheeye can see. Bernard unsplash. Hermant,

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 – therange ofshapesandproperties plasticcan have, andtherefore are the same Not all plastics the production process, for example plasticisers, dyes orflame Whether round, angular, flexible, firm, soft, transparent or colourful fuels natural gas andoil–sometimes coal. artificially produced ina complex process. Theiroriginisusuallya its uses,are virtually limitless.Butwhatisplastic?Theterm plastic hole intheground: 99percent ofplasticsare madefrom thefossil be processed. make apolyethylene shampoobottle,around onelitre ofoilhasto retardants. properties from thepolymers, additives are usuallyused during structures. Inorder to create aplasticwithparticular set of Definitions Plastics are madeoforganic polymers. Theseinturn are madeup colloquially refers to synthetic materials ofallkinds.Theseare of avariety ofrepeating units(monomers) thatcan form different 20 40

2 8 5 2 5 4 Number ofplasticpieces found duringtheclean-ups 38 For example, to Most ofthemcould nolonger beidentified. of Break Free From Plasticin2019. DPE O D P PET P P P

E P S 4

14 percent ofthe78milliontonnes ofplasticpackaging produced

the outset asdisposableitems. According to estimates, global was collected for recycling worldwide. which itwas conceived”. plastic production. production ofdisposableplasticsaccounts for roughly halfof plastic plates –theseare allproducts thatare designed from According to theEU’s plasticsDirective, single-use asingle-use plastic item is“aproduct thatismadewhollyorpartlyfrom plastic returned to aproducer for refill or for thesamepurpose re-used for accomplish, withinitslife span,multipletripsorrotations by being and thatisnotconceived, designedorplaced onthemarket to

9 0

8 1

Onlyafraction ofitisrecycled. In 2013,only 8 9 41 Whether plasticpackaging ordisposable

11 24 43 The process ofproducing usableplasticendproducts isacomplex 2018. SELECTION OFCOMPANIES ANDRESTRICTIONS the five* largest plastics corporations –whichincludebothoiland trend ofchemical integration. Conversely, traditional chemical trolley: theoilandgas sector, andtheir thechemical industry the Netherlands also discusses Shell. a piece ofplasticpackaging before itendsupintheshopping included inthestudy based ontheirannualworldwide salesin Dow holdsstakes inprojects for ofshalegas thedevelopment Because plasticsare madefrom oilandgas products, manyofthe into theirgroup structure (e.g.ExxonMobil hasitsExxonMobil gas companies aswell astraditional chemical companies –were projects inArgentina). because ofthe switch to renewable energies further reinforces the responsibility ofseveral actors inmore detail. plastic pollutionatitssource, therefore, means to examine the * Dow and DuPont de Nemours were considered jointly because of of their history mergers and splits.

Chemicals branch andShellhasChemicals). Theprospect one. Manypeopleandorganisations are involved inthelife of or projects (e.g.BASF holds 67percent ofWintershall Dea and companies often have financial stakes inoilor gas companies of falling salesfigures inthe conventional oiland gas business companies inthatsector have integrated achemicals segment customers from theconsumer goods industry. To analyseglobal 45 Inaguestarticleonp. 25,thePlasticSoupFoundation from 44

Dueto thecloseness oftheseindustries,

time, given global plasticpollution oneormore names:Coca-Cola, to individualcompanies, hascreated ameaningful overall picture, transparency, theEllenMacArthurFoundation madeprogress inthis their commitments. the United States, 31percent inIndia,30percent intheUnited to theirimmenseconsumption ofpackaging material, form the this would have disadvantaged themore transparent companies trillion US dollars worldwide by 2023. that e-commerce willreach atotal turnover ofmore than6.5 form ofpackaging, onahuge scale. For alongtimethere was a for thefirst timepublishedtheirplastics consumption as part of final group of companies examined. Amazon isthe world’s largest as against thosethatpublishno details –butontheshare of In thecontext ofplastic,therole played by atriumphant PepsiCo, were andUnilever Nestlé,Mondelēz themostfrequently Kingdom, 49percent inGermanyand20percent inJapan. Onlyin industry-wide disclosure ofdisaggregatedindustry-wide data. international movement Break Free From Plastic.Theirmeticulous global plasticpollutioncaused by theproducts ofindividual generally shippedincardboard boxes, theproducts insideare often growing ones,with market shares estimated by theenvironmental represented findsinthe collections of2018,2019and2020. pieced together from individualcollections. Ithasalso, for thefirst regard inautumn 2018. lack oftransparency asto how muchplastic(orothermaterials) Amazon andAlibaba, whichhave ahighvolume ofsavingsdue

Consumer goods corporations putplasticinto circulation, inthe China isAlibaba ahead; Amazon hasleftthe country. selection ofcompanies was based noton plasticconsumption – swaddled inplastic wrap orprotected by airpillows. Itisestimated cataloguing ofthepieces ofplasticthey findinnature, allocated companies. Thedata comes from theClean-upsundertaken by the commit to aset ofgoals towards acircular economy andgreater corporations were using.Withitscall to for theplasticsindustry e-commerce sector issometimes overlooked. Whilepackages are organisation Oceana of48percent inCanada,37percent in online retailer inmoste-commerce markets, includingthefastest-

47 Butitisstillalongway from comprehensive, 46 Bigcorporations suchasCoca-Cola have

49 Thelargest onlineretailers,

48 Accordingly, the 50

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 (as of2018). (UniCredit), which are alsoamongthe15largest banks inEurope Spain (Santander), including itsasset Germany(DeutscheBank, SELECTION OFBANKS the useofplasticisoften justified,althoughthere ispotential the scope ofthisresearch. their use of plastic. Plastics-using companiestheir useofplastic.Plastics-using outsidetheconsumer for reductions. Waste management companies, whichplayan For thefinancial research, thelargest banks by balance sheet total important role inafunctioning circular economy, are alsooutside in 2018were selected from theUK(HSBC),France (BNPParibas), goods industry, e.g.inagriculture, theautomotive industry major bank inGermany. manager DWS), theNetherlands (ING),Switzerland (UBS) andItaly All thecompanies inthisreport were examined onlyinterms of or medical technology, were notincluded.Intheseindustries, 22 51 Commerzbank was alsoincludedasthesecondary

