Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

California has filed a lawsuit against ExxonMobil alleging it falsely promoted the recyclability of plastic, becoming the first US state seeking to hold an oil major accountable for plastic pollution.

The lawsuit alleges Exxon, one of the world’s largest producers of plastic, deceived the public for half a century about the sustainability of its plastic products. The lawsuit seeks damages from the oil group for harms inflicted from plastic production. 

“For decades, ExxonMobil has been deceiving the public to convince us that plastic recycling could solve the plastic waste and pollution crisis when they clearly knew this wasn’t possible,” said California attorney-general Rob Bonta in a statement. “ExxonMobil lied to further its record-breaking profits at the expense of our planet and possibly jeopardising our health.”

Exxon did not immediately respond to a request for comment.

The allegations arrive as plastics play a growing role in supporting oil demand and as the UN prepares to broker in late November the world’s first binding agreement to cut plastics pollution in South Korea, a deal that has been likened to the 2015 Paris climate agreement.

Global consumption of plastic, a primary driver of petrochemicals demand, is expected to triple by 2060, according to the OECD, reaching 1.3bn tonnes. China was the largest producer of plastics last year, surpassing North America by a slim margin, according to S&P Global Commodity Insights. 

The International Energy Agency cites the petrochemicals sector as the “single largest contributor” to oil demand growth for the next four years as the electrification of power and transport sectors curb the global thirst for crude. The plastics industry is expected to make up 10 per cent of global emissions by mid-century, up from 5 per cent in 2019, according to a report from the Lawrence Berkeley National Laboratory.

California’s lawsuit against Exxon follows the investigation it launched into the fossil fuel and petrochemicals sectors and their role in plastic pollution in 2022. A group of non-profit organisations including Sierra Club and Surfrider Foundation filed a similar lawsuit on Monday targeting Exxon for misleading claims about its plastics business. 

State and local governments are increasing efforts to hold companies accountable for plastic waste. Earlier this year, New York attorney-general Letitia James sued PepsiCo, demanding the food and drinks company reduce its plastic pollution and pay for damages. 

Developing countries, environmentalists and businesses have called for a limit on plastic production to be included in the final UN plastics treaty expected by the end of the year, arguing that relying on waste management solutions such as recycling were inadequate. 

Karen McKee, head of Exxon’s product solutions business, told the Financial Times earlier this year that a limit on production would not solve the pollution problem and that UN negotiators needed to be “open-minded” about solutions. 

Exxon produced 11.2mn metric tonnes of polyethylene last year and operates a chemical recycling plant for plastic in Baytown, Texas.

About 10 per cent of all plastic is recycled, according to the OECD, which estimates investment in recycling must reach $1tn by 2040, up from less than $20bn today. 

Business & FinanceEnergyEnvironment

Market Impact

Supply concerns at First Quantum’s Panama contributed to copper prices jumping to two-month highs traders said while First Quantum shares extended fall to drop as much as 5.7% on the news.

Deals

Market Impact

The merged company, which would be majority owned by Asia’s richest man Mukesh Ambani’s Reliance, would have lucrative rights worth billions of dollars for the broadcast of cricket on TV and streaming platforms, raising fears over pricing power and its grip over advertisers.

The US is planning to ban certain hardware and software made in China and Russia from cars, trucks and buses in the US due to security risks.

Officials said they were worried that the technology in question, used for autonomous driving and to connect cars to other networks, could allow enemies to “remotely manipulate cars on American roads”.

There is currently minimal use of Chinese or Russia-made software in American cars.

But Commerce Secretary Gina Raimondo said the plans were “targeted, proactive” steps to protect the US.

“Cars today have cameras, microphones, GPS tracking, and other technologies connected to the internet,” she said in a statement.

“It doesn’t take much imagination to understand how a foreign adversary with access to this information could pose a serious risk to both our national security and the privacy of US citizens.”

Chinese officials said the US was broadening “the concept of national security” to unfairly target Chinese firms.

“China opposes the US’s broadening of the concept of national security and the discriminatory actions taken against Chinese companies and products,” said Lin Jian, spokesman for China’s Foreign Ministry, in a statement.

“We urge the US side to respect market principles and provide an open, fair, transparent, and non-discriminatory business environment for Chinese enterprises.”

The proposal, which will now enter a comment period, is the latest from the White House aiming to limit China’s presence in the car manufacturing supply chain.

The White House has also raised tariffs on electric cars, batteries for electric vehicle and a range of other items. It has separately banned the import of Chinese-made cargo cranes, warning of cyber-security risk.

The US launched an investigation in February examining the cyber risks from so-called connected cars.

The prohibitions on software would go into effect with model year 2027, while the hardware rules would be effective three years later, giving the industry more time to re-work their supply chains.

John Bozzella, president and chief executive of Alliance for Automotive Innovation, which represents big car companies, said that though there was “very little technology – hardware or software in today’s connected vehicle supply chain that enters the US from China” the rule would force some firms to find new suppliers.

“I’ve said this in other contexts, but it applies here too: you can’t just flip a switch and change the world’s most complex supply chain overnight,” he said.

“The lead time included in the proposed rule will allow some auto manufacturers to make the required transition but may be too short for others,” he said.

He said association would continue to share its perspective as the final rules are developed.