Shareholders raise pressure on big brands over plastic pollution

The proliferation of plastic waste that gets dumped into the oceans each year has intensified public and investor pressure on some of the biggest consumer brand-name companies in Michigan and Illinois to reduce their use of plastic.

Ten major consumer brands and retailers, including Chicago-based McDonald's Corp., Chicago-based Kraft Heinz Co. and Cincinnati-based Kroger Co., have been faced with resolutions from eco-minded shareholders to disclose how much of their plastic packaging goes into the environment and roll out detailed action plans to reduce plastic. Shareholder resolutions had to be withdrawn at McDonald's and Kraft Heinz because of paperwork problems, Plastics News reported in June.

But the message was received at Kraft Heinz (NASDAQ: KHC), one of the largest food and beverage makers in North American that uses plastic packaging for products that range from Heinz ketchup bottles to tubs of Philadelphia cream cheese.

Jonah Smith, global head of environmental social governance for Kraft Heinz, told Crain's that the resolution was tabled after the company disclosed its eco-friendly efforts so far and its sustainability goals for the future.

"Those were all removed because (shareholders) felt confident in our ability to achieve what we were telling them," Smith said.

Kraft Heinz aims for 100 percent of its packaging to be reusable, recyclable or compostable by 2025; currently, that figure is around 80 percent, Smith said.

The company recently unveiled fully recyclable caps for its ketchup bottles, an investment that cost $1.2 million. Smith declined to say how much Kraft Heinz is investing in plastic reduction or sustainability efforts overall.

Most companies shy away from discussing their approach to plastic use and shareholder pressure.

At Kroger's June 24 annual meeting, 45 percent of shareholders voted in favor of a resolution demanding the grocery chain develop and disclose a plan to reduce its plastic use, despite urging from the company's board to vote against the proposal, Plastics News reported.

In a statement with its annual report, the supermarket giant detailed the steps it has already taken to combat the plastics crisis, such as its plan to phase out plastic bags by 2025.

Kroger (NYSE: KR), along with its Walker, Mich.-based supermarket competitor Meijer and Deerfield, Ill.-based pharmacy giant Walgreens (NASDAQ: WBA), has joined the Beyond the Bag initiative, an effort by major retailers to reduce single-use shopping bag waste.

McDonald's, Walgreens, Kroger and Rosemont, Ill.-based US Foods either did not respond to or declined repeated requests for comment from Crain's.

According to As You Sow, one of the environmental groups behind the shareholder resolutions, McDonald's used 53,000 metric tons of plastic in its packaging in 2018. Just 2 percent of its plastic footprint comes from recycled content, while the majority comes from single-use plastic beverage cups, lids and utensils.

Although most companies say they are concerned about plastic waste and are implementing initiatives to reduce it, Reuters found the plastics industry plans to spend $400 billion on new plastic and less than $2 billion on reducing plastic waste.

Of the companies Crain's surveyed, most touted waste collection and diversion efforts.

In addition to waste diversion, Meijer said it prides itself on its green infrastructure, including permeable pavers and bioswales, which helps infiltrate stormwater and filter out pollutants, such as microplastics, before the water is discharged back into the Great Lakes.

For the Great Lakes, annual plastics pollution is estimated at 11,000 tons — a fraction of the estimated 11 million tons of plastic waste that pollute the world's oceans every year, according to a study published last summer by Pew Charitable Trusts, an independent public interest group.

In 2020, Meijer said it collected more than 6 million pounds — or 3,000 tons — of plastic film for recycling.

Erik Petrovskis, director of environmental compliance and sustainability for Meijer, declined to say what percentage of the company's packaging is currently recyclable but noted the company is "on track" to meet its target of all bakery, deli and brand packaging to being 100 percent recyclable by 2025. Today, about 95 percent of bakery and deli containers are recyclable, he said.

"When it comes to food packaging, plastic can play an important role in reducing food waste and keeping food safe," Petrovskis said.

SpartanNash Co. (NASDAQ: SPTN), the Grand Rapids-based supermarket chain whose brands include Family Fare and D&W Fresh Market, did not respond to specific questions. But in a statement to Crain's, the company said it had recycled 3.9 million pounds of plastic in 2020.

"We are continuously evaluating new ways to keep as much plastic out of our landfills as possible," said Adrienne Chance, SpartanNash's vice president of communications.

