Published 2019-03-12

This post is also available in Swedish

Knowledge of plastic contributes to circular economy

Gemma James, who works for a sustainable financial system in the international investor network PRI, recently participated in a webinar with researchers associated with the STEPS research programme.
The risks of plastic and possible solutions were discussed.
‘If we take research findings into account and learn more about plastic, we can get a better understanding of the strategies needed for a transition to a more circular economy,’ she says.

Plastic is now a hot topic that is receiving a great deal of attention from civil society, consumers and governments alike. It has prompted companies to seek ways of reducing plastic’s environmental impact, such as developing new products. For investors, it’s therefore important to understand both businesses’ risk exposure to plastic and the opportunities available in this material’s value chain.

What are the risks of plastic from an investor’s perspective?

There are two main risks: regulations and rumours.

New regulations may pose a risk, since they can become financially burdensome when companies have to adapt to the new requirements.

At the same time, investors who are involved in plastic-related issues will have a better chance of assessing the risks, which in turn enhances these investors’ prospects of creating long-term value.

The transition to a circular economy may also mean increased investments in the form of innovations, technology and infrastructure — something investors with the right knowledge can benefit from.

How can investor involvement help solve the problems associated with plastic?

Investors have an important role, not least if their involvement can encourage businesses to make greater efforts to produce recyclable plastic and boost the use of recycled material. They can also provide capital for companies that are trying to solve various problems.

How can research help investors to choose sustainable investments in the plastic sector?

Research can help investors by providing knowledge and understanding of the complex subject of plastic. Just as with many other environmental, social and governance (ESG) problems, there are no obvious rights and wrongs where plastic is concerned. Rather, there are many different paths to a more sustainable plastic economy.

Those investors who take note of research findings, and learn more about plastic from a broad viewpoint, can gain a better understanding of what strategies are required to make a transition to a more circular economy feasible. They can also broaden their understanding of individual companies or technologies, and gain insights into how various measures may affect the value chain and system.

What does the PRI do to clarify the role and importance of investors in the area?

The PRI has set up a working group called the Plastic Investor Working Group, comprising 29 financial stakeholders with approximately USD 6 billion in aggregate managed assets. The Group’s goal is to build up knowledge and understanding in the area on which to base their strategies and involvement.

We have a global, holistic approach instead of merely focusing on one specific issue or part of the value chain. In this way, we can better understand the system as a whole.

Our work is based on providing research to enhance people’s understanding of the types of plastic available. We also want to clarify the options and raise awareness of the issue in all its complexity. It’s a matter of identifying the key stakeholders and investors’ risks and opportunities. We’d also like to convey understanding that this is a global issue.

It’s equally important to get investors to understand the terminology in the area — associated terms like ‘bioplastics’, ‘biodegradable’ and ‘compostable’.

By extension, we hope the working group’s efforts will help investors to ask the companies more informed questions.

How can a research funder like Mistra help?

Mistra can help by communicating the investors’ interests to researchers and vice versa. The Foundation can also channel funds into research that, in turn, adds to investors’ knowledge of plastic in broad terms. Mistra can also convey to investors key findings and conclusions from the research it funds, so that they gain insight into the subject.

What did you learn from the meeting between Mistra’s researchers and investors?

The STEPS researchers presented various means of cutting CO2 emissions. They also showed ways to reduce dependence on fossil-based plastic materials by using bio-based sources; how problems of plastic waste can be tackled through recycling; how to create a less complex plastic system; and how to drastically reduce our use of plastic.

At the same time, it became clear that none of these individual approaches alone is going to solve the problem of plastic.

It also became clear that each of these approaches has its own unique challenges and repercussions. For example, using less plastic may result in greater use of other resources. The transition to more sustainable use of plastic will therefore require several different solutions.

Facts about the PRI

The PRI is an international network of investors who are working for a sustainable financial system. The network is, for example, trying to persuade investors to improve their returns and manage risks through sustainable investments. The PRI is supported by, but is not part of, the UN.

Link to PRI’s website

 

 

Text: Per Westergård