Opportunity in Waste – Plastics and ESG Investing

Plastic pollution has deep environmental and social impacts. Every year, we dump around 8 million tons of plastic waste into the oceans. Plastic waste makes up most of the sea debris on the surface and seafloor. And we don’t seem to be able to wean our economies off this plastic addiction. Addiction is the right metaphor because, like anything addictive, the plastic industry hurts our economies and wastes untold amounts of money.

plastic waste

Of the 368 metric tons of plastic packaging the world produced in 2019, 95% was unrecyclable, single-use plastic. Not only did this waste cost $80-120 billion to produce, but it also went into landfills, oceans, streams, and rivers worldwide, poisoning the environment.

The plastic waste problem is a multi-pronged catastrophe. And unless we do something, it’s not going to go away. Plastic waste may take up to 500 years to degrade into non-existence in the oceans. During this time, it would continue to poison the wildlife and flora. If fish ingest the plastic when it breaks down into smaller pieces, it can easily end up back on our tables and in our stomachs.

Fortunately, concern for the environment and the health of our communities has taken hold on grass-root levels. And the affluent masses of industrialized nations, those who drive capitalism through their spending and investments, are increasingly voting with their money.

ESG Investors are Socially and Environmentally Aware

ESG investing no longer prioritizes financial gains above everything. ESG investors are aware of the social and environmental impacts of companies and only invest in those that align with their expectations in this sense. And ESG investing is gaining traction world-over.

ESG investing

According to investingstrategy.co.uk “ESG investing has grown into a $30 trillion global trend, generating record-high inflows every year.”

ESG-focused solutions to the global plastic waste problem have generated investing opportunities throughout the plastics industry value chain. Solving the plastic waste problem requires solutions from reducing production, regulating the use of plastics, recycling, and reimagining the way we use plastic in our daily lives.

The investment opportunities in these value chain segments benefit from the momentum ESG investing currently rides. ESG-focused companies are slowly but surely gaining an edge over their competitors due to their environmentally and socially responsible approach. ESG may soon become a mainstream requirement for investors, marginalizing companies that fail to adopt its principles.

The Opportunity in Plastic Waste

Until 2017, much of the industrialized world exported its plastic waste to China. As long as the country was willing to accept 85% of Europe’s plastic waste and 45% of the world’s plastic garbage, there were few incentives to create solutions focused on plastic waste reduction.

Waste Reduction

In 2017, China announced that it had had enough of being the world’s waste bin. Suddenly, organizations that had “solved” their plastic waste problems by exporting the garbage to China found themselves needing solutions.

Plastic waste reduction can’t just happen. It requires investment, innovation, and practical solutions. Companies dealing in waste disposal solutions and transfer stations are obvious targets of ESG investment funds.

Regulation

Regulations regarding plastic waste are bound to become more stringent over the coming years. The new regulatory environment will favor companies with sustainable long-term business strategies and well-rounded socially and environmentally conscious approaches.

Regulation will target investments, the transparency of recycling programs, and the execution of all ESG-oriented organizational programs. Through its requirements, regulation always creates demand for solutions and investment opportunities.

Companies that develop solutions and create systems focusing on the extraction of higher-quality plastic from the waste streams are examples in this sense.

Recycling

Plastic waste recycling has been notoriously inefficient. Due to the nature of plastic waste, only a small percentage of the waste presents a feasible target for recycling. The European Union wants all its plastic packaging to be reusable or recyclable by 2030.

To meet the target, the plastic industry needs solutions. Companies that deal with decomposing complex materials will likely benefit from the ensuing investments. Smart packaging design solutions will also present ESG investment opportunities, together with chemical companies and biodegradable packaging.

Creative Solutions

Eliminating plastic pollution from our world may require the radical rethinking and reimagining of how we use these materials. Revolutionizing plastic packaging creates research, innovation, and investment opportunities. Coca-Cola has created an innovative paperboard packaging solution for its beverage cans in Spain.

One of the biggest users of plastic packaging, Coca-Cola has committed to removing all unrecyclable plastic packaging from its production chains.

To simplify matters, ESG investors should keep their eyes on:

  • Companies that set clear plastic waste reduction and recycling targets.
  • Organizations that create and implement alternatives to plastic packaging.