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Plastics accounting: the missing piece to the plastic pollution puzzle

Integrating plastics accounting into regulatory and policy levers is an essential element in addressing the plastic waste issue.


In brief
  • The current state of plastic pollution warrants a comprehensive solution to accurately measure the waste generated and enact mitigation strategies.
  • Plastics accounting can be instrumental in providing consistent, data-based insights required to mitigate and manage plastic waste effectively.

Plastic production and use has grown exponentially over the past few decades. Between 2000 and 2019, plastic production doubled to reach 460 million tons (Mt) and is expected to grow to 1,200 Mt by 2060. The resulting plastic waste is also projected to grow from 353 Mt in 2019 to 1,014 Mt by 2060.1 The United Nations estimates that 75% of all plastic produced since 1950 has become waste.2 In order to stem this growth, it is important to find effective ways to effectively track, reduce and manage plastic waste.

There is a need for a targeted solution to plastic waste and pollution

Establishing plastics accounting mechanisms can help companies accurately measure the full impact of the plastic they use and produce to create appropriately scaled mitigation actions to address the waste they create. Plastics accounting can also provide the clarity needed for companies who grapple with management of sheer volumes of plastic waste and the associated negative environmental impacts. Just as greenhouse gas (GHG) accounting has enabled corporate involvement to address GHG emissions, plastics accounting can provide companies the framework to build a robust plastic tracking and waste management process by:

  • Defining plastic production and waste generation baseline metrics 
  • Aligning specific reduction and mitigation strategies and targets to the generation and waste measurements, ideally in line with formal reporting processes
  • Creating consistent plastic production and waste generation metrics across companies and sectors, enabling peer benchmarking, insight into industry progress on addressing plastic pollution globally, and accountability for the largest plastic polluters

Current state of plastics disclosure

 

Currently, there are no uniform plastics disclosure metrics enforced by any industry or country. With the lack of national and international standardization, most companies that attempt to measure or reduce plastic waste have developed individualized methods. This makes it difficult to track initiatives on an industry or national level, to encourage companies to adopt a specified framework, and to hold accountable those who pollute the most. However, several initiatives to measure and disclose plastics are being promoted by non-governmental organizations (NGOs) and inter-governmental organizations (IGOs). Some of the existing initiatives on plastics disclosure include:

  • CDP’s pilot plastics disclosure module launched in 2023 (through CDP’s Water Security Questionnaire)3
  • Standards including the Global Reporting Initiative (GRI) 3064 on Waste (2020) and GRI 301 on Materials (2016)5
  • Guidelines such as 3R Guidelines for Corporate Plastics Stewardship (2021)6
  • Methodologies for plastics footprint measurement including the Plastic Leak Project (2020)7
  • Tools for calculating plastics in a company’s product such as the Materiality Circularity Indicator (2019)8 

The common key performance indicators (KPIs) associated with plastic reduction adopted by independent businesses include:

  • Use of recycled or renewable material in at least 50% of plastic used across products
  • Elimination of plastic from packaging
  • Making packaging 100% recyclable
  • Phase-out of single-use plastics
  • Virgin plastic use reduction across operations

Without harmonized standards or frameworks, these KPIs are not adequate to effectively manage plastic waste and enable plastics disclosure and management across industries. Addressing this gap in harmonization is a key barrier to reducing plastic waste and pollution.

 

Barriers to plastics disclosure and accounting

 

The lack of standardized frameworks for plastics accounting presents a serious challenge for companies that want to track their plastic usage and waste but are unsure where to begin or unaware of the efficacy of current metrics used to manage plastic waste. The lack of consistency across existing standards also makes it costly for companies to navigate this landscape. To overcome this barrier, it is important for IGOs and industry leaders to develop internationally recognized standards and frameworks for plastics accounting and disclosure to provide companies a clear path to move forward in their efforts. This will help improve the consistency and comparability of metrics and data and provide confidence to businesses that this effort is cost-effective and worthwhile, which will further aid in the widespread adoption of the standard.

 

The value of harmonized standards can be seen in the case of GHG emissions. Standards such as GRI, Carbon Disclosure Project (CDP), and Sustainability Accounting Standards Board (SASB) have enabled consistent measurement and disclosure of key sustainability metrics like GHG emissions. To further boost GHG reporting, mandatory reporting standards, such as the Corporate Sustainability Reporting Directive (CSRD) and U.S. Securities Exchange Commission (SEC) Climate Disclosure Proposal, were developed to prioritize increased compliance with measuring and reporting progress over GHG emissions. These standards have enabled companies to initiate action as they actively develop processes to collect and track GHG emissions and implement action plans to reduce carbon emissions. In addition, several United Nations programs and organizations have brought together various parties to establish standardized GHG measures and practices. For example, the United Nations Framework Convention on Climate Change’s (UNFCCC) Paris Agreement played a crucial role in catalyzing corporate action on emissions reduction, thereby highlighting the role of IGOs in evocating pro-climate business responses.

