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Tackling the challenge of plastic pollution

What can investors do?

05 December 2018

4 minute read

Awareness of the effects of plastic pollution is growing, boosting demand for solutions to help tackle the problem.

The challenge of plastic pollution has come under intense scrutiny in recent months, sparked in part by images showing its effect on marine life in BBC documentaries ‘Blue Planet II’ and ‘Drowning in Plastic’.

Growing awareness about the amount of plastic we use, and throw away, is leading to increased need for recycling, alternative materials and innovative technologies.

Investors have opportunities to contribute to, and potentially benefit from, these solutions. We examine the steps being taken to tackle the plastic problem, and how to think about identifying investment options.

Government initiatives tackling plastic waste

In 2015 a 5p levy on single-use plastic bags was introduced in England to encourage people to re-use bags and to cut down on the litter associated with them. The scheme has led to more than 80% reduction in the number of bags used in England1. Over the next ten years, the scheme’s benefits are expected to include £60m savings in litter clean-up costs and carbon savings of £13m1.

This year, the use of plastic microbeads in the manufacturing of cosmetics and personal care products, and sales of products containing them, have been banned in the UK2.

In October’s Autumn Budget, a new tax on plastic packaging was promised in a bid to tackle what the Chancellor referred to as ’the scourge of plastic littering our planet and oceans’. Subject to consultation, the tax would be imposed from April 2022 on the manufacture and import of plastic packaging which contains less than 30% recycled plastic3.

What are companies doing?

This year saw the introduction of the UK Plastics Pact, launched by sustainability campaign group WRAP, which is the most ambitious business-led plan yet to fight plastic pollution and change packaging standards.

More than 40 companies which are currently responsible for over 80% of the plastic packaging on products sold through UK supermarkets, have pledged that by 2025 all their plastic packaging will either be recyclable, reusable or compostable4.

Similarly, many companies are adopting ‘circular economy’ thinking into the heart of their businesses. The circular economy works to ensure materials are kept in use for as long as possible and the maximum value is extracted from them. For plastics, this could mean using technology to recycle used single-use plastic sachets and channel them back into the supply chain5.

How investors can help

Reducing the use of plastic will require a behavioural change, and this will take time. More immediately, companies are developing and using innovative solutions to this problem, potentially creating opportunities for investors.

Many companies rely on plastics as a critical component in their products or to protect the goods they supply. Those who move more quickly to reduce their use of plastics or use alternatives such as bioplastics, a biodegradable plastic derived from biological substances, will reap the rewards of the likely clampdown on the use of plastic.

Other companies are developing new solutions to the issue; for example, sustainable packaging options and technologies to remove plastics from our oceans and land. Growing demand for these solutions means companies who provide them will grow as well. Investors who can identify these companies will have the opportunity to positively contribute to these issues and to their financial returns.

Investors are choosing to make a change

We’ve found that people are increasingly recognising that they can play a role in addressing problems such as plastic pollution through their investments.

In fact, in a recent survey we conducted we found that 68% of respondents most preferred the idea to invest in companies developing new, sustainable packaging.

Considering the impact that your investments make on the world is the foundation ‘impact investing,’ where your money is invested with the aim of generating positive social or environmental outcomes alongside financial returns.

The survey was conducted as part of our support for Good Money Week, a leading campaign to help investors across the UK connect with their money and the impact it makes on the world.

Through it, we also found that once they understood what impact investing was, only 9% of the British public would want to limit their portfolios to traditional (non-impact) investments. 43% would focus on traditional investments but would consider impact investing, and 14% would want only impact investments.

Helping clients with impact investing

“Issues like plastic pollution present both significant risks, and opportunities, for us as people and as investors,” notes Damian Payiatakis, Head of Impact Investing at Barclays.

“Every day the savings and investments our customers make have an impact on the world, and we want to help the investors who care about this impact make the investment choices that are right for them, for their families, and for our world.”

In the end, with the increasing flow of private money into companies that are addressing these challenges, investors have an opportunity to protect and grow their investments while supporting solutions to the world’s most pressing problems.

Of course, like any investment this requires putting capital at risk. To learn more about impact investing, please speak to your Wealth Manager.

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