We are in the midst of the United Nations Ocean’s Conference and governments from across the globe recently agreed the “biggest green deal since the Paris Accord” during United Nations Environment Assembly 5 as a means to tackle plastic pollution through a legally binding global framework. Whilst government and business actors are needed to operationalise such an ambitious agreement, finance institutions also play a vital role in addressing this crisis.
importance of investment in plastic waste and pollution
A global framework to tackle plastic pollution could have a massive impact across both asset classes and regions. No doubt policy will be essential in driving action on plastic waste and pollution, especially at the national level, however, there are also huge opportunities for investors.
As we see renewables upend energy markets, this global challenge on plastic pollution also provides an economic opportunity. Consider the opportunities presented by the circular economy, which promote the elimination of waste and the continual safe use of natural resources.
Such a transition will require investment of USD 1.2 trillion and a significant shift away from business-as-usual. Yet circular alternatives can yield up to USD 4.5 trillion in economic benefits by 2030. Unfortunately, today only 8.6% of the world is circular, meaning this transition is huge; it requires collaboration and a significant increase in investment.
Such opportunities, as outlined in the Global Plastic Action Partnership’s (GPAP) recent ‘Unlocking the Plastics Circular Economy: A Toolkit for Investment’, can offer proactive investors extraordinary rewards.
The drivers of technological innovation and policy change are critical; however, they cannot solve the growing problem on their own.
The role of finance
There is a critical gap that the finance industry can fill, scaling growth and unlocking capital flows required to turn the plastic waste crisis into a bankable circular-led growth opportunity.
The approach is increasingly clear and now needs to be scaled. The drivers of technological innovation and policy change are critical; however, they cannot solve the growing problem on their own. Those investors early to the sector and the opportunities it brings, will have competitive advantage on those that choose to stand on the side lines. Private investors can generate a market rate of return but must also deploy capital and collaborate with other stakeholders to realise the opportunity.