The financial relationships identified were obtained from the The research considered loans, supportfor theissuance ofbonds to take upthisoffer, inseveral cases making reference to banking for 2017to aperiodfrom October January 2020. Thedatabase and shares. Thebanks’ profits inthesefinancialarrangements and shares aswell asinvestments insecuritiestheform ofbonds and banks, although this cannot beconsidered conclusive, given theopportunity to comment ontheresults ofthefinancial no pro rata breakdown ofabanking consortium, theamountwas negligible relative to theamountsinquestion.Where there was presented inthisreport claimedto beexhaustive. Different HOW WEARRIVEDAT OURRESULTS research priorto publication. Noneoftheeightmajorbanks chose secrecy. come from interest, dividends,price gains andcommissions. currencies may alsolead to minorrounding errors, buttheseare especially asregards thegranting ofloans. Neitherare thefigures contains information provided by capital management companies economic database Refinitiv Eikon inSeptember andOctober 2020 divided by thenumberofbanks. Allthe banks examined were They usuallyreceive thesefunds for “general purposes”. Thedebtis The easiest way for companies to get capital isto take outaloan. The provision ofcapital to companies intheform ofloans andthe The financial research mapsthefinancial relations between banks to theproduction oruseofplastics,aswell asso-called green the analysissalesofshares andbondsthatare clearly notrelated then sellthemto other investors asquicklypossible.Once the the firmsused capital they obtained from the banks northe for eitherecologically justifiableprojects or controversial ones,e.g. first puttheissued shares orbondsonto their own booksand financial relationships includesneitherthepurposes for which activities, for example by contributing to plasticpollution. and bonds.Banks,ontheotherhand,actasintermediaries to analysis loans thatare clearly notrelated to plasticsproduction or an expansion ofplasticproduction. Wehave excluded from our amount ofprofit the banks madefrom thetransactions. and companies. Inmostcases, theinformation gathered about WHAT DIDWEINVESTIGATE AND WHY usually notearmarked, andthecompany can usethemoney freely: use. Thegranting ofloans shouldbelinked to minimumsocialand issuance ofbondsandshares can beseenasthestrongest form of in allotherbusinessrelationships thatreal-economy companies prices. Proceeds from thesaleofshares flow into a company’s FINANCING makes anappearance asacapital market participant. Banks however, isnothingmore thanalarge loan inwhichthecompany Companies can alsoincrease theirliquidassets by sellingshares support for economic activities. securities have beensuccessfully placed onthemarket, banks sold orthecompany isissuingshares for thefirst time.Abond, Issuance of shares andbonds Loans ecologically beneficialprojects. But banks shouldalso take care ensure thatthey continue to betraded. Wehave excluded from equity –regardless ofwhether parcels ofexisting shares are being ensure thatthere are enoughbuyers andthatcompanies get good environmental requirements. do notviolate environmental standards andhuman rightsintheir AND HOW DIDWEINVESTIGATE IT? bonds, whichcompanies, by theirown account, explicitly usefor

funds. Anotherway banks share responsibility for corporate However, transactions onbehalfofindividualcustomers are Banks invest ontheirown account aswell asfor theircustomers. just asthey dofrom themanagement ordistributionofinvestment investments onbehalfofthird parties through thefees they charge, investment funds are obliged six to discloseallpositionsevery in aprocess ofcritical dialogue. interests ofclimate protection. Asshareholders, they shouldalso general meetings, andthey can usethis,for example, to vote inthe INVESTMENTS markets. Asshareholders, they have arightto vote atannual business –by keeping bondsandshares liquidonthefinancial business modelsisaresult of theirwork facilitating theavailability months. Itisclear thatbanks benefitfrom themanagement of Management of shares andbonds(holdings) of capital for companies –andconsequently theconduct of confidential andasinvisiblea bank’s own investments. Only demand socialandenvironmental improvements from companies 23

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 24 Features El Salvador Villa, Peru. Jordan Beltran, Unsplash Beltran, Jordan Peru. Villa, Salvador El

The case of Shell’s plastic Shell’s of case The plant in Pennsylvania in plant T emission ofassociated greenhouse gases. for shalegas alsohas majorecological consequences, ashasthe plastic packaging isthemaincause ofplasticpollution.Fracking is widelyusedfor packaging, amongotherproducts. Single-use tonnes ofpolyethylene intheform oftinypellets. Polyethylene This multi-billion-dollarplantwillyearly produce 1.6million Pennsylvania Petrochemicals Complex. plastic factories. AmongthemisRoyal Dutch Shell’s 100%-owned willinvest atleastchemical 164billiondollars industry in264new process ethane for theproduction ofplastics.By 2023theAmerican The increased production ofshalegas hasledto crackers new that pressure. Butthisappears to be ariskygamble. climate actionand energy transition are puttingrevenues under

Santander HSBC BNP Paribas Largest provision of finance HSBC Deutsche Bank UBS Largest investments inShell land, inlakes andintheair. covers (micro)plastics on of theterm plasticsoup also shipping. Awiderdefinition both thenatural world and particles are dangerous for sea currents converge. The gradable; itcollects where The material is not bio-de ally breaking upinto smallerpieces, istermed plastic soup. The huge volumes ofplasticwaste floating intheseas, gradu - PLASTIC SOUP:WHAT’S THAT? to bealifeline now that ers plasticproduction considhe oilindustry - - in millionsofeuros in millionsofeuros 2 841 2 858 3 476 129 227 609 recycling. BigOilfaces theincreased risksofstranded assets. other materials useofrecycled content andmandatory to improve regulation by governments to curbplasticuse,substitution by Oil. Amongthereasons are: theCOVID 19-pandemic, increasing Tracker have analysed indetail whyplasticisnotgoing to save Big However, timesare changing.Financialexperts from Carbon plastic was considered agrowing market generating highprofits. When BigOilstarted to invest massively inplasticproduction, unknown to manymarket parties. waters resulting from plasticproducts thelossofsingle-use isstill shale gas, theproduction ofplasticandthesoupinour among investors. Incontrast, thedirect relationship between climate are well-known andare anincreasing topic ofconversation The adverse effects ofshale gas extraction ontheenvironment and SHALE GAS ANDPLASTIC: THEINVESTOR’S BLINDSPOT with more thanoneandahalfbillion dollars inissuedshares. plastic soup. Shellwas found to bethemostimportant recipient shale gas andplasticproduction andtheenvironmental issueof establishes thedirect relationship between Dutch investments in Netherlands incollaboration withthePlasticSoupFoundation produce plastics since 2010.Thereport by theFair Finance Guide than 10billiondollars incompanies thatextract shalegas and the Netherlands have, between them,invested atotal ofmore In 2019itwas established thatmostmajorbanks andinsurers in investment inplasticproduction. about theplasticsoup, butoften have nopolicy regarding opposed to theSDGs.Banks’ achieving claimto beconcerned gas companies andcompanies thatproduce plasticsare directly protection oftheclimate andtheoceans. Investments inshale Sustainable Goals Development (SDGs).Thesegoals include All banks andinsurers saythey embrace theUnited Nations production andthustheincreasing plasticpollutioncrisis. Chevron, banks andinsurers playarole inthegrowth ofplastic Plastic soup (2019). (2019). soup Plastic luoman, iStock. iStock. luoman,

animal health. to theenvironment andhuman causes severe andgrowing damage or incinerated intheopenair;it plastic pollution,beingdumped recycled. Itcontributes to increasing is notproperly collected and collection system. Plasticpackaging have aweak ornon-existing waste all over theworld. Manycountries bottles, sachets andtrays each year, multinationals to sell billionsof Plastic isusedby food andbeverage ExxonMobil, DowDuPont and in companies suchasShell, As aresult oftheir investments 92

