In March 2022 175 countries came to a historic decision in Nairobi. Meeting in the Kenyan capital, they agreed on a common approach in the fight against plastic waste. The UN Environment Assembly undertook to put a legally binding agreement in place by 2024. The “End Plastic Pollution” resolution covers the entire life cycle of plastic – from design through production to disposal. We have already reported previously on this agreement. Now a first goal has been reached: negotiations on the specific wording of the plastics convention will start before the end of the year. On 28 November, the Intergovernmental Negotiating Committee (INC) will come together for its first session. Meeting in Punta del Este, Uruguay, the delegates will first spend five whole days dealing primarily with organisational matters. Preparations for the proposed agreement will then be discussed from item 4 on the agenda.
At the end of August the Swiss government approved the country’s mandate for the negotiations in South America. “It has given the Swiss delegation the task of making the case for an ambitious convention,” the government stated. One of the goals of the nation’s representatives is to both prevent pollution of the environment through plastics (including microplastics) and protect the health of people. “To that end the production of new plastics is also to be reduced,” the government added. Plastics that are hard to recycle and contain problematic additives are to be successively eliminated. In addition, Switzerland wants to campaign strongly for limiting the use of unnecessary plastics. “This includes, for instance, avoidable packaging and certain single-use products made of plastic,” Berne announced. In the corresponding press release the government also highlighted the huge problem behind the political efforts: “Global plastics production has almost doubled within the last 20 years.” In fact, the estimated 367 million tons produced in 2020 exceeded the 2002 level by a factor of around 1.8 (see graph).
What for a long time was regarded as a low-cost way of making many areas of life and the economy a little easier has since grown to become a major environmental problem. This is particularly the case when plastics are not disposed of properly. Pollution from microplastics in the earth and in water puts humans and nature at risk. Recycling has a central role to play alongside avoidance. The prospects for this sector are correspondingly positive. According to P&S Intelligence, turnover realised from the recycling of plastics worldwide totalled just under USDbn 60 in 2021. This business is set to grow by an average 8.5% a year until 2030. At the end of the forecast period the market would thus reach a volume in excess of USDbn 124. The market researchers expect the proposed UN plastics convention to open up lucrative opportunities for recycling companies in the coming years. As well as ambitious politicians, the private sector, too, is driving the fight against plastic waste. This also and particularly applies for the food and beverage industry, the biggest generator of this type of waste. P&S Intelligence cites Coca-Cola as an example. “The firm vowed to collect and recycle a bottle or can for every one sold by 2030,” the experts report. The soft drinks group aims to make all of its packaging 100% recyclable by as early as 2025, while bottles and cans are to be made with 50% recycled materials five years later.
The outlook is positive not only for businesses involved in the recycling of plastics of all kinds: the waste industry in general is taking on ever greater importance. Enormous investment will be required if the growing mountains of rubbish are to be conquered. It will come as no surprise that the USA is one of the largest single markets, taking second place on a global comparison after China. According to Statista, in 2022 just under the equivalent of EURbn 88 in turnover was realised from waste disposal and recycling in the United States. If the forecast is accurate, this national market would have grown by nearly 90% within a decade (see graph). While the sector has reached a certain saturation in North America, in China it remains on an expansion course. Statista reckons that turnover from waste disposal and recycling in the Middle Kingdom will rise by an average 4.9% a year until 2025. Our conclusion is that the whole waste sector is an attractive one for investors both in industrialised nations and in emerging economies. This is all the more so given that stocks in this field are relatively non-cyclical or defensive.