A year ago, I thought a nurdle was a cricket term for a score by deflecting the ball rather than striking it. But in the last twelve months I learned that a nurdle is also a term for a small, lentil size, pellet of plastic that serves as raw material in the manufacture of plastic products.
Nurdle, an idiom for pre production plastic pellets, are the malleable polymers that are molded into everything from plastic drink bottles to plastic piping and an untold number of other consumer products. But when released into nature, environmentalists now claim nurdles are the second largest direct source of microplastic pollution in the oceans by weight.
Last month in Nairobi United Nations Undersecretary General Amina Mohammed called nurdles “an ocean Armageddon.”
This is not to be confused with post consumer production microbeads used in cosmetic products.
While many are aware of the harm from plastics in the oceans, including that communities have responded by outlawing plastic drink straws; the issue of nurdles is new to nearly everyone.
Activists tell us that due to spills and poor handling, annually billions of nurdles pellets are swept into waterways during production and transport and increasingly washing up on beaches. The mermaid tears that can be found on increasingly on the world’s beaches are often mistaken by marine animals for fish eggs and consumed for food.
Nurdles are not new so how did this just come to our attention. The environmental issue was apparently first popularized in Green Britain including as a result of the 2016 surveys conducted by the Marine Conservation Society. Then a charity in Scotland conducted the Great Nurdle Hunt, which in part concluded that “up to 53 billion pellets may be spilled annually in the United Kingdom alone.” With those origins environmentalists brought the issue to U.S. shores.
We have been working with some of this country’s largest businesses on how to respond to shareholder environmental proposals including matters of nurdles.
Environmentalists engaged public traded companies in a concerted effort beginning last year. In a media release, As You Sow, a foundation charted to promote corporate social responsibility through shareholder advocacy, described how last year it filed shareholder proposals with public traded companies. At least two of those companies, Chevron Corp. and Phillips 66 petitioned the U.S. Securities and Exchange Commission to allow them to omit the nurdle reporting proposal from their annual meeting agendas, but the SEC ruled that the companies could not omit the proposals. As You Sow announced that following its engagement that it had reached agreements with Chevron Corp. and Phillips 66 as well as ExxonMobil, to start reporting on spills of nurdles.
“The company agreed to report data it submits to state regulatory agencies regarding the amount of pellets lost in the environment due to accidental releases from its plants, the amount of material recovered within its resin-handling facilities that is recycled, substantive information on its best management practices, plastic pellet production capacity, and information on how it engages its supply chain to share best practices and help reduce and eliminate pellet losses elsewhere. It also said it will employ third-party auditing to verify its reporting.”
The companies have agreed to provide regular third party verified reports to environmentalist despite that, as the language above makes clear, in the U.S. nurdle spills have long required notice to state environmental agencies, under delegations of the Clean Water Act.
Each of the companies avoiding annual meeting stockholder proposals did so despite being listed as partners in the Operation Clean Sweep enhanced Blue a private sector initiative “to help every plastic resin handling operation implement good housekeeping and pellet, flake, and powder containment practices to work towards achieving zero pellet, flake, and powder loss, protecting the environment and saving valuable resources.”
There is reportedly still an As You Sow inspired shareholder nurdle proposal pending before DowDupont and there are similar stockholder measures pending before other companies.
But the issue is far bigger than nurdles. The larger matter is environmentally conscious stockholders, often owning only a handful of shares, driving corporate action, often action not concerned about the financial interest of stockholders.
Stockholders, including even large public employee pension funds have inappropriately demanded shareholder proposals on climate change and other environmental matters, not only from oil companies, but also aerospace manufactures and sports apparel businesses. Many have suggested that the SEC staff needs to be more conservative, as it historically had (.. before the recent SLB 14J) in granting “no action relief” when companies seek to solicit proxies without including stockholder proposals either looking to micromanage the company in violation of the “ordinary business” and “economic relevance” exceptions or unlikely to garner the necessary votes at an annual meeting.
Environmental and social concerns dominated shareholder submissions in 2018 and such can be expected to be the instance again this year. But is this a good way to run a company? And maybe the greater calamity is this not a good way make environmental public policy.