Consumer brands and retailers including Kraft Heinz, Meijer and Post Holdings Inc. said they are working to make their packaging recyclable or reusable.

While the pandemic did not directly affect any of those targets, Petrovskis said, it did impact the company's single-use plastic usage, as Meijer stores did not allow reusable bags for health and safety reasons.

Post Holdings (NYSE: POST), the St. Louis-based cereal maker that has a plant in Battle Creek, Mich., has cut its annual use of plastic film in cereal bags by 1 million pounds, said Maureen Mazurek, head of environmental social governance for Post.

Similarly, Post's crosstown rival, Battle Creek-based Kellogg Co. (NYSE: K), has reduced the packaging of its cereal bags by 17 percent, amounting to 1 million pounds of plastic. Currently, 76 percent of the brand's packaging materials are recyclable.

Kellogg declined request for comment from Crain's, but company spokesperson Kris Bahner said in a statement, "Kellogg does not produce products that include microplastics."

Although plastic manufacturers have typically left public-facing sustainability efforts to retailers and consumer brands, producers of polymers, the petrochemicals that make up single-use plastic, are increasingly speaking up to defend their environmentalism records.

Midland, Mich.-based chemicals giant Dow Inc. (NYSE: DOW), which is one of the biggest producers of single-use plastic, according to a new report, announced environmental targets for itself last year: eliminating 1 million metric tons of plastic waste by 2030, implementing 100 percent reusable or recyclable packaging by 2035 and going carbon-neutral by 2050.

Dow's global sustainability director, Haley Lowry, declined to say how much the company is investing in plastic reduction or sustainability efforts overall.

Dart Container Corp., the world's largest manufacturer of foam cups and containers, as well as the maker of Solo cups, cited some of its environmentalism measures underway in a statement to Crain's, such as the privately owned company's $18 million investment in the recycling of polystyrene, the plastic foam synonymous with Dart cups.

Most companies surveyed by Crain's said plastic can still be a sustainable choice. Dow and Kraft Heinz also said they are investing in new technologies to reuse plastic.

The problem is not with plastic itself, but rather the widespread misuse of it, said Smith, who argued a holistic life-cycle analysis is needed to determine a material's overall environmental impact.

"Plastics have approximately four times less environmental cost—particularly when it comes to carbon emissions — compared to other materials," said Lowry, who cited a study from Trucost, an independent environmental research group. This report was commissioned by the American Chemistry Council, a trade group that represents oil and chemical companies such as Dow that manufacture plastic resins.

"Plus, they offer a more affordable and healthier quality of life for billions of people," Lowry added.

Lowry panned efforts by state legislatures and municipalities such as Chicago to curb certain types of waste through new laws and ordinances, such as proposed bans on plastic grocery bags, foam cups and drinking straws.

"Bans don't address human behavior related to waste management or significantly reduce the amount of debris in the environment," Lowry said. "There are far more impactful ways to address plastic waste in the environment, like improving waste collection and recycling."

Dart's signature foam products, which have been known to harm aquatic life, have been the subject of recent municipal and statewide bans.

"We advocate for and support legislation calling for reasonable, achievable, material-neutral recovery rates and public-private funding mandates to build a nationwide network of recovery and composting facilities to process post-consumer materials of all kinds," said Michael Westerfield, Dart's corporate director of recycling programs.

In addition, he cited the company's marine debris prevention initiatives, including $100,000 in grants to cities and organizations to install stormwater management products.

Rather than eliminate plastic outright, most companies have focused their corporate sustainability efforts on education campaigns to improve public awareness of recycling and waste reduction.

"There is widespread confusion around proper disposal of biodegradable plastics, so Meijer is focused instead on improving the recyclability of plastics and educating customers on proper recycling," Petrovskis said.

As part of the Sustainable Packaging Coalition, Meijer has pledged to affix recycling instructions to all of the packaging of its True Goodness brand foods by 2022. Kraft Heinz, Walgreens, McDonald's, Kroger, Kellogg and Post also are members of Sustainable Packaging Coalition.

Dow launched a podcast series this year called Plastics Unwrapped, which features industry innovations in recyclable plastics.

All players in the industry, from consumer brands to manufacturers to municipalities, must accept a "shared responsibility" in the effort to solve the environmental crisis, Kraft Heinz's Smith said.

"None of us are perfect," Smith said. "No company is perfect. But let's all do what we can and play a role."