Why plastic waste matters to investors

Over 300 million tonnes of plastics are produced annually^[1] and is estimated to quadruple by 2050,^[2] yet only 9% of all plastic waste ever produced has been recycled. To address the realities of plastics overconsumption and growing volume of plastic waste, policymakers, consumers, and businesses have collectively called for improved ways of managing plastics, creating a strengthened investment case for opportunities across the plastics value chain. 

According to the World Bank Group’s 2021 South East Asian study, more than 75% of the material value of plastics is unrealised when plastics are discarded after single use.^[3] The region’s plastics value chain remains under-developed, with limited waste collection processes, sorting efficiency, and recycling capacities in place.

In response, governments and regulatory bodies have begun attempts to revamp waste management rules and infrastructures to better reduce, capture and process plastic waste flows. To date, more than 170 countries have pledged to “significantly reduce" the use of plastics by 2030,^[4] and an increasing number of countries including members of the European Union have imposed bans on single-use plastics. China’s introduction of its ‘National Sword’ policy in 2018 bans imports of waste, including low-quality plastics as part of its commitment to reducing domestic landfill waste, which has sent shockwaves across the global recycling industry. In parallel, legislation to forbid disposable and non-recyclable packaging is planned in both China and the EU. As the regulatory landscape on plastics management tightens, investors who fail to pre-empt or accommodate the growing need for plastic waste reduction strategies will be left exposed, with regulatory risk and cost of non-compliance likely to increase. 

In addition to the push from policymakers, shifting consumer preferences underpin emerging opportunities in plastics management. PwC’s recent global consumer insights survey reveals that over 50% of global consumers are buying more biodegradable / eco-friendly products and intentionally buy items with eco-friendly packaging or less packaging. Such figures go beyond 70% in major Asian economies such as China, Philippines, and Vietnam. This can be attributed to the rise of purpose-driven consumers - those that prioritize sustainability and brand trust when making purchasing decisions. Meanwhile, rising demands for online shopping could mean a significant increase in demand for packaging. With this in mind, companies with a holistic approach to managing and upcycling plastics will be better positioned to navigate increasing consumer expectations.

Leading corporations have been pledging to achieve ambitious waste reduction targets. Unilever has committed to plans to convert all its plastic packaging into fully reusable, recyclable or compostable solutions by 2025. Coca-Cola and Estee Lauder among others have also announced plans to reduce single-use plastic and boost recycling efforts. This creates additional demand for solutions and technologies to achieve these targets. Businesses and brands that are equipped to help others manage waste and transform operations sustainably will be better positioned to form strong corporate partnership and capture new trends in consumer behavior. 

With evolving regulation, consumer trends and business needs, more resources and investments will be needed to scale solutions to help tackle the overflow of plastic waste globally. For investors looking for returns beyond financial performance, this is a unique opportunity to become an early investor in an emerging sector that will create significant social value by reshaping the way we manage waste.