Danone just can’t seem to do right for doing wrong. Two years ago, activist investors helped to oust the chief executive of the bottled water and dairy company, claiming he had put too much emphasis on the pursuit of environmental and social sustainability compared with financial performance.
Now three environmental groups are suing the producer of Evian water and Activia yoghurt for allegedly failing to do enough to help cut rising plastic pollution.
Lawyers expect there will be many more such cases to come. Like the challenge to Shell in 2021, where a Dutch court agreed with environmentalists that the oil major was not doing enough to reduce carbon emissions, the case against Danone could accelerate a new class of challenge over plastics.
The NGOs are suing Danone under a French law that imposes a duty of vigilance on larger companies over the environmental and social impact of their activities. They are obliged to map their impact in these areas, and to set out measures to address any serious harm. Not surprisingly, Danone fiercely denies the allegations that it failed to address plastics in its vigilance plan.
In fact, the company prides itself on its ambition for reducing plastics. According to conservation charity the Ellen MacArthur Foundation, it appears to be doing more than PepsiCo, Coca-Cola, Mondelez, Diageo, Mars and others to cut the amount of virgin plastic it is using — no mean feat for one of the world’s biggest bottled water producers.
But like others in the foundation’s global commitment to cut plastic waste, Danone increased its total volume of plastic packaging last year and is not expected to meet many of the voluntary targets it set for 2025.
Whether Danone wins or loses, this an important milestone in plastics-related litigation. The NGOs are not seeking damages for harm done or for misleading claims on sustainability as in most other cases. Instead, they want to demonstrate that the company’s overall strategy on plastic is not sufficient given the global risks to health and the environment of plastic waste. This argument was key to the case against Shell’s decarbonisation plan two years ago.
There have been a number of plastics-related lawsuits over the years. The first was as far back as 1971, according to Connor Fraser, prime author of the NYU School of Law’s newly launched plastics litigation tracker. But historically these have been infrequent.
Not any longer, say lawyers. Last year United Nations member states agreed to negotiate a legally binding global treaty on plastic pollution by the end of 2024. Meanwhile, individual governments and the EU are also tightening up rules.
As a result, law firm Baker McKenzie expects a “steep increase” in plastics- related lawsuits against companies, a wave that “may even reach the proportions of asbestos, tobacco, or opioid litigation”. A recent study from the philanthropic group Minderoo Foundation suggested that liability risks for plastics-related companies to 2030 could exceed $20bn in the US alone.
Meanwhile, the amount of plastic waste produced globally is expected to triple by 2060, with around half ending up in landfill and less than a fifth recycled, according to the OECD. Currently only 9 per cent is recycled, due to the complexities of collection, sorting and cost.
So recycling is not the answer. Reducing use is.
Investors are increasingly aware of the risks to their portfolio of companies who rely on plastics, and not just those who produce the material. “We are identifying companies that are major plastics users and are starting a dialogue with them to set targets on reduction of plastic use, for ‘re-use’ and for recycling,” says Arthur van Mansvelt, senior engagement specialist at Achmea Investment Management, the asset management arm of Dutch insurer Achmea.
Yet some investors stress the complexity companies face in addressing the problem. “If everyone eradicated all single use plastic and replaced it with environmentally friendly alternatives that could increase the call on land for bioplastics, for example, or increase the weight of every product which would have a negative impact on carbon emissions,” says Nick Stansbury, head of climate solutions at Legal & General Investment Management.
The world is still some way from finding an acceptable solution to the problem. In the meantime, it doesn’t matter whether a company is sincere about reducing its plastics exposure. Danone’s case shows that until the rising trend of plastics pollution begins to reverse, no one is safe.
