What has happened?
The findings were part of a series of studies from the World Bank investigating the economic and environmental impact of applying circular economy principles within industries. The study analyzed the plastic supply chains of Malaysia, the Philippines and Thailand, and found that 75% of plastic that could have been recycled had been discarded. This means that almost 5 million of the 6.5 million metric tons of plastic produced is either hauled to trash heaps, dumped in oceans, burned in incinerators or simply scrapped as litter in the open environment.1
Note: study focuses on recyclable plastic resins (PET, LDPE, HDPE and PP)
Researchers focused more specifically on the most easily recyclable plastic resins used in beverage bottles, plastic bags, cleaning sprays and food packaging, known otherwise by their chemical names of PET (polyethylene terephthalate), LDPE (low-density polyethylene), HDPE (high-density polyethylene) and PP (polypropylene). Plastic resins like these are classified as thermoplastics which can be softened and molded under high heat and pressure making them easier to convert and reuse for other products or processes.
This means that plastic trash still carries significant economic value if salvaged. Yet, despite the existence of recycling technologies, most plastic is ditched – along with its economic potential.
Why does it matter?
Emerging markets represent only a small fraction of a worldwide problem. According to a World Economic Forum panel of experts, 400 million metric tons of plastic is produced each year globally – of which only 14-18% is recycled. If the World Bank’s valuations for Southeast Asia were applied to global plastic volumes, it would mean USD 370 billion of material assets are dumped each year.2
Losses like these are not only economically wasteful but also environmentally damaging. Discarded plastic enters oceans, leaks in landfills, litters natural landscapes and, when burned, contributes to global warming.
The UNDP estimates 13 million metric tons of plastic waste (or one garbage truck per minute) are added to oceans annually, entangling marine creatures, ensnarling coral reefs, and littering sea beds. Scientists put damage to oceanic and marine ecosystems at USD 2.5 trillion.3,4
Moreover, the production and incineration of plastic creates more than 850 million metric tons of greenhouse gases each year – which is equal to the emissions of more than 180 million gas-powered cars.5,6
The world’s consumption and production of plastic is in desperate need of a reboot.
What does it mean for investors?
According to Pieter Busscher, portfolio manager of the Robeco Smart Materials strategy, the problem with plastics is a dilemma faced in many industries—how to efficiently produce the materials needed for economic growth while effectively managing the waste produced in the process. “We look at companies that provide solutions to make the manufacturing cycle more efficient and less resource intensive. A key feature of the strategy is investing in companies turning industrial waste, like plastic, into valuable materials that can be reused across industries.”
Meanwhile Robeco’s Circular Economy strategy attacks plastic overproduction and excess waste with an entire arsenal of approaches ranging from biodegradable packaging and recycling to digital platforms that share, track and trace products before, during and after use. “It might be counterintuitive,” says the strategy’s portfolio manager, David Kägi, “but to effectively combat pollution, companies need to think about waste during product design, manufacturing, and use and not just at the end of the product’s life. We focus on companies across a wide spectrum of sectors that are successfully adopting this approach.”
1 The World Bank Group 2021. Plastic Circularity Market Study Series: Thailand, Malaysia, and the Philippines. March 2021. Marine Plastics Series, East Asia and Pacific Region. Washington DC.
2 World Economic Forum. Plastics, the Circular Economy and Global Trade. White Paper. July 2020. Cologny/Geneva Switzerland.
3 Volume of plastic. United Nations Development Program, UNDP. The Great Garbage Patch. A tidal wave of plastic. https://feature.undp.org/plastic-tidal-wave/#article
4 Cost to marine ecosystems. N. Beaumont, M. Aanesen et al. Global ecological, social and economic impacts of marine plastic. Vol. 142. May 2019. Pp 189-195. https://www.sciencedirect.com/science/article/pii/S0025326X19302061
5 Center for International Environmental Law (May 2019). Plastic and Climate: the Hidden Costs of a Plastic Planet. White Paper Report.
6 Comparative car emissions calculated using the US Environmental Protection Agency, greenhouse gas emissions calculator, https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator
The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong. This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions. The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.