91 25 90 93

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 for plastics. economy thatwillnotberealised Industry’s focus isonacircular Andiftherefor isamarket, it. itisonefor low qualityproducts. wherever plastic iscollected for recycling, there isnoreal market quality isthereason whytherecycling sector cannot compete. So, cynical. Theextra production ofcheap virgin plasticsofgood Shell’s focus onrecycling astheway to go through AEPWisvery is peanuts compared to theinvestments by plastic. BigOilinnew The 1billionearmarked for theAEPWfor clean-ups andrecycling was presented. recycling are promoted. InSeptember 2020,thefirst annual report and treatment ofplasticwaste, and,ontheotherhand,reuse and two-fold; ontheonehand,solutionsare to for bedeveloped size than 1billiondollars to fightplasticpollution. Theapproach is global players inoil,chemical andplasticindustries,pledged more BASF, Dow, ShellChemical andExxonMobil, Procter &Gamble,all the Alliance to EndPlasticWaste (AEPW). Multinationalfirmslike 2019Shellwas oneofthefoundersIn January initiative, ofanew THE ALLIANCETO ENDPLASTIC WASTE pollution crisiscan besolved through recycling andtechnology. not industry, are responsible for theplasticpollution; systems likedelivery re-fill. The overall messages are: people, plastic thatcan bere-used multiple times,orto adaptalternative is nopledge to reduce theproduction ofplastic, to introduce governments, businessesandcommunities, andclean-ups. There infrastructure, more andbetter recycling, raising awareness to The focus lieslargely ontheimprovement ofwaste management 26 94

(2020). US the in Complex Petrochemicals Pennsylvania Shell the of Construction 95 calculates onlytheCO carbon dioxide (CO stay below 1.5degrees. Thiscan onlyberealized ifemissionsof global warming by two possibleto degrees anddoeverything In 2015itwas agreed attheParis Climate Conference to decrease SHELL’S CARBON BOOKKEEPING at least 20percent by 2025.Producers like Shell,beingthe most European PlasticPact thataimsto reduce plasticproduction by In March 202015 European countries and66companies signedthe BAD INVESTMENTS cars ayear. alone willemitasmanygreenhouse gases asalmost500,000new excluded. According to arecent thePennsylvania report, plant like petrol. Otherproducts, suchasplasticandethylene, are are, however, excluded from Shell’s CO of theclimate targets. Greenhouse gas emissionsfrom plastics posesaseriousthreatThe plasticsindustry to theachievement reduced by 45percent by 2030andare entirely phasedoutby 2050. 96 Robert Michaud,Robert iStock. 2 ) —themostimportant greenhouse gas —are 2 emissionsofprocessing energy products become lesscreditworthy. usual, companies like Shellwill industry. Withbusiness-as- detrimental consequences for packaging willhave direct measures to limitplastic analyse thatimpending Advice agencies for investors business. will beathreat for Shell’s sign. Anyreduction of plastic important players, didnot 2 accounts, because Shell T

Asian countries ofbeingthebiggest plasticpolluters. being publishedinthepress, accusing SouthEast higher for members ofthesecommunities. the mostfrom thepolluted air, landandwater. Cancer rates are frontline communities, livingnear theproduction plantsthatsuffer and incineration, plasticpollutes along itsentire life Itisthe cycle. From theextraction ofthefossil fuel usedasfeedstock, to landfill tripleby2030 andeven 2050.Wecannot afford to let thishappen. If businessasusualcontinues, plasticproduction could doubleby plastic atsource. answer. Itisimperative thatwe stop theproduction ofsingle-use the airwe breathe, andinthefood we eat. Recycling isnotthe become sopervasive, thatthey can befound inthewater we drink, in alandfill,incinerator orinouroceans. Microplastics have now indefinitely while keeping itsinitialquality. Itinevitably endsup actually beenrecycled. Furthermore, plasticcannot berecycled thathasbeencreated,the single-use-plastic only9percent has plastic waste from theproducts they consume; however ofall thattheyindividuals believe are the onesresponsible for the The oilandplasticlobby have worked hard to make sure companies were thedrivers behindplasticpollution. successfully shift thenarrative andprove thatthemultinational the Brand Break Audit, Free From Plasticmembers were ableto was plasticwaste produced by western companies. Thanksto Asian countries hadbeenaccused ofpolluting,wheninfact it clogging uprivers anddestroying ocean ecosystems. SouthEast wereNestlé andUnilever thereal culpritsbehindtheplasticwaste data showed thatCoca-Cola, PepsiCo, International, Mondelez When thereport itmadewaves came out, across theworld. The collected were thenmeticulously catalogued. in 42countries. The187,851pieces ofplasticpollutionthatwere world’s real plasticpolluters. 10,000volunteers did239clean-ups movement’s members in2018,order to identifythe The first Brand Audit was organised by the & CITIZENSCIENCE CALLING OUTPOLLUTERS WITHTHEBRAND AUDIT straight. It was imperative to actinorder to set therecord

and #breakfreefromplastic and Let’s set the record straight record the set Let’s plastic pollutioncrisis.At thetime,stories were in 2016,outofanurgent needto tackle the he Break Free From Plasticmovement was born 97

economy. environmental limitsoftheplanet. Wemustbuildaglobal circular reuse systems. Ourlifestyles andeconomy mustfitwithinthe stop plasticpackaging, usingsingle-use andimplementrefill and the pollutionandcarbon emissionsthattheirproducts create, We demandthatthesebigpolluters take full responsibility for single useplasticproducts are stillcompletely unaccounted for. on theworld’s biggest polluters. Theexternalised costs oftheir more volunteers joiningtheranks, inorder to keep thepressure The Brand Audits continue to take year, place every withmore and ecological solutionstowards acircular economy. a central role inthewaste management system, whichensures decentralised waste management system where communities play compostable andorganic waste istransformed into soil.Thisisa effectively implemented atmaterial recovery facilities, while waste sothatrecycling atthehouseholdlevel can bestrictlyand The goal isto have communities properly sortthrough their based resource management systems inAsiaPacific. From Plastichave beensuccessfully implementing community- from plasticpollution andwaste disposal.Members ofBreak Free circular economies whileavoiding seriousenvironmental harm private sectors, provide animportant opportunity to buildlocal Innovative Zero Waste Citiesprojects, bothinthepublicand ZERO WASTE CITIESINASIAPACIFIC 27

