1 Aug 2018
Since its invention in 1907 by Belgium’s Leo Hendrik Baekeland, plastic has moulded our everyday lives. More than a century later, plastic fragments in our oceans have created one of the most serious environmental challenges facing the world today.
The plastic we throw away is having a dire impact on the entire food chain. This crisis is real and by 2050, there will be more pieces of plastic in the ocean than fish. The threat posed by plastic pollution hasn’t been far from the headlines in recent months, thanks in part to hard-hitting images showing its devastating impact on marine life in the BBC’s ‘Blue Planet II’ series.
A sea change in behaviour
Cutting back on the use of plastic will mean a tangible behavioural change from us all – something that will take time and commitment. But positive change is already well underway at a government level. Back in 2015, businesses in England followed the lead of their Scottish, Welsh and Northern Irish counterparts by charging customers five pence for a single-use plastic bag in a bid to cut down on rubbish.
According to the government, the number of bags used has since fallen by more than 80% in England.Another initiative, in January this year, saw plastic microbeads outlawed from personal care products and cosmetics in the UK, with a prohibition on sales of products containing them coming into force in July.
The investment implications of plastic pollution
Plastic pollution is a serious threat to our planet, but it also represents a clear opportunity for advisers to engage with clients via ethical investing. Increasing awareness of the amount of plastic we use and abuse has sparked growing demand for recycling and alternative materials and solutions. And that demand is creating clients to invest in - and potentially benefit from - these solutions.
One compelling way to generate financial returns, while also tackling plastic pollution, is to invest in funds with an environmental, social and governance (ESG) focus, where the goal of creating positive social or environmental benefits is combined with the goal of generating long-term financial rewards. In fact, the Schroders Global Investor Study 2017, which looked at the experiences of more than 22,000 investors across 30 countries, revealed that 78% of respondents saw sustainable investing was a growing priority for them.
Also, almost two thirds of those surveyed said that they had upped their sustainable investments, in comparison with five years ago.
How does it work? Some funds invest thematically in companies that are developing innovative solutions for the environment; some identify well-run companies that correlate long-term environmental drivers with a company’s ability to generate sustainable returns, while others invest in companies that have proven, sustainable business practices.
Ethical investing opportunities
As we approach the 2020 UN climate talks — the critical stock-take that will tell us whether we are likely to meet the ambitious environmental goals set out in the Paris Climate Accord – the imperative to make a difference to plastic pollution is becoming more pressing than ever. And that pressure is now creating crystal-clear opportunities for investors – and advisers – to play a part in achieving those goals.
To find out more about the themes affecting the near future of our changing world watch, listen to or read the latest edition of Rathbones Look Forward.
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