As the oil and gas industry reckons with the clean energy transition, its emerging plans show one last desperate attempt to cling to continued fossil fuel extraction: a theory of growing global demand for petrochemicals, especially plastics. In a world flooded with plastic waste, however, the proposed expansion of plastic production raises red flags for investors and requires enhanced scrutiny.

In recent years, the first petrochemical-focused resolutions – addressing negative health impacts from petrochemical facilities hit by climate change-induced extreme weather – garnered a majority vote with Phillips 66 and strong votes with Chevron and ExxonMobil. Chevron Phillips Chemical has responded to the resolutions by publishing new disclosures addressing these concerns, and this year Dow agreed to enhance its related disclosures.

Yet, even as companies acknowledge the need to prepare for physical climate change and better protect communities from hazardous chemicals escaping from these facilities, investors have further cause for concern regarding petrochemical investments: the risk of stranded assets. This year, investors are requesting that ExxonMobil describe if and how it is reducing the risk of stranded assets related to the environmental impacts of its petrochemical investments. In recent years, ExxonMobil has invested heavily in expanding its petrochemical operations and plans to continue growth. Shareholders seek information on the growing risks associated with public, market, and governmental responses to plastic pollution, community health, and climate change associated with petrochemical operations and products.

While plastics and other petrochemical goods are set to overtake the transport sector as the largest driver of future global oil demand, fossil fuel companies risk overinvesting in the space. They are ignoring calls to consider how related environmental concerns may deflate such lofty demand growth expectations. Plastic pollution has become one of society’s most intractable problems, leading major corporations to make new commitments, like Unilever’s 2025 goal of reducing virgin plastic use by half. Local and international governments are imposing new policies to ban or restrict single-use and disposable plastics.

Further, the industry’s massive climate footprint is projected to use up to 19 percent of the world’s carbon budget. Therefore, global efforts to reduce GHG emissions will likely affect plastic production and use. Locally, health concerns about hazardous emissions from petrochemical facilities in low-income, fence-line communities create environmental justice issues that could reduce social license to operate and increase opposition. Investors should pay close attention and encourage better transparency from companies, since companies like ExxonMobil significantly understate these risks.

Since 2010, energy and chemical giants have invested nearly $200 billion in new and projected plastics facilities in the U.S. – investments that face an increasingly uncertain future. Investors must ask whether this risky bet on new and expanded petrochemical infrastructure makes sense.