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 plastic bag andstyrofoam regulations, butthisremains aproblem. Philippines, for example, are implementing strictandeffective of SanFernando, andSanCarlosinNegros Occidental incentral use plasticssuchassachets andotherplasticpackaging. Thecities the management ofnon-recyclable waste; mostlylow-value single- However, citieswithsuchprogrammes continue to strugglewith reduced andfrontline communities are lessexposed. harm from plasticpollutionandotherwaste disposalisgreatly incinerators and landfills.Mostimportantly, theenvironmental a highnumberofjobscompared to waste disposalsites like reasonable andpredictable costs. Theprogrammes alsocreate Residents receive ahighlyreliable service andcitiesbenefitfrom households allcontributing to implementation ofsystemic change. local governments organisations units,socio-civic andindividual community approach interms ofresource management, with programmes are manifold. Theseprojects have awhole-of- according to thecontexts andneeds. Thebenefitsofthese India, andothercountries inAsiawithplace-specific retrofitting currently inIndonesia,Malaysia,Vietnam, underway China, Beyond thePhilippines,otherZero Waste Cityprogrammes are needs. increases worker income, where previous income barely met daily monitoring staff, for thedaily collection of waste. Thissystem waste workers are hired asauthorisedgarbage collectors oras waste collection. InaZero Waste previously informal Citiesproject, and safer, andthelocal government employs 65peoplefor daily city ofMalabon’s zero waste programme makes thecitycleaner San Fernando isashort distance from Metro Manila,where the to composting andrecycling. improvement goals, over 80percent ofcollected material now goes through theZero Waste Citiesprogramme. Driven by continual or dumpsites, thewaste isnow efficiently and recycled composted least 50percent ofwaste, meaning thatinstead ofgoing to landfill Since 2013,thecityofSanFernando hasconsistently diverted at waste. ensured thatSanFernando was notbedupedinto burningtheir systematically declined.Political willandcommunity participation times by waste-to-energy incineration companies, whichthey had beenoffered waste-to-energy incinerators for thecityseveral Foundation, thecityofSanFernando, inPampanga, Philippines, Before partnering withGAIAAsiaPacific andMotherEarth toxic form to another(low-value plasticsto single-use dirtyair). waste-to-energy incinerators thattransform thewaste from one their wastes through landfills and dumpsites as well as to construct Local government unitsare often convinced to manage by industry IN THEPHILIPPINES CASE STUDY: SANFERNANDOANDMALABON CITY 28

Fernando.pdf https://zerowasteworld.org/wp-content/uploads/San- Further reading: greener andfairer future. and reuse, municipalities willhave builtrobust systems, for a linear approach ofmultinationalcompanies. Withrecycling, return must make thisdemandto policymakers andpushback onthe and reuse systems, mustbeputinplace. Municipalities ofallsizes products andpackaging thatthey produce. Depositreturn systems, have to take full responsibility for theexternalized costs ofthe successfully putan endto plasticwaste. Multinationalcorporations a strong community component. Yet thisisnotenoughto solutions for waste management are often smallscaled, with As we sawwiththeseZero Waste Citiesprogrammes, thebest CONCLUSION Harmful Invest-ments

A crab caught in a discarded plastic cup with branding from the company Zagu off Verde Island in Batanga Province in the Philippines. The island is known worldwide for its marine biodiversity (2019). © Noel Guevara, Greenpeace.

29 8 | 2020 PROFITSFINANCE | DIRTYFACING Financial research

The eight major European banks investigated – BNP Paribas, Commerzbank, Deutsche Bank including DWS, HSBC, ING, Santander, UBS and UniCredit – have financial links totalling EUR 146 billion to the fourteen companies analysed in this report. Nearly 65 percent, or 95 billion euros, is attributable to the financing of business by participation in loans and issuance of bonds. The investment volume, mainly in the form of shares and, less frequently, in the form of bond holdings, amounts to 52 billion euros. The issuing of shares is only a small part.

Shareholdings Bondholdings Lending Issuance of bonds Issuance of shares 49 676 1 977 38 181 54 053 2 333 in millions of euros

For all four industries examined in this study, banks must formulate policies on plastics, covering both investment and financing. The latter is considered to be the strongest form of support for business activities because it directly increases the financial resources companies have access to for implementing their business models. Comparing sectors and volumes of financial relationships can help to identify priorities: in e-commerce, investment policies are more urgently required, while in the raw materials, chemical and consumer goods sectors, financing is in more need of regulation.

30 749 30 000 Shareholdings 28 269 Bondholdings Lending Issuance of bonds 25 000 Issuance of shares

20 000

16 891

15 000 12 812 11 917 in millions of euros 11 393 11 295

10 000 7 717

5 000 3 577 2 412 2 775 2 104 1 697 997 667 565 0 147 71 165 0 Raw material extraction Processing Consumer goods E-commerce

DIRTY PROFITS 8 | 2020 PROFITSFINANCE | DIRTYFACING 30 TOTAL Unilever Shell PepsiCo Nestlé Mondelez Ineos ExxonMobil Eni Dow andDuPont deNemours* TOTAL Unilever BASF Coca-Cola BASF (incl. Wintershall) Alibaba Amazon Issuance of shares ue ofshares, DeutscheBankhadthelargest involvement inshare placements. 2 billion euros, however, share issueswere thesmallestofthree typesoffinancing examined. According to total val- Five oftheeightbanks participated intheshare issuesofthree companies 2017andOctober between 2020.At January * Dow andDuPont deNemours were considered jointlybecause ofmergers oftheirhistory andsplits. Issuance of bonds andShellraisedbillions. Nestlé,Unilever themostmoney through bondsduringtheinvestigation period. HSBCandBNPParibas2017 andOctober 2020. DeutscheBank, were each involved intransactions inthedouble-digit The eightEuropean banks supported fourteen companies to place 54billioneuros’ worth ofbondsbetween January * Dow andDuPont deNemours were considered jointlybecause ofmergers oftheirhistory andsplits. TOTAL Shell PepsiCo Nestlé Mondelez Ineos ExxonMobil Eni Dow andDuPont deNemours* BASF (incl.Wintershall) Amazon Alibaba Lending Wintershall) andShellwere thelargest borrowers. However, BNPParibas DeutscheBank, andINGhave alsogranted high-volume loans. Nestlé,ExxonMobil, BASF (including of thecompanies inthestudy. Britain’s HSBCistheonlyfinancialinstitution to approve loans inthe tens ofbillions. 2017andOctoberBetween 2020,theeightEuropean January banks selected lentatotal of38billioneuros to eleven FINANCING Alibaba in millionsofeuros in millionsofeuros in millionsofeuros BNP Paribas BNP Paribas BNP Paribas 10 916 5 601 1 034 1 036 1 915 2 442 2 181 475 518 165 279 313 673 734 374 388 899 556 185 164 580 614 945 377 317 71 56 Commerzbank Commerzbank Deutsche Bank 1 290 1 115 260 226 165 639 146 893 75 938 565 373 Deutsche Bank Deutsche Bank HSBC 13 166 7 588 373 1 036 1 149 1 050 1 136 373 2 163 2 065 2 338 1 298 2 012 1 303 915 226 626 217 859 374 422 385 130 714 266 70 11 318 12 964 HSBC 1 036 1 149 3 917 1 480 HSBC 1 861 1 603 2 166 1 612 1 904 1 303 997 637 549 165 217 639 531 909 194 128 672 478 75 56 ING 317 317 5 521 1 036 1 299 1 136 1 077 1 918 626 129 217 ING 105 372 255 106 381 643 ING 56 Santander Santander UBS 317 317 3 595 1 036 7 056 1 082 1 861 1 727 981 165 279 236 226 673 895 146 110 106 447 597 86 4 701 2 143 1 203 2 601 1 036 UBS UBS 662 235 360 662 85 31 UniCredit UniCredit 2 216 1 125 1 353 639 486 863

