Aegon AM: Something Old, Something New, Something Recycled

by | Apr 1, 2022

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Initially hailed for its non-decaying, cheap to manufacture, lightweight properties, we are now heavily reliant on plastic. It’s everywhere. Global waste generation has also increased massively in recent decades, and there are no signs of it slowing down writes Adam Hussain, Investment Analyst at Aegon Asset Management.

The Green Planet, a recent television documentary featuring Sir David Attenborough, warned about the detrimental effects of human activity on biodiversity. Apparently, two in five wild plants are now estimated to be at risk of extinction. The documentary series examines the negative impact humankind is having, but also highlights how a potentially impending biodiversity crisis can still be averted.

Worldwide municipal solid waste generation is expected to increase by roughly 70% to 3.4 billion metric tons by 2050. Recycling currently accounts for only c.14% of waste treatment globally. Despite this, recyclables are estimated to save over 700 million tons in CO2 emissions each year – almost offsetting all annual emissions from the aviation industry – and supply approximately 40% of the world’s raw material needs. The potential positive impact from improving global recycling rates appears clear.

The need to effectively collect waste material is of paramount importance; 32% of all plastic packaging ends up ‘leaking’ into our environment each year and, if current practices continue, there could potentially be more plastic than fish in our oceans by 2050. From 1st April 2022, all businesses in the UK that manufacture or import 10 tons or more of plastic packaging in a 12-month period with less than 30% recycled content, including plastic packaging already filled with goods, will be subject to the plastics packaging tax. This will hopefully incentivise improvement on both recycling rates and the levels of new plastic consumption. Whilst this should mark a step in the right direction, a great deal remains to be done.

 

So, who are some of the companies that are helping to address some of these considerable sustainability issues?

TOMRA Systems is the leading provider of advanced sensor-based collection and sorting solutions and is a key enabler of effective recovery and recycling of used materials, including plastic.

The company’s approx. 80,000 automated reverse vending machines (RVMs) represent over 70% of the global RVM market. It is responsible for collecting, recognising and processing more than 40bn used beverage containers annually. However, this represents under 3% of all beverage containers currently sold each year. TOMRA aims to increase global recycling collection to 40% and increase plastics in the closed-loop system to 30% of total used material by 2030.

 

Adidas is well known for its stylish sportswear. But did you know that in 2019 Adidas intercepted the equivalent of 4.5 billion plastic bottles for use in its recycled apparel products alone?

And by the end of 2020, it created 30 million pairs of shoes with Parley Ocean Plastic™, a material created from upcycled plastic waste intercepted from beaches and coastal communities before reaching the ocean. From the beginning of 2021, more than half of polyester used in Adidas products came from recycled plastic waste. From 2024 onwards, Adidas has committed to using recycled polyester exclusively.

Advanced Drainage Systems is a leading manufacturer of high-density polyethylene pipe (HDPE) and polypropylene pipe (PP) used for the drainage, storage, and treatment of water. These types of pipes continue to take market share from traditional concrete/steel drainage by being cheaper, more durable, and more cost-effective to install.

 

Advanced Drainage Systems is the 2nd largest plastic recycler in the US with 66% of pipe revenue being derived from re-manufactured products. In 2020, they consumed over 1-in-4 recycled US HDPE bottles and in 2021 they recycled 510 million pounds of plastic, keeping it out of landfills and preventing the emission of 670 million pounds of Greenhouse Gases – equivalent to taking 64,000 cars off the road. With credentials of this calibre, Advanced Drainage Systems is being anything but slow with its level of recycling flow.

So, while plastic does have its uses and it may be hard to imagine life without it – we need to carefully consider its usage and minimise the negative impacts it can have on nature. We can do this through reducing, reusing and recycling – and as investors we can buy into companies that are enabling these activities too.

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