Lavish usage of plastics - should it be measured (ESG, net zero on Plastics)?
How businesses are using plastics irresponsibly and financial system is not doing their part responsibly either. (ESG, plastic net-zero)
We use plastics lavishly. Where one single packet of biscuit could have one wrapping to put it together, we find it is wrapped in groups, and then within the group, each biscuit is further wrapped individually. What a luxury? Maybe it has a reason which I miss to appreciate and probably many of you too. Our goal is to reduce, but if goods are produced and sold irresponsibly, there is no good reason to blame users for littering plastic everywhere. If such tiny pieces of plastic wrappings are created for items that get consumed in no time but the wrappings live forever (almost) on this planet, we can’t blame the consumers. Businesses are irresponsible, and those supporting businesses to carry on like this are equally irresponsible. The financial system has the responsibility and the power to steer companies towards sustainable ways of doing things and making their businesses inclusive. ESG is not a fancy term for marketing and branding purposes. Everything is now green; everyone appears to be getting it right on the spot. Is reality great? How do we make it absolutely transparent and effective and leverage technology to further enhance the outcomes?
So when we see this type of irresponsible usage of plastics in packaging all across the spectrum, we need to think harder what the reason behind it is? You might agree the first reason is that plastic is definitely cheap, very cheap and easily available. As a kid, I remember learning how the discovery of plastics was a boon for humanity. I barely imagined that plastic would turn out to be our curse like this one day. Plastics has evolved tremendously and is an extremely flexible option for all types of packaging. The entire industry seems to be focused on innovations that promote the usage of plastics more and more.
On the other side businesses consuming plastics rarely are measured for their input of virgin plastics vs recycled ones. What happens when you start measuring? ESG reporting is all about non-financial measures, so are we creating such measurements that bring to light how businesses are doing in terms of their responsibility to reduce plastic usage? Just like carbon, as we are talking about net-zero, shouldn’t we talk about net-zero on plastics which means we do not dig petroleum endlessly and inject endless volumes of plastics, but we recycle. When our usage is entirely from recycled plastics, there would be no need to dig more underneath the ground and increasingly dump on the planet. Have you noticed the increase in the number of items that are now couriered and thereby an increase in the packaging materials that are used today? So a very simple metrics for all those giant organisations who fill the shelves of the supermarkets with very fancy packaging and for that matter any kind of packaging including the couriers we receive should report what volumes of plastics they consume; out of that what is the recycled part and what part is the new or virgin plastic? This single measurement would tell a lot about their performance on the Environment aspect in the ESG measurements. Are they reducing the consumption, are they becoming net-zero on plastics and do they have clear goals and roadmaps to achieve them that can be measured? Someone needs to ask these questions, and no one is better suited than the financial system. A significant shift seen in the financial system is that they have already committed a large pool of finances for sustainability-related investments today Glasgow Financial Alliance for Net Zero . What we need now is a further transformation of the financial system that will shift them to become sustainability-focused in every aspect of their operations, change in their culture and their internal applications that embed ESG metrics apart from all other regulatory requirements and financial measurements and enable their agile response to business needs. But at the same time, we need businesses to run real projects on the ground that are aiming for such improvements. A transformation of businesses is thus inevitable to be able to get these new measurements on ESG aspects. The board today is unanimously asking for sustainability-oriented work, the financial system is measuring ESG performance and including such data for all decision making, technology is further leveraged for its discrete, effective and transparent measurement, and regulations are increasingly focusing on these areas and mandating requirements. So we are now in a position with the greatest opportunity to solve such major problems that we have in the world today.
What is net zero on plastics?
It means we do not dig petroleum endlessly and inject increasing volumes of plastics on this planet, but we recycle. When our usage is entirely from recycled plastics, there would be no need to dig more underneath the ground and dump on the planet. Thus we become net zero on plastics.
What is ESG metrics?
ESG metrics are the measurements of Environmental, Social and Governance aspects of a business's performance. Unlike the past where financial performance alone played a key role in businesses creditworthiness, ESG measurements have become prominent today. They serve as measurements towards the long term sustainability of the businesses also. ESG metrics could be qualitative or quantitative. When it is derived from the quality of transformation of businesses they become qualitative measures and they are then universal. There could be a ton of quantitative measurements specific to the industry that will also tell about the businesses performance on ESG aspects.