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 GESAMT Unilever Shell Nestlé PepsiCo Mondelez ExxonMobil Eni DuPont deNemours Dow Coca-Cola BASF Amazon Alibaba *incl. DWS Bondholdings and ExxonMobil. UBS accounts for thelargest share, followed Thebanks’ by DeutscheBank. largest bondpackages are inShell,Coca-Cola As ofOctober 2020,five of the eight banks holdnearly 2billioneuros inbondsfrom thecompanies inthestudy. Once again, *incl. DWS Shareholdings share value. ing inthenext two places. Thetwo onlineretailers Alibaba andAmazon account for around halfofthebanks’ holdingsby holds atotal ofmore thanhalfofthetotal investment volume with28billioneuros, withDeutscheBankandHSBCfollow - As ofOctober 2020,theeightbanks holdshares ofaround50 billioneuros in thirteen companies. TheSwissbank UBS INVESTMENTS GESAMT Unilever Shell PepsiCo Nestlé Mondelez Ineos ExxonMobil Eni DuPont deNemours Dow Coca-Cola BASF Amazon Alibaba 32 in millionsofeuros in millionsofeuros BNP Paribas BNP Paribas 145 18 12 12 35 15 15 20 8 1 1 7 2 1 3 148 1 039 100 282 276 133 120 102 891 11 85 23 66 18 Deutsche Bank* Commerzbank 728 111 164 106 49 22 24 20 25 12 80 34 25 49 8 72 14 26 25 2 3 2 HSBC 147 12 12 37 15 11 10 18 9 2 5 9 3 3 Deutsche Bank* Santander 10 727 1 383 2 015 2 304 1 801 177 926 148 278 260 445 850 90 50 3 2 1 HSBC 7 567 1 262 4 826 UBS 117 176 298 230 233 224 954 264 149 113 111 119 76 34 20 27 45 43 35 13 28 33 19 15 7 5 ING 43 37 1 1 2 1 1 Santander 517 101 207 11 44 19 26 18 68 1 2 2 9 7 27 558 1 431 5 072 1 704 8 772 7 056 UBS 344 637 993 906 209 227 147 62 UniCredit 43 10 27 2 2 2

O Banks

with with

European European

In comment. did notrespond to anyrequests for has notdoneso. Spain’s Santander but atthetimeofgoing to press bank HSBCpromised to respond, published documents.TheBritish merely referred usto already UBS Commerzbank andUniCredit. Deutsche BankandDWS, ING, with thisstudy: BNP Paribas, Finance’s requests inconnection dialogue constructively to Facing researched, five responded f theeightEuropean banks 2018 balance sheet total BNP PARIBAS bank. relevant pledge for plastics-producing companies thaninthe internal operations ofa an explicit commitment to theplasticreduction targets –whichwould beamore However, it does notspecifically require the companies inwhichit invests to make the EllenMacArthurFoundation’s New PlasticsEconomy (NPEC)GlobalCommitment. BNP Paribas Asset Management , BNP’s asset management subsidiary, hasjoined BNP Paribas, aswithcoal, should seekfull exclusion. and companies thatengage inshalegas extraction amongotherlinesofbusiness. inpractice,this report shows that, financial relationships still exist between the bank operations inshalegas (andtar sands).However, thefinancial research conducted in BNP Paribas hasdiscontinued businessrelationships withcompanies withmain ing itsinvolvement infossil fuels, itisreferring onlyto coal. Onthepositive side, on conventionally produced oilin thecommitments –whenBNPtalks aboutend sums inallthecompanies For inthisreport. example, there are few restrictions with Facing Finance, BNPParibas hasstakes ranging from eight- to ten-figure Despite allitsendeavours, itsdetailed response andtheoffer to engage inadialogue circular economy index? alternatives to plasticdothey cover? Whyare Ford andNike inthetop ten ofthe as acriterion? How manyofthesebondsare there? How manycompanies offering economy. All these approaches raise questions: How important is waste management offers a fund thattracks anindex of companies thatare pioneers inthecircular finances companies thatproduce plastic-free packaging. Finally, BNP Paribaseven a numberofbondswithinterest rates linked to thereduction ofplastics,andit it appliesinassessingthesustainability of companies. Thebank saysithasissued is avoided andgoods remain incirculation. Waste management isthusacriterion made, whichitseesaspart ofthe transformation into aneconomy inwhichplastic of theproblem ofplastic pollution.Initsstatement itdescribestheefforts ithas France’s BNPParibas hasanswered Facing Finance indetail, sayingitisaware Dow undDuPont deNemours Nestlé Unilever PepsiCo Shell Largest Mondelēz PepsiCo Nestlé Alibaba Amazon Largest investments BNP Paribas

Commerzbank 1 963

provision Deutsche Bank 452 1 470

HSBC 2 100 of

finance in millionsofeuros

ING 846 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 287 1 935 1 986 2 656 3 476 1 041 892 euros 836 168 289 294 33

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020

by projects andonsufficientmeasures to prevent accidents. guidelines on consultation with the local population affected gas andoilsands.Whatismissing,ontheotherhand,are from financingprojects for the extraction of oilshale,shale coal power plantsandmines.Thebank partially abstains deep-sea drillingandrejection oftheconstruction ofnew weak. Onthepositiveare sideisitsrejection very ofArctic by Facing Finance aspart oftheFair Finance Guideproject, The guidelinesontheoilandgas sector, whichare evaluated contain anyexplicit reference to plasticorwaste ingeneral. the publicdomainonitswebsite. However, thesedonot When contacted, Commerzbank referred to documents in Ineos Nestlé Mondelez BASF Largest Amazon Eni Unilever BASF Nestlé Largest investments BNP Paribas 2018 balance sheet total COMMERZBANK

