Directors and Consultants Take Cover as Distaste for Biodegradable Plastics Grows

28 /Jan

A shift in eco messaging in the world of plastics recycling could potentially have repercussions in boardrooms across the UK, highlighting why a particular type of insurance cover – Directors & Officers – is worth considering, should any managerial decision lead to future legal challenge.

Similarly, the latest green thinking has implications for consultants, who might have advised plastics manufacturers to go down certain routes with regard to their packaging.

The debate is about what have been termed ‘biodegradable plastics’ and has been sparked by Chinese manufacturers ramping up their production of these. [1] China has seen a seven-fold increase in biodegradable plastics production capacity in less than 12 months, due to the planned and actual creation of new plant, purpose-built for this type of plastics output. It is predicted that 5m tonnes of biodegradable plastic waste will be generated by China’s e-commerce sector alone, by 2025.

Whilst ‘biodegradable’ paints a rosy picture, it actually takes many months for this type of waste to break down at landfill, where it continues to release carbon into the atmosphere.  Such waste actually needs to be processed in a special way and at high temperatures, to facilitate a six-month degrade time.  Greenpeace says biodegradable plastic does not solve “the plastics pollution crisis.”

As the consumer has no way to get this type of waste to a production facility, it adds to the plastics problem at landfill and enters the sea in just the same way as other plastic.  Greenpeace is now saying that “the biodegradable rush” has to stop.  It wants to see a shift towards re-use, rather than biodegradability.

This opinion may leave some manufacturers wondering why they have invested so heavily in biodegradable plastics production or products which could well now fall out of favour and struggle to find a market.  Some may be concerned about consumer backlash, if Greenpeace’s opinions are endorsed.

This shift in attitudes towards biodegradable plastic comes at a time when work is starting on a new plastics recycling plant on Teesside, which will convert items, such as plastic films, pots and trays, back into the chemicals and oils from which they were made. [2]

Commenting on this, Rebecca Pow MP and Under-Secretary of State at the Department of Environment, Food and Rural Affairs (Defra) said, “The Government is committed to both clamping down on the unacceptable plastic waste that harms our environment and ensuring more materials can be reused instead of being thrown away.”

Further evidence of the trend toward re-use is seen in the adoption of a molecular recycling process, developed by UK scientists and researchers, by a new mainland Europe recycling plant, which will reverse production processes, turning acrylic products back into Methyl Methacrylate (MMA).

The shareholders of any business that shifted its production to biodegradable plastics may now wonder if share prices will be impacted and whether the business has a long-term future.  Directors who took the decision to shift to biodegradable plastics could be held accountable, as could any external consultants, who offered advice on these.

Such decisions come with running a business but can be flawed. Those held accountable for a business’s direction can find themselves prosecuted, if key stakeholders feel their decisions underpinned a negative situation or incident.  For this reason, Directors & Officers cover, which can protect a director or manager’s personal assets from being damaged by a legal case, is often of great value.

For plastics-sector consultants, having professional indemnity insurance, to safeguard against any legal case that could question the professionalism of advice given, is highly advisable.

If you would like to talk to a member of our team about both types of cover then please get in touch.

 

Sources:

[1] https://www.bbc.co.uk/news/world-asia-55301203

[2] https://www.gazettelive.co.uk/news/teesside-news/whats-started-here-could-change-19513352

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