Climate Week NYC takeaways for the plastics industry

Aligned with the United Nations General Assembly (UNGA) meeting, thousands of government officials, heads of state, investors in climate, academics, corporate executives and sustainability change-makers gathered for Climate Week NYC.

Reflecting on this gargantuan event, one thing is clear: Every industry will be impacted by the discussions held at Climate Week NYC, and the plastics industry is no exception.

Stakeholders across industries engaged in wide-ranging discussions, including the need for increased government support and legislation to propel climate action and foster progress toward sustainability targets.

Other topics including advancing the clean energy transition and climate financing were also central to many discussions. Yet, one topic rose above the rest, cutting across sectors and topics: carbon markets.

Carbon markets, specialized financial markets that facilitate the purchase and sale of carbon credits, allow governments, corporations and other nonstate actors to trade greenhouse gas emissions credits to achieve climate targets.

While carbon emissions are not the only measure for climate action, today carbon markets are the most advanced mechanism to measure progress and get us on track toward meeting global climate goals.

The plastics industry faces significant challenges in its journey toward sustainability. The plastics industry is now the fastest-growing source of industrial emissions. These emissions typically come from four areas: fossil fuel extraction, production, distribution and disposal. Fourteen percent of all fossil fuels today go toward plastic production, with 95 percent of all plastics made from fossil fuels.

With such a vast supply chain, it can take time to implement widespread changes. The industry will need to take an in-tandem approach to emissions accounting and reduction together with participation in carbon markets. As the plastics industry has some hard-to-abate emissions, carbon credits can complement measurement and reduction actions, counteracting the impacts of these emissions and supporting progress toward sustainability goals. This is why discussions at Climate Week around carbon markets should be an essential focus for plastics industry decision-makers.

To take part in carbon markets, plastics players will first and foremost need to accurately measure emissions footprints. With accurate measurement, reporting and verification, leaders can make data-driven decisions on how to mitigate their impact, whether through reducing energy requirements with more efficient machinery and processes, transitioning to renewable energy sources, or integrating more bio-based materials to reduce the extraction of and reliance on fossil fuels.

However, carbon markets can only support the plastics industry's decarbonization if there is trust and transparency in the system.

Carbon markets have existed for over two decades but, lacking standardization, have taken a reputational hit due to bad actors misusing what should be a positive system for decarbonization. As such, to move forward with a reliable, accurate carbon credit system — and for the plastics industry to be a beneficiary — there must be clear carbon credit assessment methodologies, backed by transparent and verifiable carbon market frameworks.

With this mechanism in place — much like tech giants and airlines are doing — plastics companies can look to carbon markets to reach emissions reduction targets for their hardest-to-abate emissions. Reaching these targets is not simply about checking a box. It's about building a supply chain road map that can deliver a more sustainable future.

The plastics industry, often weighed down by scrutiny, can be a leader in this space by contributing its considerable resources and influence to ensure carbon market frameworks are developed and adopted globally. Industry can be the shining example of how carbon markets can drive sustainable change. Where the plastics industry pioneers go, other companies and sectors will follow.

And there is a business upside as well.

Due to consumer and customer pressure and finite fossil fuel resources, sustainable practices have become a business imperative. Companies that prioritize sustainable transformation will become preferred providers to their stakeholders and importantly will be ahead of the curve, leading the rest of the field. Industry players that invest in new recycling technologies, integrate novel carbon-negative materials, implement more efficient processes and adopt renewable energy sources will come out ahead of the competition.

Investing in both green technology and carbon credits are not just beneficial for the environment but also a blueprint for long-term demand and business success.

While carbon markets may have been the topic on attendees' lips throughout Climate Week, carbon credits are just a vehicle to take us on the path of decarbonization. The real key takeaway is that a comprehensive, sustainable transition relies on collaboration. The plastics industry can lead this opportunity and provide a case study of how a heavy emissions sector can utilize a combination of emissions reduction strategies alongside carbon markets investments to mitigate its environmental impact.

While today plastics production is reliant on fossil fuels, the industry can still measure and intervene in significant ways to reduce its emissions footprint. Carbon credits can serve as a bridge, counteracting hard-to-abate emissions, as the industry develops new sustainable practices, integrates cleaner energy and adopts novel, nonextractive materials. Looking to principles of circularity can guide this transition to maximize resource efficiency and minimize waste.

As consumers, businesses and government regulations demand greater sustainability, the market for more sustainable materials will grow concurrently with capital flow. Sustainable market indexes are in fast development, and the major stock markets are already looking to integrate exclusive trading platforms for companies abiding to clear, objective and verifiable commitments.

Plastics industry stakeholders can lead this transition and reap the benefits that will come with implementation of novel materials, cleaner energy sources and technologies and the concurrent development of economies of scale over time.

By embracing carbon markets alongside innovative emissions reduction strategies, the plastics industry can mitigate its environmental impact in the near term and set the standard for industries of tomorrow.

Climate Week NYC takeaways for the plastics industry: Carbon markets as a decarbonization pathway

Jack 'Tato' Bigio is the co-CEO and co-founder of Tel Aviv, Israel-based UBQ Materials.