Commerzbank 1 963 34 provision Deutsche Bank 452 1 470

HSBC 2 100 of

finance in millionsofeuros

ING 846 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 532 euros 836 241 260 372 14 25 26 2 3 PepsiCo Unilever Alibaba Nestlé Amazon Largest investments 2018 balance sheet total DEUTSCHE BANK tion targets for thenext few years. gas sector. Basedontheresults, itplansto reduc develop announced plansto itsexisting review linkswiththeoiland from thedismantlingofproduction facilities. Thebank has mental impacts andadverse health consequences resulting cluded. Otherissueswithoutspecificguidelinesare environ- gas extraction, andoilshalemining,for example, isnotex from financing,butthere isnoblanket rejection ofoiland projects intheArctic andoilsandsprojects, are excluded weak. Certain projects, typesofnew oiland gas suchasnew Deutsche Bank’s guidelinesontheoilandgas sector are very requirements orreduction targets for production. specific reference to plastics–suchasminimumecological management firmhas publishedawritten positionwitha held dialogueswiththem.Neitherthebank northeasset encourage companies to become more sustainable, they explained ontheplasticsindustry. theirviews Inorder to DWSNovember 2020,DeutscheBankanditssubsidiary In atelephone conversation withFacing Finance in PepsiCo Unilever ExxonMobil Amazon Nestlé Largest BNP Paribas

Commerzbank 1 963

provision Deutsche Bank 452 1 470

HSBC 2 100 of

finance in millionsofeuros

ING 846 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 037 1 489 1 850 2 037 2 329 2 065 2 163 2 348 2 452 3 374 euros 836 - - ING

HSBC 2018 balance sheet total in billions of euros

2 100 1 963 2018 balance sheet total in billions of euros 1 470 1 446

2 100 1 963 846 782 836

1 470 1 446 452

846 782 836 ING UBS 452 HSBC Santander UniCredit BNP Paribas CommerzbankDeutsche Bank

ING UBS HSBC

Santander UniCredit BNP Paribas Largest investments in millions of euros CommerzbankDeutsche Bank Amazon 37 ExxonMobil 2 Largest investments in millions of euros Alibaba 1 Alibaba 4 844 Mondelez 1 Amazon 1 272 Coca-Cola 1 PepsiCo 311 ExxonMobil 243 Coca-Cola 239 Largest provision of finance in millions of euros BASF 1 780 Dow und DuPont de Nemours 1 458 Largest provision of finance in millions of euros Nestlé 1 408 ExxonMobil 5 529 PepsiCo 1 404 Nestlé 3 203 Ineos 881 Shell 2 858 Amazon 2 452 PepsiCo 2 240 The Dutch bank ING responded to our request for comment on its efforts. The bank expects all stakeholders in the plastics lifecycle to take responsibility, i.e. to reconsider As of going to press, the British bank HSBC has not production and consumption. It states that it at least responded to our request for policies or exclusion criteria for encourages the use of more environmentally friendly financing or investing in plastics-related companies. Facing products and processes in its dealings with packaging Finance looked independently for financing or investment manufacturers and recycling companies. However, there policies directly related to plastic but did not find any. When is no reference to actual dialogues, so the bank is yet to it comes to financing in the energy, oil and gas sectors, provide any evidence of success. ING has joined the Ellen there are individual criteria that are on the weak side.98 MacArthur Foundation’s New Plastics Economy (NPEC) Global One positive note is HSBC’s financing guidelines for the Commitment, but it does not explicitly specify whether it chemical industry, which exclude producers of persistent applies the plastic reduction goals described therein to organic pollutants (POPs) in accordance with the Stockholm the plastics producers that it finances or just ING’s own Convention. These substances are also widely used in operations. plastics.99 The chemical companies examined in this report are nevertheless investment targets and business partners ING is assessed by the Fair Finance Guide in relation to its for HSBC. oil and gas policies. The verdict is that these are average in comparison to other banks. For example, the bank refuses to finance controversial methods such as oil extraction from oil sands or offshore drilling in Arctic areas, but it does not reject other harmful practices, such as oil extraction from shale.

35 8 | 2020 PROFITSFINANCE | DIRTYFACING FACING FINANCE | DIRTY PROFITS 8 | 2020

these remain too vague. production andrefining, includingdrillingactivities,but such asincreased attention to oilandgas exploration, to financing in the energy sector, there are individual criteria, directly related to plasticbutdidnotfindany. Whenit comes looked independentlyfor financingorinvestment policies or investing inplastics-related companies. Facing Finance comment onthepoliciesorexclusion criteria for financing Spain’s Banco Santander didnotrespond to arequest for Unilever Dow undDuPont deNemours Coca-Cola Nestlé Shell Largest Eni Nestlé Amazon Unilever Alibaba Largest investments BNP Paribas 2018 balance sheet total SANTANDER

Commerzbank 1 963 36 provision Deutsche Bank 452 1 470

HSBC 2 100 of

finance in millionsofeuros

ING 846 100 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 082 1 120 1 727 1 931 2 841 euros 836 101 207 28 44 68 PepsiCo Coca-Cola Nestlé Alibaba Amazon Largest investments 2018 balance sheet total UBS GROUP extended duediligence withrespect to fracking. on theoilandgas sector are rather weak, e.g.limited to ofplasticinto theenvironment. tion oftheentry contribute to oftheSDGsorto theachievement thereduc does notgive specificguidelinesonhow a capital flow can responsible for global UBS plasticpollutionasinthisreport. it uses,butthesedonotincludelistingthemaincompanies tion ofwater bodies.Thebank refers to effective methods Goals 12and14– Goals (SDGs).Withregard to plasticpollution,itmentions investments thatsupporttheSustainable Development In itswritten response, UBS saysitseesitsrole inenabling Alibaba PepsiCo Shell Unilever Nestlé Largest BNP Paribas

Commerzbank 1 963

provision Deutsche Bank 452 1 470

sustainable consumption andtheprotec HSBC 2 100 of

finance in millionsofeuros

ING 846 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 473 1 814 5 221 7 088 8 800 1 021 1 203 3 637 euros 836 317 897 101 Guidelines

- - Arctic. sands andshale,aswell asoilandgas exploration inthe controversial typesofoilandgas extraction, namelyoil one formulated withallmannerof exceptions, ofthemost against competitors. There isatleast anexclusion, albeit also taken seriouslyinterms offinancingandismeasured example by means ofreusable bottles.However, theissueis made to reduce plasticconsumption withinthebank, for guidelines withreference to plastic,justthatefforts were Group. Whenasked, theGroup saidithadnospecificlending HypoVereinsbank, oftheItalian UniCredit isasubsidiary UniCredit Bank AG, better known inGermanyunderitsbrand BASF Eni Largest Amazon Nestlé Shell Unilever BASF Largest investments BNP Paribas 2018 balance sheet total UNICREDIT GROUP

