By Ron Shinn
We should not be surprised that investors in companies that manufacture plastics are showing signs of being uneasy about the future.
A majority of shareholders at Phillips 66 Co. voted to have the company reassess the financial risks of producing virgin plastic in an economy that is demanding the use of more recycled resin and less single-use plastic. The vote by 50.4 percent of Phillips’ shareholders came at the annual meeting in May. It is the first such successful resolution.
The resolution approved by Phillips 66 shareholders requires the company to publish a report describing how it could shift its plastic production business from virgin to recycled 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.
A similar resolution was defeated at ExxonMobil Corp.’s annual shareholder meeting in late May, but it still received 37.4 percent of the vote.
The boards of directors at both companies recommended voting against the proposals, which were pushed by shareholder advocacy group As You Sow.
Phillips 66 is a joint owner with Chevron Corp. of Chevron Phillips Chemical Co. LLC, also known as CP Chem, which manufactures propylene and PE. As You Sow, citing figures from the Plastic Waste Makers Index, said Chevron Phillips 66 is the world’s 15th-largest producer of virgin plastic resins for single-use plastics.
In its statement advising shareholders to vote against the resolution, the board of directors pointed out that CP Chem is already committed to producing 1 billion pounds of circular polymers by 2030. This and other support of mechanical and chemical recycling makes the resolution unnecessary, they wrote. Shareholders did not buy that argument.
As You Sow credits CP Chem with being one of the first companies to publish a recycled materials production target, but said the company has announced investments in virgin resin production that are three times its recycled resin target.
ExxonMobil is the world’s biggest producer of single-use plastic resins, according to As You Sow and the Plastic Waste Makers Index.
In opposing the resolution, the board of directors said the company already has advanced recycling projects in Texas and France and by the end of 2026 expects to build advanced recycling capacity to process 551,156 tons of plastic waste per year.
As You Sow pointed out that ExxonMobil’s planned expansions of virgin plastic production are eight times higher than its recycling target. The environmental group said ExxonMobil’s target would displace no more than 5 percent of its plastic production volume.
What does this mean for the industry? If you take a long view, I think it is mostly good.
Resin manufacturers have deep pockets, significant R&D capabilities and the corporate focus that allows them to solve big problems. Contrast that with individual recycling companies, OEMs and trade groups — all focused on more day-to-day problems or refuting the next anti-plastics legislation.
Federal, state and local governments have failed to fix our patchwork recycling system. The same goes for recycling companies, machinery makers and OEMs.
For better or worse, the resin manufacturers are getting blamed for plastics in our oceans and rivers. So, is it any wonder that shareholders in these companies are uneasy about the significant negative perception of their plastics?
Resin manufacturers are already researching and investing in recycling, generally pyrolysis or chemical techniques as opposed to mechanical recycling. They recognize that their customers want more recycled resin in their products.
A nice side benefit is that much of their research focuses on materials that mechanical recyclers find difficult to process.
Leveraging the power that shareholders have is an interesting tactic and As You Sow is using it well. My guess is there will be more such resolutions to come.
Convincing shareholders to vote with their conscience instead of their pocketbooks is a tough sell. But arguments for the resolution worked at Phillips 66, and even though it did not achieve a majority, it got more than one-third of the votes at ExxonMobil.
It likely means that some investors are worried about the financial risks for companies that make plastics. I am not one of those worried about the financial risks. I think plastics manufacturers can speed up recycled resin production and slow down production of resin for single-use applications.
Conrad MacKerron, senior VP at As You Sow, said, “These high votes at Exxon and Phillips 66 send a loud, clear message to the industry to move swiftly to develop a blueprint for an expeditious transition away from virgin plastic and less production of throwaway plastics overall.”
We need strong leadership and a bold plan to fix this country’s worsening recycling system. Nudging the resin manufacturers toward more recycling could turn out to be just what we need.
Ron Shinn, editor
About the Author
Ron Shinn
Editor
Editor Ron Shinn is a co-founder of Plastics Machinery & Manufacturing and has been covering the plastics industry for more than 35 years. He leads the editorial team, directs coverage and sets the editorial calendar. He also writes features, including the Talking Points column and On the Factory Floor, and covers recycling and sustainability for PMM and Plastics Recycling.