Circular economy to the rescue? The U.S. corporate disclosure response to the plastic crisis

ABSTRACT

Media attention to the world’s growing plastic crisis exploded in 2018, almost certainly increasing social exposures for companies heavily involved in the material’s manufacture or use. Relying on arguments from media agenda setting theory (Brown & Deegan, 1998), we explore how a sample of large U.S. plastic manufacturers and users responded to the crisis in their standalone CSR reports, with particular emphasis on their use of circular economy terminology to frame that response. Circular economy ideas have been gaining traction with governmental units, non-governmental organisations, and academic researchers, and like the plastic crisis, are seeing substantially increased coverage in media outlets. The concern we address in our investigation is whether the exposed companies use the circular economy terminology in an attempt to identify with symbols of legitimacy. As expected, we find significantly more extensive disclosure of plastics-related issues in our sample companies’ 2018 CSR reports than had been the case for reports covering the prior three-year period, and we show increased reliance on the use of circular economy terms within those disclosures. We further document that the circular economy-related plastics disclosure is significantly weighted toward symbolic as opposed to substantive disclosure and is far more commonly related to disclosures of goals and initiatives than to the provision of actual data. We thus argue that rather than reflecting an underlying shift in the sample companies’ operating processes, the increased use of the circular economy terminology may be an attempt at legitimation.

KEYWORDS:

• Circular economy
• plastics crisis
• CSR reporting
• legitimacy

Acknowledgements

The authors thank the Guest Editors of the special issue, two anonymous reviewers, and participants of both the CSEAR North American 2022 Congress and the 32nd CSEAR International Conference (2022) for comments and suggestions related to the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The remaining portions of the disclosures are classified as categories identified by Hrasky (2011) as ‘descriptive’ and ‘other’. We provide more detail on the coding scheme below.

2 Hrasky (2011) uses the term ‘behavioral management’ in place of ‘substantive’. but we follow more recent research (e.g., Michelon et al., 2015; Chelli et al., 2018) and use the latter term.

3 Available at www.thomasnet.com/articles/top-suppliers/plastics-manufacturers-suppliers/.

4 Available at www.greakfreefromplastic.org/globalbrandauditreport2018/.

5 All results remain qualitatively similar when these three additional firms are excluded.

6 The missing firm-year observations are due to companies not choosing to issue a CSR report for a given year.

7 We label reports based on the year they are covering. That is, a report including data on 2018 activities is labeled as the 2018 report. For most companies the reports with 2018 data were labeled by the companies as 2018 reports, and this is consistent with financial reporting. However, some companies label their reports based on the year of release. As such, for example, a ‘2019 CSR report’ actually reflects data for 2018 in these cases, and we use the ‘2019 CSR report’ for our analyses.

8 These include, for example, polypropylene, polyethylene, polyester, Styrofoam, and others.

9 In addition to ‘circular economy’, other relevant examples included ‘circular models’, ‘circular thinking’, ‘circularity’, and reference to work with ‘Circulate Capital’, an investment management firm supporting the clean-up of ocean plastic, among others.

10 In non-tabulated sensitivity tests we also estimate models using alternative size measures (size rank within sample and size rank within group within sample). Results are qualitatively unchanged from those using the primary size metric.

11 Hrasky (2011) also included statements identifying external recognition or awards as symbolic, but we found none of these in our sample companies’ circular economy-related disclosures pertaining to the plastics issue.

12 In its 2018 report, PepsiCo labeled its section discussing packaging issues as “Circular Future for Packaging” and included the term, along with the titles of other major sections of the report, in the masthead of most pages. We did not include these cases as part of our CE Mention counts.

13 Further supporting the robustness of the findings, differences in mean disclosures for 2018 versus the pre-period remain statistically significant (at p < .05, one-tailed) when the company with the largest observation in 2018 for each of the three disclosure metrics is excluded.

14 Because Procter & Gamble has a June 30 fiscal year-end, we searched the 10-K report for the year ended 6-30-2018 as well as the report for the year ended 6-30-2019.

15 Keurig Dr. Pepper (p. 7) included the following statement in a ‘Sustainability’ disclosure in Section 1 of the report: We are committed to making a positive impact in the communities in which we live and work and to leave the world better than we found it. We continue to focus on efforts to improve sustainability throughout our value chain, working to reduce our environmental impact while helping to ensure the Company's financial growth. These efforts include … [d]esigning our packaging to enhance circular material use, including recyclability and recoverability.