Once universally touted as a miracle material responsible for helping to usher in the postwar age, plastic use is now derided for its environmental impact – whether it’s emissions from plastic production or because it’s seeping into our marine ecosystems and killing our whales, compromising our food supply, even endangering human health.
And there’s little question that this once nascent movement has moved to centre stage. It’s a global revolt in which citizens are demanding change while investors are scouring for investment opportunities that offer solutions to the plastics crisis.
It’s little wonder.
Consider these figures. Across continents and countries, humanity currently produces about 9.2 billion tonnes of plastic and more than 6.9 billion tonnes have become waste. Even more worrying? Of that figure, 6.3 billion tonnes never see a recycling bin, according to a global study released in 2017 in the journal Science Advances.
And what’s happening globally is reflected here at home. A new report from Deloitte and ChemInfo Services shows that it’s generally cheaper and easier to produce new plastic, use it and throw it away, than it is to recycle it. Despite 30 years of recycling programs in Canada, more than 3.3 million tonnes of plastic ended up in the trash in 2016, 12 times the amount of plastic that was recycled. And almost 90 per cent of the plastic headed for the recycling bin is from packaging, the report found.
Just this week, in a bid to help deal with the waste, the Liberal government of Prime Minister Justin Trudeau announced plans to ban single-use plastics as early as 2021.
In Europe, regulators are pushing hard for change and similar measures may eventually take hold in North America. Last month, MSCI, the index and data-analytics provider, played host to a client meeting in London to discuss the issue and plans similar discussions in both Paris and Frankfurt later this year.
Indeed, investors are increasingly challenging industry on their use of plastic throughout their production and retail life cycles.
There are real opportunities for investors wanting to marry their interest in improving environmental outcomes with returns, primarily by looking to companies that have found novel solutions by turning plastic waste into highly beneficial products, as well as in those companies that provide essential waste services.
Trex Company Inc. (TREX-N), for example, a manufacturer based in Winchester, Va., recycles plastic bags by turning them into long-lasting decking products. Since its founding more than a decade ago, the company has been on a growth trajectory, stealing market share from traditional wood-based manufacturers.
Similarly, Britain-based Kingspan Group (KGSPY-OTC), a global leader in building energy solutions, has found a unique way of recycling plastic bottles into wall board insulation. More recently, the company announced plans to add recovered ocean plastic to its manufacturing chain.
We also believe that where the economics of recycling isn’t feasible, effective and safe landfilling is an important part of responsible waste management. Companies such as Waste Connections Inc. (WCN-T) provides recycling services for many municipalities, but the company also designs and operates engineered landfills for the bulk of used materials that can’t be recycled.
As we look to the future, we believe there will be significant opportunities in bioplastics – materials made from things such as woodchips and food waste.
There’s still much work to be done.
But given the mounting chorus of criticism, and growing acknowledgement that plastic waste is both an environmental and business risk, we believe investor opportunities are only likely to continue to expand as the next decade unfolds.
Martin Grosskopf is a vice-president and portfolio manager at AGF Investments Inc. AGF owns all stocks mentioned in this article.
The views expressed in this article are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. References to specific securities should not be considered as investment advice or recommendations.