By Daniel F. Akrofi
The proposed global plastic treaty currently being negotiated seeks to end plastic pollution by regulating the entire lifecycle of plastics. To end global plastic pollution and decarbonize the global plastic economy, financial flows that fuel the global plastic industry must truly be tailored towards transitioning away from the current models of economic development, consumption, and overreliance on fossil fuel-derived virgin plastics – considering that 98 percent of plastics produced globally are fossil fuel-derived. This will require a 360-degree shift from the current mode of financing in the global plastic industry that encourages overreliance on fossil-fuel feedstock to produce excessive plastics (in some cases non-recyclable plastics) to green financing aimed at ending global plastic pollution.
Such a move must be promoted by the proposed global plastic treaty where States are encouraged to develop regulations and financial frameworks that prevent investors and financiers from investing in new projects that contribute to and further exacerbate the global plastic pollution problem. This might include encouraging sustainable capital market instruments; green trade finance; sustainability-linked instruments including credits, bonds, and loans; and other specialised green products that adopt new circular business models for both multinational corporations (MNCs) and small and medium-scale enterprises (SMEs) involved in the global plastic value chain.
For countries in developing and emerging markets, blended finance might provide the needed investment to augment the domestic financial ecosystems toward closing any potential funding gap that might hinder the ability of States to take action in ending plastic pollution in their respective jurisdictions. This can be done through impact investing, as a report by the Rockefeller Foundation estimates that the value of the emerging impact investing sector is between US$400 billion and US$1 trillion, with a possibility of generating profit between US$183 billion and US$667 billion. However, in regulating the full lifecycle of plastics, one will question where to direct investments that will end plastic pollution. I briefly share some thoughts below.
Investment in green chemistry to develop alternatives
In decarbonising the global plastic industry, the global plastic treaty must encourage investment in green chemistry to revolutionalise the way plastic products are made. Considering that plastics are made of chemicals and carbon, investment in green chemistry could facilitate the uptake of plastic feedstock that is sustainable (non-toxic, non-persistent, and degradable) compared to the traditional fossil fuel-derived plastic feedstock. Such investments should aim at reducing or better yet eliminating the use and/or generation of hazardous substances throughout the lifecycle of plastics (i.e., from raw material extraction to end-of-life management). This will not only reduce the amount of waste material generated but also the quantity of virgin plastic feedstock required to manufacture plastic products. Through green chemistry, new materials and application mechanisms that avoid potentially harmful materials (e.g., microplastics found in personal care and cosmetic products) can be systematically promoted for a more sustainable future.
The outcome might be the production of plastic products that are environmentally benign, more economically viable, and functionally equivalent to or outperform existing alternatives. While multinational corporations could invest large sums in research and development, access to green finance by businesses particularly SMEs to encourage such investments must not be the barrier to realising the potential of green chemistry to develop alternatives, particularly for States in the global south. This is where the global plastic treaty could encourage access to sustainability-linked loans and credits through for example blended finance..
Developent of and access to green technologies
The proposed global plastic treaty should encourage the use of green financial instruments to develop green technologies to be used across the plastic lifecycle (particularly plastic production/manufacturing and waste management). Green technologies are currently in short supply as estimates show that only 10% of current technologies are environmentally benign with only 25% having the potential of being made benign and over 65% yet to be invented. The global plastic treaty could promote the use of such technologies to remove hazardous substances from materials and processes which could also eliminate potential hazard-related costs across the plastic lifecycle such as those associated with production, handling, transportation, storage, use, and disposal.
Green finance products to support sustainable business models
The global plastic treaty could encourage States to develop ambitious and forward-looking policies to ensure financial institutions like banks, asset management, and investment firms harness the potential of green and sustainability-linked instruments when investing in the global plastic industry. Such sustainability-linked instruments must be geared towards helping companies build inter alia circular and sustainable business models that use fewer plastics and encourage sustainable procurement, production, and consumption patterns to create zero waste while eliminating greenwashing. Furthermore, such instruments could encourage the use of greener alternatives with the goal of decreasing their overall plastic footprint, and by extension the environmental footprint of companies which in most cases positively affects profit margins. Such policies on one hand could target multinational corporations be it the top 20 banks and asset investment firms based in the global north that fund more than 80 percent of the plastics value chain, the top polluting multinational fast-moving consumer goods corporations, or the top 20 petrochemical companies producing virgin plastics. On the other hand, small and medium-scale enterprises and start-ups could also be targeted and assisted through for instance green microfinance mechanisms.
Technical Assistance Facility
In implementing the proposed global plastic treaty, States particularly from the global south may require assistance as far as technical expertise in specific areas are concerned that might not be readily accessible in their home countries. The treaty could encourage a grant-like resource to hire experts to inter alia develop sustainability strategies, prepare projects as well as feasibility studies to ensure the quality, efficiency, and sustainability of plastic-related projects.
Increase environmental democracy and accountability
The global plastic treaty could encourage environmental democracy by ensuring inclusivity among actors like indigenous community leaders, academia, vulnerable groups, and waste pickers across the global plastic value chain. This could be done by making green financial facilities available to fund actors who otherwise will not be able to afford to attend global plastic negotiation processes and have their voices heard to realise an effective and comprehensive outcome that addresses inter/intragenerational injustice associated with the responses to the plastic crisis. This will ensure that actors have access to information, decision-making, and justice particularly when plastic-related investments threaten human health and the environment to limit potential plastic litigations.
Dealing with legacy plastics
Addressing legacy plastics is an important issue the global plastic treaty could help resolve by inter alia creating a Green Plastic Fund and/or utilising existing facilities like the Global Environment Facility (GEF) to finance plastic initiatives to remove such plastics, especially in low and middle-income countries as well as small island developing states. The proposed plastic treaty could also encourage States to take financial policy action by means of green finance and sustainable blended finance instruments to support such plastic initiatives.
Conclusion
The need to act to end plastic pollution depends on us, We, the people of the world, and those entrusted to lead must exhibit courage and come up with an ambitious and innovative treaty that encourages the use of green finance and sustainable blended finance (where necessary) towards a just transition in the global plastic industry. The proposed global plastic treaty could offer a unique opportunity to lead this charge by encouraging States to adopt financial regulatory frameworks that promote green finance and sustainable blended finance toward ending plastic pollution. Let’s not miss this opportunity!
Daniel F. Akrofi is a Commonwealth scholar and an International legal & sustainability consultant. He is currently a final year Doctoral researcher in International Law and Global Plastic Governance at the University of Lincoln, United Kingdom.
Note: This article gives the views of the author, not the position of the EADI Debating Development Blog or the European Association of Development Research and Training Institutes.