The ‘Blue Planet effect’ has had a profound impact on public attitudes toward plastic waste. Broadcast on the BBC last year, Sir David Attenborough’s Blue Planet 2 laid bare the damage caused by plastic pollution, with the programme revealing that we dump eight million tonnes into the sea every year, accompanied by shocking images of poisoned marine life.
There is an estimated 150 million tonnes of plastic in oceans today and, at current rates, we are on track to have one tonne for every three tonnes of fish by 2025 and more plastic than fish in our waters by weight by 2050 (according to World Economic Forum figures).
Given such alarming predictions, plastic pollution has quickly become a mainstream issue and urgent action is needed from consumers, companies and governments: we need a global effort to eliminate single-use plastics and significantly reduce use, and improve recovery, of the rest. As investors, we see the environmental and social impacts, the financial value of tackling this issue and, therefore, the potential benefit to our clients in supporting companies that can deliver solutions.
Closing the loop of the plastic lifecycle
Only 14 per cent of plastic packaging is currently collected for recycling and just 5 per cent retained for subsequent use, for example, highlighting the opportunity for companies working to improve this.
One area of investment opportunity is through the development of ‘regenerated’ plastics. These are made from recycled plastic waste, avoiding the creation of new virgin material from oil-based petrochemicals and helping to close the loop in the plastic lifecycle.
Regenerated plastics benefit from escalating environmental regulations and the rise of conscious consumerism
Regenerated plastics are highlighted in our investment theme of increasing waste treatment and recycling, which benefits from long-term structural drivers including increasingly scarce resources, escalating environmental regulations and the rise of conscious consumerism.
One company we have identified and invested in as part of this theme is Italian textile manufacturer Aquafil. The company’s main product is Polyamide 6, better known as nylon, which is tough and durable, as well as being lightweight, quick-drying, shrink and fire resistant. As a crude oil derivative, however, nylon has a number of sustainability challenges. Recognising this around 20 years ago, Aquafil decided to tackle this issue by trying to improve the sustainability of nylon production.
The company set about researching the process of depolymerisation, taking nylon from old fishing nets and carpets, breaking down the long chain polymers and turning this back into the monomer building block Caprolactam. This can then be re-polymerised into new nylon over and over again in a regenerable fashion. After years of trial and error and investment, this was realised as Aquafil developed a commercially viable process to recycle used nylon, branded Econyl.
Bio-plastic potential
Another investment theme across our portfolios is Improving industrial and agricultural processes and, as part of this, we look for companies offering sustainable alternatives to current food production and packaging.
Dutch company Corbion is another recent addition to our funds, a natural preservative business that has spent decades finding ways to keep food fresh and stable for as long as possible. It is now branching out into bioplastics, which are gaining traction as an alternative to traditional plastics made from non-renewable petroleum reserves.
Very few of us can say we are not part of the plastics problem
In contrast, bioplastics – with many made from Polylactic Acid (PLA) – are derived from renewable resources like corn starch or sugar cane, which means product designers can have an end in mind at the outset. It is important not to see bioplastics as an ultimate solution to marine littering however – PLA is biodegradable only in industrial conditions at present – but they represent a significant move in the right direction.
While we continue to invest in such solutions providers, very few of us can say we are not part of the plastics problem. Plastic is therefore a priority engagement issue for us in 2018 and we are working with our investee companies to drive change.
Our clients want to invest in companies that can earn sustainable financial returns by delivering positive environmental impacts: after all, there is little point in saving for a retirement by the beach if we have no beaches worth going to.
Key Risks:
Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term. Some of the Funds managed by the Sustainable
This article is taken from the Good With Money Good Investment Review, produced in collaboration with 3d Investors and available here
