Plastics: a new wave of litigation?

The widespread use and poor disposal of plastics are driving an increase in litigation across different lines of business, particularly in the US, on account of the potential harm that plastics and plastic particles cause. Alongside evolving legal frameworks, scientific advances regarding causation and source attribution could spark a rapid increase in environmental and product liability claims against plastic producers, users and waste managers. Insurers may see rising demand for pollution-related coverage amid tightening regulations. In L&H insurance, potential health effects from micro- and nanoplastics could lead to increased morbidity risks and associated claims.

Plastics are all and everywhere. The OECD projects that global production of plastics will reach 736 million tonnes by 2040, up 70% from 435 Mt in 2020. ¹ Made mostly from fossil fuels, production is paired with inadequate disposal and waste management systems. Almost half of all plastics are used only once (eg, for food packaging, grocery bags, bottles etc) and less than 10% of single-use plastics are recycled. Around twothirds are incinerated or landfilled in a controlled manner, and more than 25% leak into terrestrial or aquatic environments. ² The “Great Pacific Garbage Patch” in the Pacific Ocean, about three times the size of France, is just one shocking example of plastic waste accumulation in the marine environment.

Another side to the plastic risk equation is the slow decomposition into small particles at micro- (<5mm) or nano- (<0.1mm) scale. Large amounts of microplastics originate from tyre wear and from paints. Plastic particles are produced for commercial applications, such as in cosmetics and personal care products (microbeads). Increasingly, micro- and nanoplastics are being found in the environment, in waterways, food chains and even in geological formations. ³

Concern around the role of plastics made from fossil fuels as a climate change driver is becoming more prominent as the related impacts rise, and become more complex and self-reinforcing. ⁴ To mitigate environmental impacts, international and jurisdiction-specific programmes have been introduced to curb production, drive recycling, and to promote use of plastic substitutes (degradable plastics made from renewable sources). Further, a UN-led global treaty on plastics with 175 countries is under negotiation. Uniform standards remain lacking and things are becoming more complex. That authorities in different jurisdictions are pushing in different directions could see a rise in cases of plastics-related climate change litigation.

Plastics are a major ecological concern. Environmental harm stems from the carbon footprint left by the production of plastics from fossil fuels, physical plastic waste, and chemical additives such as per- and polyfluoroalkyl substances (PFAS) or bisphenols, used to produce softeners, plasticisers, flame retardants and antioxidants, among others. ⁵ These additives can harm plant and animal life if leaked into the environment or if they enter food chains. There is also evidence of the presence of plastics and related substances such as endocrine-disrupting chemicals in the environment. These can disturb reproduction processes.

Of late, there has been more research into the potential harm of plastic particles to human health. Findings include increasing presence of plastic particles in the body, including in the digestive system, blood stream, liver, kidney and even the brain. ⁶ Unsurpisingly, public concern is also rising. ⁷ The negative health impacts of larger (micro-) particles found in digestive systems (but assumed to be largely excreted) are thought to stem from toxicity of chemicals, such as PFAS, phthalates or endocrine disruptors. These can disturb hormonal systems and in turn fertility, weight and more. ⁸ Recent studies indicate particular danger from plastic particles at nanoscale. These can pass through cell membranes and the blood-brain barrier. Such particles are even accumulating in the tissue of a foetus, entering via the placenta. ⁹

Casualty: Scientific progress in causation and source attribution with respect to quantifying the sources and impacts of plastic pollutants, will play a crucial role in litigation. If causal relationship between pollutants and their sources is established, this will provide plaintiffs with scientific evidence of pollution emanating from specific industries and/or companies. Producers and manufacturers of plastic products, additives, distributors, but also entities responsible for recycling, waste management and water supply could be hit by environmental liability, property damage or bodily injury claim. In the US, emerging litigation trends are around public nuisance (expansion of liability with lighter burdens of proof), deceptive labelling and advertising, and product liability. Cases of contested labelling and advertising claims include producers of bottled mineral water and baby bottles being sued for marketing products as safe, but from which microplastics and additive chemicals have leaked.¹⁰

The recycling sector is also under scrutiny. In 2024, California’s Attorney General filed a lawsuit against Exxon Mobile for misleading the public on the recyclability of plastics and its potential to pollute the environment. ¹¹ There has been a significant rise in plastics litigation in the US, particularly with class action and consumer protection lawsuits. The US exit from the Paris Agreement, and the deregulations and dismantling of federal governmental agencies in the US is unlikely to reduce environmental liability litigation. Instead, the role of enforcing environmental protection will likely shift from federal regulators to courts, consumers and state attorneys general, potentially increasing litigation risk and insurance claims. A rise in litigation awards is a general driver to consider in the context of plastics’ claims scenarios.¹²

In Europe too, consumer protection regulations are increasing propensity for plasticsrelated litigation. The 2024 revision of the EU Product Liability Directive, which shifts the burden of proof to producers, increases the likelihood of compensation payouts and increases the likelihood for expanding liability. ¹³ In Asia, national authorities are still developing their regulatory and legal approaches. Some countries are adopting measures to reduce plastic pollution, but litigation is still only in early stages.

Specialty: Projects to diminish plastic pollution, boost recycling and provide alternatives may provide insurance opportunities, with rising demand for covers for pollution-related events. Companies may seek cover for associated legal defence costs and potential settlements.

L&H: While direct causal links between plastic exposure and specific diseases or deaths have not yet been firmly established, growing evidence suggests plausible ways by which plastics could contribute to both morbidity and mortality. There has been correlation between particles lodged in blood vessels and increased propensity for heart attacks, stroke or death,¹⁴ and neurotoxic effects on the brain.¹⁵  If evidence is established, L&H business may be affected via several different causes of mortality and morbidity, though no mitigation measures exist at present. In our view, this risk is perhaps one that is currently underrated.

Financial markets & insurers’ assets: Financial market exposure to plastics and microplastics is becoming a growing concern for investors due to accelerating regulatory, legal and reputation risks. Litigation is mounting, as exemplified by the aforementioned California state lawsuit against ExxonMobil for misleading claims on plastic recyclability, underscoring legal exposure across the plastics value chain. ¹⁶ Emerging class actions and consumer protection litigation, mostly in the US and the EU, are raising litigation risks, especially for petrochemical, packaging, and consumer goods firms. Long-term asset values are also at risk as fossil-fuel-based plastic production faces declining demand, regulatory penalties and policy driven phase-outs. ¹⁷ Current ESG indices and ratings often fall short in adequately capturing plastic-related risks about sustainability, long-term demand risk and stranded assets.¹⁸