Planet Tracker - Plastic Risk: Measuring risk in the plastic sector - Report

Planet Tracker have published a report exploring the concept of a plastic risk register where sources can include toxic releases, harmful additives, CO2 emissions, marine and terrestrial pollution, microplastics, unrecyclable waste and new regulations and how these sources can lead to different types of risks including reputational, legal, physical and transitional.

Key takeaways include 'Corporates in the plastic value chain face physical, transitional, legal and
reputational risks. Each plastic company’s risk register should include exposure to
CO2 emissions, harmful toxic discharges, visible and invisible plastic pollution (for
land, sea and air), chemical additives exposure and rising harm to people
and nature.
• Risk, as measured by the equity risk premium1, has remained fairly stable since
2012 for companies in the plastic value chain; however, it started declining (i.e.,
perceived as less risky) in 2022.
• When compared to those industries which are similarly materials-based –
construction, paper & forest products, metals & mining, and chemicals – the
plastic-exposed sector trades on the lowest risk premium (i.e., perceived as less
risky).
• Between 2012 and 2022, 731 plastic pollution policies have been introduced
worldwide. Presently, investors in the plastic value chain are ignoring this rising
regulatory threat.
• Within the plastic value chain, the single-use plastic producers are generally
perceived as the riskiest segment and the consumer staples the least. Packaging
and container companies mostly fluctuate between these two.
• Financial investors and lenders need to decide whether the risk premium not only
adequately reflects the present backdrop of tightening regulation but also the
increasing possibility of significant litigation from a variety of sources.
• The universality of plastics, for which demand continues to rise, may make the
plastic industry appear like an attractive growth story, but it also increases the
sector’s regulatory and litigation exposure.'

This report shows an interesting viewpoint on investors perception of risk.

Read the full report via Planet Tracker

Language: English