 

The CDP’s water security questionnaire is a positive step toward harmonization of plastics disclosure. In addition, the United Nations Environment Program (UNEP), an initiative that works with governments, industry leaders, and UN entities to address environmental challenges, is currently in discussions to create robust mandates for plastic waste in the form of the UN Treaty on Plastic Pollution.

 

Implementing a unified approach to plastics accounting through the UN’s negotiations can help organize companies to achieve successful plastic waste management so that:

  • Metrics are aligned across industries.
  • Efforts made to reduce plastic waste are measurable and impactful.
  • Companies comply with this legally binding policy (should it be finalized).

Role of policymakers in plastics accounting

Given the aforementioned benefits of plastics accounting in reducing plastic waste, it is important to provide companies effective tools to mitigate the plastic crisis. Policymakers are uniquely positioned to:

  • Prioritize the development of scientifically backed and internationally harmonized standards for plastics accounting — This will enable businesses to measure plastic produced and waste generated, set time-bound targets and report progress using the appropriate metrics identified in the standards.
  • Mandate the disclosure of plastic metrics via reporting — The voluntary nature of the current frameworks and standards can stall corporate action on the issue of plastic waste. Therefore, it is essential that the developed standards be legally binding.
  • Incentivize the adoption of standards and reporting — Use of the right incentives such as tax breaks, rebates and credits could lead to a higher degree of compliance.

As the UN Treaty on Plastic Pollution aims to address the whole lifecycle of plastics, incorporating plastics accounting into the treaty will enable relevant stakeholders to quantify the impact of plastic across each stage of the plastic lifecycle and enact mitigation strategies accordingly. Furthermore, legally mandating plastics accounting via the treaty can serve as a clear incentive to make plastic waste management a business priority, with violations potentially leading to public concern about a company’s commitment to sustainability, and of course, fines and penalties for companies that violate the treaty.

Benefits of plastics accounting to businesses and society

Effectively managing plastic waste has numerous benefits for businesses, consumers and society at large including:

  • Customer loyalty: Consumers increasingly consider sustainability as a factor when deciding from which companies to make purchases. A 2022 survey demonstrates that over a third of shoppers report a modest change in their shopping behaviour, and nearly 30% said they have significantly changed their shopping habits to be more environmentally friendly.9 By adopting forward-thinking plastics accounting policies, companies can demonstrate their genuine commitment to reducing plastic waste and drive consumer loyalty.
  • Investor relations: In recent years, investors have reviewed sustainability metrics to help inform investment decisions. As investors increasingly value sustainability, it is essential that companies can clearly articulate their sustainability efforts to foster interest from investors. According to a 2022 study from the Harvard Law School Forum on Corporate Governance, over a quarter of global investors reported that ESG was central to their investment approach in 2022 (26% vs. 28% in 2021).10 Taking genuine steps toward a more sustainable future can also open the door to new government incentives. In the US, regulators are introducing incentives for brands that meet certain environmental guidelines.
  • Resilience: Taking steps to reduce reliance on plastic can help promote business and community resilience in the long term. Climate change-induced natural disasters, social upheavals and the pandemic have led to an increased number of supply chain interruptions. A 2021 statement from the World Economic Forum predicts that companies could face supply chain disruptions lasting at least one month every 3.7 years on average.11 To prepare for future disruptions, companies should invest in forward-thinking, sustainable sources of value.

Conclusion

The UN’s ongoing discussions on a plastics treaty represent a key moment for all industries. A unified, legally binding treaty on plastics represents an important step to manage this source of pollution. While the UN is in the negotiation process, it is essential for companies to reflect on their current plastics waste practices. Adopting effective plastic waste management is associated with several business benefits, including customer loyalty, investor trust and resilience in the long term. Industry leaders should seek to define plastics accounting frameworks that suit the needs of their industry, adopt practical measures to report plastic waste and commit to effective plastics waste management moving forward.

Nidhi Potharaju, Kristin Bianca, Ashley Pajor, Niraja Chopade and Brianna E Wren also contributed to this article.

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Summary 

As governments and companies alike grapple with changing international regulations and market expectations, plastics accounting is an important lever to tackle plastic waste and reduce the environmental impact of plastics. Plastics accounting can help companies accurately measure their plastic waste generation, develop well-informed mitigation strategies, and track their performance against other industry leaders. Incorporating plastics accounting into regulatory levers, such as the United Nations Plastics Treaty, will help develop a centralized mechanism for companies to manage plastic waste effectively.

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