The Coming Sea Change for Consumer Goods Companies

Nicole Shamoon

Associate Editor

Loyola University Chicago School of Law, JD 2020

“I sometimes wonder if we’re in the branded litter business, branded trash.” That was a presumably half-joking statement made at the World Economic Forum in Davos by Alan Jope, CEO of Unilever, one of the world’s largest consumer goods companies. What certainly was not a joke was the pressure and criticism major consumer goods companies faced in Davos from activists and groups that believe not enough is being done to cut use of plastic packaging in goods. Companies like Coca-Cola and Procter & Gamble (P&G) have emerged as new targets of environmental groups, who see these companies as major contributors to polluted oceans and endangered marine life. The impact of plastic waste on the environment has also drawn the ire of millennials, to the extent that one industry analyst claims the war on plastics is part of consumer goods companies’ marketing plans. While companies may be tailoring marketing plans and making pledges to reduce the amount of plastic in their products, the 8 million tons of plastic that end up in the world’s oceans each year means these companies will continue to feel the heat from activists, millennials, and regulators.

The Loop scheme unveiled at 2019 World Economic Forum

The World Economic Forum, commonly referred to as Davos, has a stated mission of “improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.” To others, however, it looks more like a gathering of out-of-touch billionaires who take their private jets to the Swiss Alps for a few days and pretend to solve the world’s problems. Nonetheless, given the extremely high profile nature of the event and the number of global leaders in attendance every year, one would hope that the gathering would at least occasionally deliver on its mission. This year, P&G, Coca-Cola, PepsiCo, Unilever, and others tried to improve the state of the world with the “Loop” scheme, designed to reduce waste from single-use packaging by delivering products direct to consumers in durable, refillable containers that can be collected from consumers and reused when finished. Mirjam Kopp, plastics project leader at Greenpeace, was unimpressed and sees these companies increasing single-use plastic packaging in developing markets that cannot take more plastic waste. Lower income consumers in developing countries depend more on single-use sachets of soap or shampoo, so P&G has recently tried to encourage consumers to recycle while also investing in recycling infrastructure in these markets. Kopp’s slightly less modest suggestion to these companies to reduce plastic waste: change your business model.

Industry alliance launched ahead of Davos

Many companies in the Loop scheme, along with others connected to the plastics industry such as Exxon Mobil and BASF, launched the Alliance to End Plastic Waste earlier this month. Member firms have committed $1 billion to the initiative, which will fund research, infrastructure, and cleaning efforts. Greenpeace leaders also had strong words to say about the Alliance, framing it more as a self-serving attempt on the part of “corporate polluters to maintain the status quo on plastics.”

Litigation and insurance trouble?

Could companies that produce plastic goods or package their products in plastic face lawsuits for the damage plastics have done to the oceans, similar to litigation the tobacco industry faced in the 1990s? That was a question asked to the CEOs of PepsiCo and Dow Chemical at one Davos panel by human rights lawyer Vivek Maru. While many factors make this a difficult question to answer, insurance companies have taken note of various firms’ exposure to lawsuits relating to climate change, and some see plastics as a future target. Christian Mumenthaler, CEO of Swiss Re, the world’s second largest reinsurer, said it is not yet a big reinsurance topic but alluded to the possibility that it could be. His hope is for consumer goods and plastics companies to act quickly and radically enough to make a significant change.

Regulation increasing

While it is too early to tell whether any lawsuits or insurance issues will arise for consumer goods companies, regulation has recently started to gain traction. At the end of 2018, the European Union (EU) passed measures to ban plastic straws, Styrofoam cups, and other throw-away plastic items. The move was welcomed by Greenpeace, but the organization says further action is still necessary, and that the issue cannot be solved by industry initiatives alone. France’s secretary of state for ecology, sustainable development, and energy feels existing initiatives fall well short. She had harsh criticism for the companies and insinuated further regulation would be needed. Theresa May set a target of 2042 to eliminate avoidable plastic waste as part of a 25-year plan to improve the environment, while the EU said it would demand all plastic packaging be recyclable by 2030. Plastic bags and bottles have faced bans and additional taxes in many cities and countries for years now, but the dialogue at Davos indicates the tide may have turned for consumer goods companies being able to patiently enact environmental initiatives on their own schedule.

Billions now or billions more later

In a perfect world, major multinational corporations would work to enact societal good from a place of altruism. More realistically, though, a combination of activists, consumer demands, and regulation or threat of regulation has driven billions of dollars in spending by consumer goods companies to become more environmentally friendly and consume less plastic. This sea change has been brought about by the horrible impact plastic waste has had on the world’s oceans, reefs, and marine life. While some of the recent initiatives launched by these companies is a step in the right direction, the call to eliminate plastic waste is growing louder by the day, and if companies do not act quickly enough, they will likely face increased regulation and potentially calls for lawsuits.

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