Value chain

Risks and Opportunities Along the Plastics Value Chain | engagement guide

The level of global interest in plastic production, consumption and waste has exploded in recent years. Although much of the focus has been on risk and impact, it is important to recognize that the flexibility and resilience of plastic means that products made from this material perform many crucial functions in society and in all sectors.

The plastics value chain is complex and affects most (if not all) industries worldwide. Consequently, investors’ portfolios are exposed to a range of risks and opportunities associated with plastic.

Overview of the global plastic supply chain

Main conclusions:

  • Different sectors will experience short and long-term risks along the plastics value chain, due to changing demand for plastics, regulations, changes in the supply of raw materials and alternative materials , and access to recycled materials. Starting with the production of raw materials, the oil and gas sector is responsible for fossil-based production. Investors should consider the long-term risks (stranded assets) that the sector will face in the future due to potential disruptions in demand for plastic packaging and the supply of alternative materials. When it comes to the production of bio-based raw materials, the agricultural products sector will come under greater scrutiny amid competing demands for food safety and responsible sourcing requirements.
  • The theme of bioplastics is linked to bio-based raw materials. There are many misconceptions about bioplastics as investors consider alternatives to conventional petroleum-based plastic. It is important to note that biobased materials may or may not be biodegradable, and biodegradable materials used as alternatives to plastics may or may not be biobased. A major issue is that recycling is only suitable for non-biodegradable plastics (fossil or biobased), which is not always clearly indicated.
  • Global production of fossil fuel-based plastics is dominated by large petrochemical companies, including some major oil and gas producers. However, some of these companies are becoming more integrated players in the production of plastics, providing waste treatment solutions and supplying raw materials.
  • The container and packaging industry, as well as related industries such as food and beverage and consumer goods, face reputational and regulatory pressures to use alternative materials and recycled content on a large scale. This creates opportunities for companies to collaborate and find solutions with different actors in the value chain.
  • If waste management is part of the problem, it is also part of the solution. Less than 20% of plastic waste is currently recycled globally and demand for recycled content exceeds supply. This will be amplified by regulatory disruptions in the secondary commodity market.

References

  • Ryberg, MW, Laurent, A. and Hauschild, M., 2018. Mapping the global plastics value chain and plastic losses to the environment. [pdf] Nairobi: United Nations Environment Programme.
  • Jambeck, JR, Geyer, R., Wilcox, C., Siegler, TR, Perryman, M., Andrady, A., Narayan, R. and Law, KL, 2015. Inputs of plastic waste from land to ocean . Science, 347(6223), pp.768-771.
  • World Bank, 2019. What a Waste Global Database.
  • Geyer, R., Jambeck, JR and Law, KL, 2017. Production, use and fate of all plastics ever made. Science Advances, 3(7), p.e1700782.
  • Eurostat, 2019. Packaging waste recycling rate.
  • Ministry of Environment, Japan, 2018. Japanese Resource Circulation Policy for Plastics.
  • United States Environmental Protection Agency, 2019. Plastics: Material Specific Data.
  • Iniciativa Regional para Reciclaje Inclusivo, 2018. Study comparativo de legislación y políticas públicas de Responsabilidad Extendida del Productor – REP para empaques y envases.
  • Reloop, 2017. Reloop publishes a global overview of deposit systems.
  • Geyer, R., Jambeck, JR and Law, KL, 2017. Production, use and fate of all plastics ever made. Science Advances, 3(7), p.e1700782.
  • Plastics Europe, 2018. Plastics – the facts 2018.

About The plastic landscape series

This is the second report in a series aimed at providing investors with the information they need to understand plastic as a systemic issue, by providing technical insight into plastics and the plastics market and exploring common concepts. .

The series will help investors identify where and how their portfolios could be exposed to plastic, enabling them to analyze relevant sectors and engage at the company and policy level accordingly.

The first report examined challenges and solutions for the plastics system, and the third will identify regulations, policies and influencers of change in plastics management.