‘Polluter pays’ doctrine will take on new meaning

CJ CheilJedang

04/01/2024 07:25

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Lisa Jucca
       MILAN, Jan 3 (Reuters Breakingviews) - Companies will
learn the hard way that polluting the world has a cost. Ten
years after the deadly Rana Plaza factory-building collapse that
killed more than 1,000 underpaid textile workers in Bangladesh,
cheap polyester clothes from Shein, Boohoo  BOOH.L  or Primark
continue to fill our wardrobes before hitting the landfill.
Meanwhile, more than 350 million metric tons of Coca-Cola
bottles, Mars wrappers and other plastic items are discarded
each year. This may change as a crackdown on fossil fuel-based
waste takes shape in 2024.
    Plastic, a range of wonderfully versatile and resistant
materials derived from petroleum, has become ubiquitous in
sectors ranging from food products to fashion. Its success is
linked to the fact that it’s seemingly cheaper than more
sustainable alternatives. For example, containers in
biodegradable plastics, like those produced by CJ Biomaterials,
owned by Korean food and biotech company CJ CheilJedang
 097950.KS , can be three to five times more expensive than
those made of fossil fuel-based virgin plastics. Polyester yarn
tends to cost less, and last longer, than natural fabric.
    Yet the environmental cost of regular plastic is 10 times
higher once waste management, greenhouse gas emissions and the
damage to the ecosystem are factored in. The additional economic
burden, which the World Wildlife Fund calculated at over $3
trillion per year in 2019 against a market cost of $370 billion
for all plastics produced that year, is currently borne by
governments and consumers rather than companies.
    Plastic polluters will soon have to start to pay their fair
share. California is currently discussing a bill that would
require textile companies to design, fund and implement the
collecting, sorting and recycling of the garments they produce.
The European Union proposed in July that fashion companies
either collect a gradually increasing percentage of clothes,
linen or shoes or pay a fee towards the cost of managing waste.
That seems sensible given that 85% of discarded shirts and
dresses end up in landfills.
    The approach, known as extended producer responsibility, is
also at the centre of discussions around a United Nations treaty
to end plastic pollution, to be finalised in 2024. To be
effective, however, the “polluter pays” doctrine has to impose
sufficiently high financial contributions to deter
overproduction. In France, where a scheme of this kind has been
in place since 2007, the fee has averaged just 0.16 euros per
garment, says Bloomberg. Targets to reduce the use of virgin
plastic, which has increased by 11% globally since 2018, are
also sorely needed, although oil-producing countries including
Saudi Arabia and Russia are against legally binding caps.
    Investors have yet to grasp the potential negative impact of
a rise in waste management costs for companies. Shares in Zara
owner Inditex  ITX.MC  and H&M  HMb.ST  rallied around 50% from
the start of January to Dec. 1, 2023, while those in bottler
Coca-Cola HBC  CCH.L  were up 8%. Meanwhile, deals in the
packaging segment, which accounts for 40% of global plastic
waste, have been booming.
    Yet the financial challenge of addressing climate change
while also cleaning up the planet is so huge that many
governments around the world are starting to act. Global
corporate titans had better get ready to pay up.
    Follow @LJucca on X
- This is a Breakingviews prediction for 2024. To see more of
our predictions, click here.
    
    CONTEXT NEWS
    The European Union and California want to introduce
legislation aimed at forcing fashion companies to produce and
discard textiles in a more sustainable way.
    The European Commission, the EU’s executive, proposed in
July that fashion companies either collect a
gradually increasing percentage of clothes, linen or shoes or
pay a fee towards the cost of managing waste. 
    Global plastic waste generation reached 353 million metric
tons in 2019, more than double that in 2000, according to the
Organisation for Economic Co-operation and Development. Around
40% of plastic waste comes from packaging, 12% from consumer
goods and 11% from clothing and textiles.

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Graphic: Global plastic consumption is exploding Global plastic
consumption is exploding    https://tmsnrt.rs/47PIjtw
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 (Editing by Francesco Guerrera and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  JUCCA/  | lisa.jucca@thomsonreuters.com ; Reuters
Messaging: lisa.jucca.thomsonreuters.com@reuters.net))