Plastic Straw Ban: An Unanticipated ESG/Sustainability Catalyst

Pamela Styles principal

Millions of plastic straws are used every day around the world. It’s become a flashpoint, with consumers lobbying companies to stop the waste. Now scores of firms are making public statements of their intent to eliminate plastic straws, immediately or within a few years.

While plastic straws appear to be a relatively small contributor to global plastic waste, the process of eliminating their use could have large implications across multiple sectors in the B2B supply chain. How many industries could be impacted? What systemic costs, multiple-sector impacts and other unintended consequences might arise? According to AlphaSense, there is a dramatic increase in chatter on plastic straws (as well as paper straws, the viable alternative) across companies: the subject is mentioned frequently in press releases. Interestingly, Starbucks and McDonalds were the only publicly traded U.S. companies found through AlphaSense to have had shareholder proposals related to plastic straws in annual proxy filings 2018 year-to-date.

The data also shows it seems to be across many sectors.

General Search

Top 5 Sectors Results

Plastic Straws (# results) Paper Straws (# results)
Consumer Discretionary (89) Materials (109)
Materials (47) Consumer Discretionary (39)
Consumer Staples (27) Energy (36) *
Industrials (24) Consumer Staples (21)
Health Care (10) Industrials (11)

    *Only (1) result in the plastic straws search.  Paper straws require more energy

The elimination of plastic straws is now being turned into a competitive public relations opportunity:

For example, in Food and Beverage:

  • Starbucks’ [$SBUX] goal is to eliminate use of plastic straws in its stores by 2020, removing the creation of 1 billion plastic straws per year  
  • A&W Canada [$AW] has advertised it will be the first restaurant chain In North America to eliminate plastic straws (or 82 million straws per year.)

In Lodging and Leisure:

  • Marriott [$MAR] just announced it will eliminate plastic straws and stirrers by July 2019 across its 6,500 locations, eliminating use of 1 billion plastic straws per year and a quarter billion of plastic stirrers.
  • Hilton Hotels [$HLT] plans to eliminate use of 5 million plastic straws per year by the end of 2018.

And in Travel:

Manufacturers’ facilities equipment conversion and investment capital may have to step up quickly to meet the shifting demand for large scale alternative straws manufacturing capacity.

Seeing all sides of the straw ban debate

There are more sides to the straw ban than can possibly be covered in a short blog. For example, while McDonalds [$MCD] just announced it will eliminate plastic straws in all of its UK and Ireland restaurants, it is resisting these efforts in the United States, with support of its recent shareholders’ vote. McDonald’s uses 95 million straws each day.

Meanwhile, disability groups are voicing concern about the elimination of plastic straws in restaurants and cafes, as many disabled people cannot drink from standard cups. Others question whether the straw-ban tsunami is a costly distraction away from a higher impact environmental priority, citing that 10 rivers in Asia and Africa have been found to be responsible for most plastic debris found in the world’s oceans.

While front line consumer companies are making promises, do the millions and billions of straws numbers add up?  How much overlap and conflation may be going on in public relations communications? Will it be possible for the supply chain to meet the demands for non-plastic straws in the near term?  If nothing else, the current straw-ban tsunami should be a wake-up call for the attention of most every corporate Board and executive leadership team. Make sure you are actively bringing your company’s ESG/Sustainability visioning,comprehensive strategy, policies and operations coordination up to date with the times.

Pamela Styles is principal of Next Level Investor Relations LLC, a strategic consultancy with dual Investor Relations and ESG/Sustainability specialties.

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