Commerzbank 1 963

provision Deutsche Bank 452 1 470

HSBC 2 100 of

finance in millionsofeuros

ING 846 Santander in billionsofeuros 1 446 in millions UBS 782 UniCredit of 1 501 1 840 euros 836 10 27 2 2 2 37

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 38

Recommendations:Stop the plastic

monster Illustration of plastic monster made of disposable plastic items such as bags, lids, food food lids, bags, as such items plastic disposable of made monster plastic of Illustration containers, cutlery, cigarettes and bottles (2020). (2020). bottles and cigarettes cutlery, containers, peepo, iStock.

the plasticcrisis. model for financial institutions to address Facing Finance recommends amulti-level proportion ofglobal plasticpollution. in companies thataccount for ahigh is widespread financingandinvesting address theplastic crisis.Inpractice, there have sofar beeninsufficient to adequately This report shows thatthebanks’ policies emerge aswinners. toward thecircular economy will companies thatare already moving internalisation of disposal costs, those regulation of plasticandtheexpected also benefit financially. Withincreasing of peoplearound theworld, they can of ecosystems, climate andlivelihoods they notonlypromote theprotection opportunity andscale asinvestors, seize thisfundamental innovation a closed-circuit economy. Whenbanks prevention of unnecessary waste and economic system, onebuiltonthe a low-plastic andlow-waste circular in thetransformation from alinear to Financial institutionsplayacentral role FOR BANKS RECOMMENDATIONS Finance Guide, or thesectiononforestry intheFair for example inlinewiththeEUtaxonomy ecologically sustainable management, this mustbeoncondition ofsociallyand Where renewable raw materials are used, materials withoutfurther specifications. materials suchaspaper orbio-based raw not replaced intheportfolio by alternative plastics based onfossil raw materials are It isimportant to ensure thatdisposable and ontheuseofalternative materials. the climate impact addressed by theEU, issue ofeconomic efficiency, inaddition to and health risksand,notleast, onthe unanswered questions onenvironmental recycling, where there are currently many should includepositionsonchemical the EUwaste hierarchy. Theguidelines precedence over recycling, inlinewith andbeyond. Reuse shouldtakeindustry top priorityinthe plastic-producing avoidance of plasticbeset asthe Facing Finance recommends thatthe handling ofpollutants. and interms of water management and recycling withregard to itsclimate impact use ofbiological material, for chemical used –withfurther requirements for the if atleast 90percent recycled material is its endproducts isdisposable plasticor sustainable ifamaximumof 10percent of plastics production is onlyconsidered sustainable management, acompany’s According to theEUtaxonomy on lifecycle. and alongtheentire plastic regard to disposable plastics soon aspossible, primarilywith and investment policiesas comprehensive plastic financing publicly documented and and implementing should start developing Financial institutions POLICIES competition. 103 andtheexclusion ofland 102 Securities from thecompanies researched inthis themselves as asociallyandecologically oriented funds because specificcriteria relating to plastics are stillrare. Where they they are doexist, notso alternative for consumers. Corporations involved as sustainable by theiroperators, presenting approximately 4,500funds inthedatabase.105 as theinformation portal faire-fonds.info, run Forty-five ofthese392 funds areeven advertised in thespread ofplasticsfindtheir way into these because ofotherbusinessactivities,suchasthe by Facing Finance, shows. For example, theoil report are notuncommon ininvestment funds, strict thatinfringements lead to exclusion. When extraction ofoilinsensitive ecosystems. getcycle through asustainability fund’s filter, itis corporations thatplayarole intheplasticslife company ExxonMobil isincludedin392ofthe and extended producer responsibility, projects designedto promote re-use Companies thatactively hinderlegislative social objective ofplasticavoidance. tolerated, because itunderminesthe by chemical companies shouldnotbe An expansion of plastic production starting material for ethylene production. to thecheap availability ofethane asa driver ofexcessive plasticproduction due climate andhumanspecies,itisalsoa particularly harmful to theenvironment, Frackingand investment. isnotonly beeligibleforshould never financing and extraction ofshalegas andoil that are involved intheexploration Companies intheraw materials sector greenwashing allegations (seep. 17). initiatives for check voluntary industry and transparent manner. Banksshould in aspecific,measurable, time-bound aimed atcompanies mustbeformulated organisations. Performance indicators Break Free From Plastic)andcivilsociety p. 41 andfrom independent alliances (e.g. in therecommendations for companies on each sector. Initial pointers can befound and shouldbeformulated individuallyfor and clear exclusion criteria iseffective and positive criteria aswell asnegative businesses. Aninterplay of minimum no-waste orlow-waste solutionsand companies andto promote innovative intensive andplastic-dependent be afinancialshift away from plastic- The aimof aplasticsguidelineshould 39 -

