On July 24, 2018, non-governmental organization (NGO) ClientEarth published a report called “Risk unwrapped: Plastic pollution as a material business risk.” According to ClientEarth, “companies face serious material business risks for their involvement in creating plastic waste.” The new report “details four types of business risk that companies may be exposed to and sets out the legal obligations on their directors to take action to deal with these risks.”
The four types of business risks identified in the report include:
“ Transition risks: risks arising from the transition from a linear economy to a more circular economy, including an increased regulatory burden and disruptive technological change;
 Reputational risks: the risk of damaging or losing the organization’s reputational capital;
 Physical risks: risks arising from the presence of plastic pollution in the environment. These can impact on infrastructure and workforce productivity, disrupt supply chains, and cause resource scarcity;
 Liability risks: risks arising whenever parties who have suffered loss of damage from plastic pollution seek to recover from others whom they allege to be responsible.”
The liability risks also include litigation risks, e.g., prosecution for failure to timely comply with new regulations.
ClientEarth concludes that companies that are “intensive plastic users and producers should be aware of the material business risks derived from plastic pollution, manage those risks in a diligent way, and disclose them, as required by law.” This means that “existing corporate governance, risk management and disclosure practices need to be revisited to ensure they accommodate the issues” discussed in the new report.
ClientEarth (July 24, 2018). “Risk unwrapped: Plastic pollution as a material business risk.”
ClientEarth (July 24, 2018). “Risk unwrapped: Plastic pollution as a material business risk.” (pdf)