Big brands targeted for plastic reduction and refill commitments in 2022 proxy season

As the noisy battle over plastics continues to intensify in legislative and public debate, the behind-the-scenes tactic of shareholder advocacy has seen numerous developments this year.

Shareholder resolutions are non-binding in the U.S., but they can still yield key agreements when a proposal is withdrawn or if it goes through a successful vote. In prior years, these efforts have led major public companies to announce commitments for phasing out specific types of plastic packaging, setting broader plastic reduction goals and publishing reports on plastic recycling infrastructure.

This year, resolutions backed by groups such as the nonprofit As You Sow and investment advisor Green Century Capital Management have resulted in high-profile commitments on refillable beverage containers and one of the first absolute plastic reduction goals by a major company. Multiple important votes are still pending in the weeks ahead.

Reduction and reuse

While many categories of material can contribute to packaging waste, plastics are once again the prime focus of this year’s shareholder advocacy efforts. Conrad MacKerron, senior vice president at As You Sow, said his group used to pursue proposals focusing on all materials but intentionally made a shift in recent years. 

“Plastic is such a bellwether material. It gets people so angry that you focus on that to get their attention,” he said, adding that other materials have better recycling rates and plastic also takes on a bigger role because of its many different formats in packaging.

Another shift has been to focus on overall plastic reduction targets, rather than higher recycling rates or amounts of recycled content. In particular, MacKerron cites a 2020 report from the Pew Charitable Trusts about the need for greater emphasis on plastic reduction as a turning point for his approach to these issues.

Annalisa Tarizzo, a shareholder advocate at Green Century, highlighted this year’s commitment to an absolute plastic reduction goal by the company that owns Office Depot and OfficeMax as especially notable in this category. While the office supply retailer may not be top of mind for some working in the plastics space, Tarizzo said her work specifically focuses on companies in Green Century’s mutual fund portfolio and she intends to systematically go through that list.

“I want every single company in our portfolio that uses single-use plastics to have at least a virgin reduction goal in the next few years,” she said.

Tarizzo also highlighted a rare level of support for another resolution filed with fast-food chain Jack in the Box, which called for a report on a sustainable packaging policy. Despite a recommendation by the company’s board of directors to vote against it, that cited pandemic effects and ongoing packaging efforts, the proposal garnered 95% support from shareholders in March.

Not all proposals have seen success. After shareholder Green Century Capital asked Tyson Foods to issue a report on how it would reduce its use of plastic packaging, the proposal only received 13% support among all shareholders. But 59% of independent shareholders voted in favor of the proposal.

Yet the highest-profile outcomes to date came from two of the world’s biggest beverage companies.

In February, Coca-Cola pledged to have at least 25% of its beverages sold in refillable/returnable glass or plastic bottles, or in refillable containers through fountain dispensers, by 2030. Although As You Sow filed a proposal in November requesting a plan for refillable bottles, MacKerron said this had already been partially in the works at Coke. A related pledge by PepsiCo to set its own target this year may have been more influenced by a proposed shareholder resolution.

According to reports submitted to the Ellen MacArthur Foundation, an estimated 1.7% of Coke’s plastic packaging was reusable (down from the prior year), though MacKerron notes the company has sizable infrastructure it can expand in certain international markets. Pepsi reported its rate as 0%, though the company now owns SodaStream and MacKerron expects it to be exploring this area further. Pepsi did not respond to a request for comment to clarify information about its current percentage of reusable plastic packaging.

While interest and investment in reuse/refill systems has expanded significantly in recent years — across categories such as takeout, groceries and e-commerce — Closed Loop Partners say this is still a nascent but fast-growing area. It remains to be seen exactly what proportion of a company or sector’s portfolio could be feasibly converted to this model in the U.S., but shareholder advocates aren’t considered the ones who need to figure that out.

“They know their tactics work in pushing and they’re not the technical authorities on how to make this happen,” said Bridget Croke, a managing director at the investment firm. “If they waited until they really understood how companies were going to get there I don’t think they would be effective in pushing these companies.”

This emphasis on reuse and refill comes as different types of advocates, including environmental organizations, are increasingly fed up with plastic recycling. That tension isn’t lost on entities such as Closed Loop and The Recycling Partnership that work to direct more money to recycling infrastructure — with donations and investments from many of the major brands being targeted by shareholder proposals — but they still see a clear role for recycling to play.

“We can’t recycle everything, so I think it’s really exciting to see that this has helped generate refill goals,” said Sarah Dearman, vice president of circular ventures at the Partnership, noting investments in recycling infrastructure are still considered essential in part because “even those reusable packages will have an end of life and we need those to be recycled.”