Majority of Phillips 66 shareholders support studying shift away from virgin and single-use plastics
A first-of-its-kind shareholder resolution challenging a major petrochemical company on plastics production received majority support (50.4%) from Phillips 66 shareholders at the company’s annual meeting last week.
The resolution requests that Phillips 66 publish a report describing how it could shift its plastic production business from virgin to recycled plastic polymers, assess the resilience of its petrochemical assets under virgin-to-recycled transition scenarios of five and 10 years, and study the financial risks associated with such scenarios.
Phillips 66 is the joint owner of Chevron Phillips Chemical Company, the 15th largest global producer of virgin plastic resins bound for single-use applications, according to data published in the Plastic Waste Makers Index.
The scientific community has warned that plastic pollution may be nearing an irreversible tipping point. The plastic lifecycle imposes costs on the environment, climate, and human health that are at least 10 times higher than the market price of plastics. At the heart of the plastic pollution problem are single-use plastics, which make up the largest component of ocean-bound plastic pollution.
In its 2020 sustainability report, CPChem states a goal to end plastic waste. The company was also one of the first major U.S. petrochemical companies to announce a recycled plastic polymer production target. However, the company’s planned expansions of virgin plastic production are three times higher than its recycled plastics target. In total, CPChem’s recycled plastics target is estimated to displace less than 8% of its virgin plastic production volumes by 2030.
“Petrochemical companies that are serious about their commitments to end or combat plastic pollution cannot justify continuous and rapid expansion of virgin plastic production,” said Joshua Romo, energy and plastics associate at As You Sow. “We hope this majority vote will motivate the company to thoroughly assess its exposure to the single-use plastic supply chain and provide investors with information on how it will decrease transition risk as the world moves away from virgin and single-use plastics.”
As You Sow’s resolution is based on peer-reviewed research from the Pew Charitable Trusts and SYSTEMIQ, in collaboration with global experts, which found that the world can feasibly reduce ocean plastic pollution by 80% by 2040 using existing technology. Presented as the System Change Scenario in the widely respected “Breaking the Plastic Wave” report, this transition is based on a global shift to recycled plastics (nearly tripling demand for recycled content) coupled with a one-third absolute reduction of virgin demand (mostly of virgin single-use plastic).
“While the plastics industry frequently discusses the need to transition towards a circular economy for plastics, U.S. petrochemical companies have not adequately addressed the necessity for or the potential impacts of an expeditious transition away from virgin plastics,” said Conrad MacKerron, senior vice president at As You Sow. “In fact, as demonstrated by CPChem, many major plastic polymer producers are investing in a continuous expansion of virgin plastic production.”
A similar proposal is pending at Exxon Mobil Corp, which has been cited as the world’s largest producer of single-use plastic resins. It will be voted on at Exxon’s annual meeting on May 25.
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