Investing in the war on plastic

16 November 2021

4 minute read

We discuss investing in the fight to reduce the use of plastic.

Who's it for? All investors

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek professional independent advice.

As the damage done to the environment by one-use plastic becomes more and more evident, the demand for plastic recycling and sustainable packaging solutions is rising. The pandemic accelerated the online shopping habit meaning a huge increase in online delivery packaging was generated during lockdown.

The COP26 climate change summit which took place in Glasgow this month addressed how we can all live more sustainably, which included a look at the overuse of plastic. Estimates suggest that more than 8.3 billion tonnes of plastic has been produced since the early 1950s, and about 60% of that plastic has ended up in either a landfill or the natural environment1.

Public awareness around the damage being done to marine life in particular has increased considerably since David Attenborough’s Blue Planet II series was aired and became the most watched UK TV show of 2017 with 14 million viewers.

This and other awareness campaigns have moved people to start paying more attention to their own use of plastics. Almost half (42%) of UK (and US) consumers now say sustainable materials are important when it comes to their everyday purchases2.

The war on plastic has meant that consumer goods firms are paying much more attention to usage and recycling opportunities.

Stephen Peters, Portfolio Manager at Barclays, said: "The use of plastic globally is still at astonishing levels. New recycling solutions are needed and the amount of plastic packaging needs to be drastically reduced.

“However, we can’t just stop using all plastic in packaging. It plays a crucial role in protecting food, making it last longer and stopping it from being wasted, for example.

“Companies around the world have been making vast efforts to stamp out one-use plastic and to reduce the amount of waste in packaging. The winners will be those firms with recycling technologies at scale, with the lowest costs.

“There are a great number of people who feel passionately about stamping out plastic packaging which continues to litter our countryside and seas, causing damage to nature and wildlife.

“Among those are investors who might want to use their money to support businesses offering sustainable solutions to the problem of plastics and packaging in general.”

Investors who feel strongly about cutting out plastic can use their money to support those companies making the biggest inroads in reducing and recycling. Businesses focused on minimising one-use plastic and recycling have captured the attention of fund managers. They include recycling and cardboard packaging giant DS Smith.

The London-based firm has pledged that by 2023 it will manufacture 100% reusable or recyclable packaging. It aims that by 2030 all packaging will be recycled or reused. By 2025 DS Smith says it will have taken 1 billion pieces of ‘problem plastics’ off supermarket shelves3.

It is currently exploring how seaweed fibres can be used as a raw material in paper and packaging products.

Further afield, Godrej Consumer Products is an Indian consumer goods company which requires lots of plastic packaging. It has pledged that by 2025, it aims to reduce packaging consumption per unit of production by 20%; ensure that 100% of its packaging material is recyclable, reusable, recoverable or compostable and use at least 10% Post-Consumer Recycled content in their plastic packaging.

Dabur, another Indian consumer goods firm, is also committed to reducing and recycling packaging. Between 2018-19 and 2019-20, Dabur has collectively reduced plastic usage in secondary and tertiary packaging by 250 tonnes. It has been recycling PET bottles collected under its plastic waste collection drive to make T-shirts that are distributed amongst community members and school children.

Cleanaway Waste Management is an Australian waste management company involved in the recycling or safe disposal of all kinds of materials, including plastics.

Meanwhile, businesses from other industries are doing their bit. For example, Adidas has a range of sportswear made from upcycled marine plastic waste. The plastic – intercepted from remote islands, beaches and coastal communities – is shredded and reworked to become high-performance polyester yarn.

Investors who want to support companies developing sustainable solutions to help reduce the use of plastic can access these companies mentioned and more through funds managed by professionals.

We have a number of funds on the Barclays Funds List which currently own companies that relate to the theme of the war on plastic, among other holdings.

  • Fidelity Asia owns Cleanaway Waste Management
  • Janus Henderson Global Sustainable Equity owns Adidas
  • Jupiter UK Alpha owns DS Smith
  • Stewart Investors Asia Pacific Leaders Sustainability Fund owns Godrej Consumer Products and Dabur

Please remember that the fund manager may choose to disinvest in stocks at any time so if you want exposure to those companies dedicated to cutting out plastic and reducing plastic waste on a more permanent basis, you may want to consider other investments such as Exchange Traded Funds.

Investing in companies that are part of the war against plastic is just one of many investment ideas and should be part of a widely diversified portfolio.

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