NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.
It’s virtually impossible to avoid contact with plastics or microplastics. They’re in our food packaging, used throughout manufacturing, in healthcare products, and even in our clothing. On Earth Day, we’re confronted with the growing evidence of the impact of plastics on human health, particularly for babies and infants who may be the most susceptible group.
The message is clear: while we don’t yet fully understand the health risks of microplastic exposure, we can no longer assume plastics are safe.
| The Science of Impact
In our modern world, plastic is nearly everywhere. As EarthDay.org describes it, we’re living in the ‘Plasticene’ era, where plastics have infiltrated every aspect of our lives like an epidemic. Microplastics are now impossible to escape.
Evidence is mounting that plastics, microplastics, and their additives pose potentially serious health risks to humans. The report Babies vs. Plastic highlights how babies and infants are especially vulnerable.
In particular, microplastics, which are nearly invisible to the naked eye, are pervasive in our daily lives, in our bodies and in the environment:
- they have been found in the human placenta
- they have been linked to higher rates of miscarriage as well as male infertility
- they have been detected in dairy milk and breast milk.
A new pilot study suggests that babies may be more susceptible to ingesting microplastics due to their behaviors and developing immune systems. Sources of microplastics can include plastic toys, clothes, furniture, and playground surfaces. Crucially, microplastics can accumulate in specific organs through bioaccumulation, potentially leading to health issues in the heart, lungs, brain, digestive system, and urinary system.
Where should we focus our attention to solve for microplastics- is time better spent upstream (drastically reducing plastic production) or downstream (dealing with their after use)?
The most effective way to address microplastics is by focusing upstream. By drastically reducing plastic production and developing new, safer materials, we can have a far greater impact on minimizing microplastic pollution. The company that can create a new plastic that doesn’t shed microplastics, doesn’t require harmful additives, and is either recyclable or easily degradable will revolutionize the industry and reap immense rewards.
| Circularity Roadmaps Explained
OECD – OCDE data tells us that the current plastic lifecycle is far from circular.
It also makes it clear that focus on recycling alone won’t cut it either as only 17% of plastic waste is projected to get recycled by 2060. Although double its pre-pandemic level, it will still represent a smaller share of waste management compared to landfilling (approximately 50%).
Another difficult fact: almost two-thirds of total plastic waste is from applications with lifetimes lower than five years of use such as packaging, consumer products, and textiles.
What can policy makers and stakeholders do?
Four key steps are being addressed within OECD countries to tackle the plastic waste problem:
- Providing economic incentives to support recycled plastics markets. Recycling alone is not enough. Secondary plastics currently make up only 6% of new plastics production globally, and this needs to change. Incentivizing sorting at the source is crucial for improving the quality and profitability of recycling.
- Boosting innovation for a more circular plastics lifecycle. While innovation in environmentally relevant plastics technologies is growing, it’s still a small part of the overall picture. Greater innovation is needed to reduce virgin material use, extend material lifetimes, and improve recycling. More ambitious policies are needed to drive this change.
- Strengthening domestic policies. Combining policies targeting different stages of the plastics lifecycle can significantly reduce environmental leakage.
- Enhancing international cooperation. Since mismanaged waste is a major issue in low and middle-income countries, investment and collaboration in these regions are crucial. The design process for globally traded plastics needs to consider the full life-cycle impacts to achieve a more circular economy and net zero plastic leakage.
A positive trend is that less plastic waste and scrap is being exported by OECD countries to non-OECD countries, especially southeast Asian markets that have been major export destinations. This suggests that higher value plastics are being traded, while more is being processed into fuel.
| Investing in the Circular Economy
Are investors appropriately factoring in the risks related to plastics within the value chains of their portfolio companies?
Research authored by Planet Tracker estimates the financial impact of the plastic sector to be greater than US$100 billion globally, each year between 2022 and 2030, when considering the systemic stress associated to biodiversity loss, rising GHG emissions, and exposure to plastic chemicals. The analysis compares the evolution of the equity risk premia of 145 corporations as a measure to examine the amount of risk investors require to invest in equities at a risk-free rate.
While the research acknowledges that the rise in interest rates could influence measurements of risk, it also highlights that investors seem confident in the sector’s growth potential. This confidence could provide a cushion to fund any regulatory or litigation costs that may arise due to concerns about plastics in the value chain.
But pricing these costs is not straightforward either.
The recent US$10 billion settlement in the 3M PFA water contamination case serves as a stark reminder of the substantial reputational and legal risks investors should consider when assessing their portfolio companies’ exposure to environmental issues related to plastics.
| You don’t want to miss this spring
From Berlin to Brussels, and Paris, this spring offers new opportunities to connect with fellow circularity practitioners, and stir our world towards a more sustainable economic transition.
Discover, grow and leave your mark!
May 6th – 7th: Global Solutions Summit (Berlin, Germany).* The Global Solutions Summit, also known as the World Policy Forum, is an international conference that brings together experts from research, business, and civil society each year during a G20 Presidency. Their goal is to work on practical policy solutions to the biggest challenges facing the G20 and G7. This year’s theme is “Moving Beyond the Crisis: Mobilizing Change for Global Prosperity”, and it will include solution dialogues on the role of a circular economy in affecting areas such as energy security, biodiversity, global health. Justine Diokno-Sicat, Ph.D., Executive Director of the Asian Development Bank (ADB), and Anshula Kant, Chief Financial Officer ofThe World Bank Group.
Note (*): Virtual participation also available.
May 16th: Raw Materials Summit (Brussels, Belgium). Organized by EIT RawMaterials, the world’s largest consortium in the raw materials sector, the summit is a key platform for discussions on securing a reliable supply of raw materials for a carbon-neutral economy in the EU and beyond.
May 22nd – 23rd: OECD Forum on Responsible Mineral Supply Chains (Paris, France). The 17th edition of the Forum will focus on longstanding and emerging priorities in creating responsible mineral supply chains. It will cover overlooked conflict risks, the role of development minerals, regional sessions on gold supply chains, policy cohesion in a changing regulatory landscape, and the importance of responsible business conduct in government-to-government agreements on transition minerals.
Off to another impactful week!
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
