INTERVIEW with Gemma James, Head of Environmental Issues at Principles for Responsible Investment (PRI). For further expert opinions please use the question-level hyperlink.
| Already back in 2017 scientists warned of what they termed ‘circular economy rebound’ arguing that ‘circular economy activities can increase overall production, which can partially or fully offset their benefits’. Against the backdrop of the sustainable recovery discussion in the EU, do you find that the respective risks are properly considered?
Addressing the circular economy means that the solutions are complex, there’s no one size fits all, and inevitably there will be trade-offs and unintended consequences to consider. Each solution will intercept multiple pathways, supply chains and country contexts.
A holistic and systemic approach needs to be taken. One message we have worked on with our investor signatories is that influencing and changing practices of one part of the plastic value chain has a knock-on effect in other stages – so you need to understand and harmonise the whole value chain to effectively create change.
An (over-simplified) example is requesting FMCG’s to move towards recycled content in their packaging. That’s only feasible if secondary material is available at the right quality to the packaging manufacturers, and enough plastic is getting collected and recycled in the first place. There are many more other considerations too.
| Can plastic waste be seen as an investment opportunity?
Some investors are looking to invest in plastic waste and to contribute to the SDGs. One example is Circulate Capital, which invests in businesses and infrastructure in South East Asia to prevent plastic reaching the oceans. However, this type of model is not always feasible for institutional investors.
There are an increasing number of investors that are looking for opportunities to invest in business models which provide solutions to avoid plastic waste. An example is private equity firm, Circularity Capital, which invests in businesses creating value from circular activities, thus preventing waste from reaching landfill or being leaked into the environment. Blackrock’s Circular Economy fund includes Adidas for using recycled plastic, which notably has a partnership with Parley Ocean Plastic. Other investors are exploring businesses that are scalable and modelled around reusable packaging and containers, edible plastic and alternatives to plastic.
It should also be noted that plastic presents not only investment opportunities but also risks to investors which need to be avoided and mitigated.
| Beyond direct plastic waste investment opportunities, what else can investors do to tackle the problem?
Investors can allocate capital to companies which are identifying and mitigating plastic related risks and have business models linked to solutions to plastic waste. In addition, as part of their stewardship strategies, investors can engage with companies across the plastic value chain and policymakers to influence good practice, collaboration and set ambitious targets. Investors are encouraged to align and collaborate on expectations of companies and governments in order to give a consistent message.
| How does PRI support asset owners and managers interested in circular economy investment and opportunities?
PRI convenes and facilitates an Investor Working Group (IWG) on plastics, consisting of over 30 global institutional investors representing around US $6trillion AUM. It is a platform for signatories to discuss, debate and share learnings on the topic. The aim of the group is to:
- Raise investor’s awareness and understanding of the impacts, risks and opportunities surrounding plastic.
- Explore the materiality of plastic to companies across the plastic value chain
- Develop resources to support investor understanding and engagement on plastic.
This group has produced The Plastic Landscape – a series of research reports – which outline the problem and challenges of plastic, risks and opportunities along the value chain, and regulatory and policy changes globally. We are currently working with partners on how to engage different stages of the value chain.
| brief bio
Gemma James joined the Principles for Responsible Investment (PRI) as a Manager in the Investor Engagements team in 2015. Since March 2019, she is Head of Environmental Issues and is responsible for overseeing investor initiatives, research and engagements on environmental themes. She established the PRI Plastics Investor Working Group in 2018 and published The Plastics Landscape series. Gemma previously worked for the International Council on Mining and Metals (ICMM). She worked on water, biodiversity and climate change issues with mining companies to develop and share good practice. Gemma holds an MA in Environment, Politics and Globalisation and a BA in Geography, both from King’s College London.
The UN-supported Principles for Responsible Investment is the world’s leading proponent of responsible investment. It works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