FACING FINANCE | DIRTY PROFITS 8 | 2020 FACING FINANCE | DIRTY PROFITS 8 | 2020 sole basis for assessment. examined critically andshouldnotbethe monitoring. Lifecycle analysesshould be dilute them,shouldbesubjectto special repeatedly misstargets, orshiftand review. Companies thatare seento should beaddressed by acomprehensive are common whenitcomes to plasticand organisations. Greenwashing suspicions by oilandgas projects orcivilsociety plants, indigenous communities affected resident communities near petrochemical seek dialoguewithstakeholders, suchas countries intheGlobal South,they should planning waste infrastructure projects in society organisations andexperts. When and rating agencies, aswell asfrom civil companies themselves andfrom research should draw oninformation from the disposal for aduediligence Banks audit. Banks shouldusealltheresources attheir above. kind oflegislative projects described economy, for example by hinderingthe counter to theprinciplesofacircular meet thecriteria set by banks andrun along theplasticvalue chainthatdonot screening should identifycompanies contribution to plasticpollution.Such auditing itsplasticconsumption and context of itswidercorporate group, taking each into consideration inthe financial relationships with companies, review bothexisting andpotential new Banks needto regularly andcarefully DUE DILIGENCE economy. low-emission andnon-toxic circular to promote aresource-efficient, should establish across apolicy industries In additionto aplasticsdirective, banks companies. plastic avoidance strategy from these the endof2021.Banksshoulddemanda paying attention to theissueofplasticby plastic consumption thatstillare not and mailorder companies withexcessive as shouldconsumer goods companies excluded from financingorinvestment, equally critically and–asalastresort – circular economy, shouldbeexamined and thusthetransformation towards a 40 relations. serious cases, atermination offinancial timed follow-up, e.g.adialogueor, in process shouldlead to apre-defined and Any irregularity detected inthescreening public. customers, thatlendingmaybemade stipulate, atleast withlarge corporate process. Banks shouldcontractually the success –orfailure –ofthe dialogue records thecompany, thethemeand insist onpublicdocumentation that least, theypossible. At should thevery the dialogueprocess astransparent as concerned, banks shouldwork to make In consultation withthecompanies themselves against thisdate. Online retailers should alsomeasure have set goals to by beachieved this date. deadline year, because manycompanies Facing Finance recommends 2025asa reviewed. For consumer goods companies, be set outinanaction planandregularly ofnon-compliancein theevent should objectives, measures andconsequences all companies alongtheplasticlifecycle, a limited, pre-defined time window. For The engagement shouldtake place within influence. consortium members to exert greater form alliances withotherinvestors and external stakeholders. Itmakes senseto such a dialogue, banks should also consult thebestpossibleresultsachieve from should betriggered immediately. To sufficiently, anengagement process required by banks ordonotmeet them If companies donotmeet thecriteria ENGAGEMENT published withreasons. the details oftheexclusion shouldbe any others withcontroversial activities, pressure onthecompany inquestionand business relations. Inorder to exert public announceresort, thetermination of (e.g. 3–5years), banks should,asalast process withinapredetermined period objectives defined inanengagement models. Ifacompany fails to meet the with reference to unacceptable business be terminated asquicklypossible criteria, thefinancial relationship must If corporations breach hard exclusion DIVESTMENT particular packaging. should includecriteria for materials, in systems. Requirements for suppliers reusable containers orthrough refill pandemic. Drinksshould beoffered in as thisisonce again safe after theCorona unpackagedshould serve food assoon restaurants andconference rooms products. Office kitchens, cafeterias, premises andreplaced withlong-life be completely banned from business plasticproductsSingle-use should resource awareness andconservation. demonstrate theirown commitment to defining reduction targets, andso calculating their plasticfootprint and Banks shouldlead by example, INTERNAL PROCUREMENT between sectors andcountries. of plasticandhow theseare distributed publish plasticproduction figures, types should alsoberequiredindustry to be independentlyverified. Thechemical total consumption. Publishedfigures must broken down by country, inadditionto product designationsandquantities, year.every Thedisclosure shouldinclude plastics andothermaterials indetail publish theirentire consumption of corporations andonlineretailers should Plastics producers, consumer goods TRANSPARENCY pollutants. water management andthehandlingof only subjectto minimum standards on and chemical recycling maybeused must beensured. Biological material at least 90percent recycled material products assustainable. Alternatively, of 10percent disposableplasticinend The taxonomy considers amaximum EU’s taxonomy for sustainable activities. companies to take theirlead from the It makes sensefor plastics-producing products, plastic. especially single-use priority mustbeproducing fewer plastic sustainable product design.Thetop switching to reusable solutionsand on consumers, andstart systematically that place responsibility solelyormostly They shouldstay away from approaches problem, butalso aspart ofthesolution. therefore themselves aspart ofthe along theplasticlifecycle shouldsee costs are externalised. Corporations that are cheaper onlybecause disposal with short-lived products andpackages replaced traditional reusable systems infrastructure. Allover theworld they have for whichthere isnocorresponding waste the Global South,withplasticpackaging products, flooding countries, especiallyin unnecessary andshort-lived disposable trend towards athrowaway society with goods companies have fuelled the require disposable plastics.Consumer efficient businessmodelsthatdonot responsibility to implementresource- pollution, companies have ahigh As themaincause of global plastic FOR COMPANIES RECOMMENDATIONS

104 companies infracking. of liquidmixtures usedby oilandgas production, aswell asthecomposition example, theuseofadditives inplastic end products into account butalso, for This means they needto take notjust footprint butalsotheirchemical footprint. chain shoulddisclosenotonlytheirplastic Companies throughout theplasticssupply and repairable. products thatare long-lasting,non-toxic Instead,resort. thegoal mustbe to design circular economy, recycling isthelast where they are sold,butinanambitious products country can berecycled inevery process. Companies mustensure their right from thestart oftheproduct design still important andmustbeconsidered importance, onreuse. Recyclability is packaging and,asamatter ofsecondary and focus first ontheprevention of use amodellike theEU’s waste hierarchy unnecessary plastics,companies should to eliminateWhen trying problematic and systems atcountry level). reusableintroduction ofindustry-wide (e.g. proactive supportfor thelegal be introduced to overcome thehurdles explained, andplannedmeasures should recyclates), thisshouldbeidentified and (e.g. dueto legislation oravailability of implementation isexpected to bedifficult a breakdown isappropriate. Where circumstances require different measures, transparently. Where country-specific actions andtimetables, andpublishthem with clear andmeasurable objectives, is essentialthatthey draft actionplans production and inindividualproducts. It plasticsintheiroverallof single-use primarily interms ofreducing theshare significantly cut their plastic consumption, bound andbindingcommitments to Companies should make pollution oftheplanet by plastic. contribution to reducing theongoing formulated targets thatmake aneffective chemical sectors andonlineretail, have let alonecompanies intheoil,gas and not allconsumer goods companies, plastic pollutionundercontrol. Moreover, companies get are notsufficientto The commitments madesofar by BINDING ANDAMBITIOUS OBLIGATIONS ambitious, time- reasons for doingso. they shouldleave andpubliclystate their that seekto prevent positive legislation, are initiatives stillmembers ofindustry financial institutions. Where companies business partners for banks andother also make themcredible andwelcome global plasticpollution–whichshould demonstrating theirwillingnessto curb deposit-return andrefill, they are promote ambitioussystems for reuse, entire life cycle of plastic.Ifcompanies and products onthemarket alongthe principle for placingplasticpackaging application of thepolluter pays producer responsibility andthe supporting legislation onextended their responsibility by proactively Finally, companies shouldacknowledge unresolved. magic bullet –too manyquestionsremain chemical recycling andnotpresent itasa aconsideredshould develop positionon of itproperly. Similarly, corporations clearly labelled,soconsumers dispose should ensure “bioplastic” packaging is competition. Inaddition,companies management andthe prevention ofland make thisconditional onsustainable in renewable raw materials, they must other materials. Where companies buy replace fossil-fuel-based plasticswith nor asustainable solutionto simply is neededandthatitneitherasuitable should make itclear thatasystem change justified underwhat conditions. They clear rulesonwhenanapplication is on bioplastics,paper etc. anddefine Companies shoulddevelop policies solutions. can bebetter withshared achieved scale impact thatisdesperately needed individual pilotprojects, butthelarger- Some corporations have announced consumers andcivilsociety organisations. involvement ofgovernments, experts, retailers shouldwork together, withthe by many manufacturers), companies and standardised andsocan beusedjointly glass bottlesinGermany, whichare solutions (seefor example thereusable standardised, accepted andscalable users. Inorder to appropriately develop tosupply chainsrightupto end delivery refill systems from thestart oftheir switch to reusable, deposit-return and resources, companies shouldconsistently In order to systematically save plasticand 41

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