"The planet is swimming in discarded plastic": How do circular economy policy statements affect corporate engagement in addressing plastic pollution?

With the global economy only 7.2% circular, strong collaboration among diverse stakeholders becomes increasingly required to tackle plastic pollution. Aware of the role of businesses as key stakeholders in designing new forms of resource use, this study seeks to answer how publicly announced circular economy (CE) policies affect the businesses' engagement against plastic waste. For this purpose, an event study methodology is used to evaluate differences in abnormal returns of large, mid and small-cap securities across 23 developed markets and 24 emerging markets -considered aligned with the overall objective of managing plastic waste and promoting circularity. The findings reveal that all companies react positively to CE policy announcements though with varying extent. Specifically, the plastic transition index appears more responsive to the CE Action Plans incorporating the product's whole life cycle into the waste management system (in particular, Australia, Danemark, France, Germany, South Africa). It is also shown that the European Union's initiatives introducing both legislative and non-legislative measures targeting areas have led to a decline in systematic risk for the plastic transition index. Overall, the results highlight that public awareness and support are pivotal factors in changing businesses' behaviour and thus can be crucial for the success of CE and waste policies.