Government and investor tackle plastic pandemic

Government and investor tackle plastic pandemic

Plastic waste is one the greatest environmental challenges the world faces. According to a study by the World Economic Forum, by 2050, there will be more plastic in the ocean than fish.  

Plastic planet

Since the invention of plastic, the world has produced over 9 billion tonnes of it and almost 7 billion tonnes have become waste. Our consumption of plastic has increased exponentially, and we have developed an addiction to this versatile, yet environmentally destructive material, a third of which we now use for packaging.

In addition, plastic production continues to rise steadily and is expected to double again in the next two decades according to the European Commission. China is still the largest producer of plastic, accounting for over 25% of global production.

Bad plastics

Not all plastic is equal. Since 1988 plastic has been classified into seven different categories in order to facilitate identification, and thus it's recycling. A common type of plastic used in consumer goods is Polyethylene Terephthalate, also called PET. It's coded as type 1 and is widely recyclable.

It's the plastic that is used to make water bottles and has become a symbol of the single-use plastic waste problem. However, PET only represents 11% of all plastic and the other types are not as easy to recycle or reuse.

Threat to life

Plastic has many benefits, including being lightweight, strong, durable and versatile. It also allows food to be kept for longer or to provide safe and clean drinking water.

However, one of the challenges is that much of it ends up in our oceans and therefore presents a risk to biodiversity as well as animal and human health. It is estimated that between 5 and 13 million tonnes of plastic enter our oceans each year, mainly via rivers from China, Indonesia, Vietnam, Thailand and the Philippines.

Scientists estimate there are at least 5.25 trillion plastic particles weighing nearly 270,000 tonnes floating in the oceans. Plastic waste has been washed up on beaches and found in some of the most remote places on earth. 

The presence of plastic in our oceans causes what the UN has labelled as "irreparable damage". It threatens wildlife as it strangles turtles, poisons dolphins, sickens birds and ultimately enters the food chain. 

Material progress

Despite the clear challenges, there are reasons to be optimistic. Public policy is slowly catching up. In December 2017, almost 200 nations signed a UN resolution to eliminate plastic ocean waste. Countries around the world have taken different approaches, such as implementing a 5p levy on plastic bags in the UK, banning the use of plastics bags or banning the import of foreign waste such as in China. 

Businesses are also working together to find a solution to the plastic waste problem. In the UK over 40 companies and organisations came together for the UK Plastic Pact. Led by the Ellen MacArthur Foundation and The Waste and Resources Action Programme (WRAP), the parties which include supermarkets and consumer goods companies, have agreed ambitious targets to ensure that by 2025, 100% of plastic packaging is reusable, recyclable or compostable.

Pacts against plastic

By 2025, the UK Plastics Pact aspires to have taken action to eliminate problematic single-use packaging through re-design, innovation or alternative materials. The aim is that by 2025 70% of plastic packaging will be effectively recycled or composted and all plastic packaging will contain an average of 30% recycled content. 

A new investor coalition, The Plastic Solutions Investor Alliance, was also launched to encourage companies to disclose annual plastic packaging use and set plastic packaging use reduction goals. An Investor Statement has been published and is backed by investors with a combined $1 trillion of assets under management. EdenTree was among the early signatories.

Take action: make the change

Responsible and sustainable investors should share the concern of their consumers when it comes to the plastics problem. Routine engagement with retailers and manufacturers on the topic of plastics, as part of a wider programme of engagement on environmental, social and governance (ESG) issues will ensure that the topic is not forgotten and companies, over time, will embrace more sustainable models. 

Companies that are embracing the model of the circular economy also provide a strong and sustainable investment opportunity. Minimising waste is not only the right thing to do; instead, it is a necessity as resources become scarce. Investors need to assess companies both on their impact and dependency on natural capital. For investors, identifying those trends and understanding the risks of a linear model is likely to become even more important.

Esmé van Herwijnen is responsible investment analyst at EdenTree Investment Management