Plastic is ubiquitous in our life. Look around and you will find all kinds of materials that are made from plastic such as smartphones or food packaging. Plastic’s versatility, lightweight, and low-cost characteristics have led to its substantial growth. Today more than 400 million tonnes of plastic are produced annually – this is the equivalent of the mass of the world population, and it continues to grow.
Unfortunately, this massive growth has lacked the corresponding waste management infrastructure. Of the 8.5 billion tonnes of plastic ever produced, 55% was discarded or landfilled, 8% was incinerated, and only 1.2% of plastic found its way into a truly circular loop. Plastic packaging is problematic. Over 70% of plastic packaging is not recovered because it is either landfilled, mismanaged, or uncollected. This translates to up to USD 120 billion lost to the economy after a short first use.
Mitigating plastic pollution requires a holistic approach in order to improve waste management and plastic circularity. At Lombard Odier, we believe that we are at an inflexion point. Technological innovation, consumer demand, brand commitments, and policy shifts are all creating tailwinds to make circular plastics an attractive opportunity for investors. Earlier this year, 175 countries pledged to develop the first legally binding UN Treaty to address plastic pollution. The treaty, which is expected to be completed in early 2024, will include measures to improve plastic design, production, and disposal. Businesses representing 20% of global plastic packaging supply and demand across consumer goods, retail, and fast fashion have committed to reducing plastic waste.
In order to support the system changes needed in the plastic industry, USD 1.2 trillion of total capital investment is required between now and 2040. Investors will play a critical role in enabling innovation and scaling up deployment. Investments have already picked up in Europe and North America as the industry ramps up to meet higher demands for recycled plastics, adapt to new policies and support opportunities for growth and value creation. Strategic investors are actively pursuing vertical integration in the recycling sector, by working with waste managers, polymer producers, brand owners, converters, and retailers.
Lombard Odier has partnered with the Alliance to End Plastic Waste (AEPW) to help catalyse private asset investment in circular plastic and support research in the circular economy. The Lombard Odier Plastic Circularity Strategy will target investments in the plastics value chain including innovative materials, new usage models, and improved collection, sorting and recycling. We believe this will bring together the plastic value chain and the wider investor community to help turn the tide of plastic pollution.
Guest contribution by Lombard Odier