investment viewpoints

Plastic has a bright and sustainable future

Plastic has a bright and sustainable future







Plastic has an image problem. This 19th-century invention has acquired a negative reputation because of our wasteful economic model, but plastic is a valuable resource – and the industry has a vital role to play in the sustainability transition. Thankfully, a lower carbon, circular plastics model is taking hold, bringing many opportunities for investors. 

Need to know: 

  • A cleaner, circular plastics economy is set to become a reality, a result of macro and regulatory drivers, changing consumer attitudes and innovations – especially in recycling 

  • Challenges include finding substitutes for fossil-fuel feedstocks, eliminating unnecessary use, expanding the lifespan of plastic packaging and products, and building up end-of-life infrastructure 

  • The transition to a circular plastics economy is a key contributor to the environmental transition and a significant investment opportunity 


Building momentum in plastics

Society has come to rely on this durable material for a multitude of products and applications, but we have prioritised cost and convenience over planetary health. Our current take-make-waste economic model harms nature through excessive materials extraction and, ultimately, crude waste disposal and pollution.

We need to rethink the plastics value chain, changing how we produce, use, and recycle plastic to minimise waste. At LOIM, our Plastic Circularity strategy invests in companies that promote circularity in the production, use and end of life for plastic. We estimate that the transition to this model will require as much as USD 1.2 trillion in capital by 2040.1

To show why we think this is such an attractive opportunity, we recently hosted a Plastics Roundtable for clients in London. The talk was moderated by Selina Tyler, LOIM Head of UK Wholesale Distribution. Speakers included Michael Urban, LOIM Chief Sustainability Strategist, and  Martyn Tickner, Chief Advisor Circular Solutions at the Alliance to End Plastic Waste (AEPW).

LOIM collaborates with the AEPW, which acts as a technical advisor to inform our strategy in areas like product delivery models and design, waste management systems and recycling technologies.


“There is a lot of momentum around plastics, a heightened awareness. Change is happening”.
– Michael Urban, LOIM Chief Sustainability Strategist


Urban and Tickner spoke of the potential for a plastics industry that emits less carbon dioxide, produces less toxic waste, and minimises harm to biodiversity and natural capital. This is achievable through innovative design, new business models, increased durability, advances in recycling and new feedstocks to replace fossil fuels in making plastics.

Transforming the plastics industry will not be easy. There are many complex challenges. However, we are excited by the possibilities and opportunities in this space.


Innovation pipeline

Plastic recycling is one of the biggest areas of both challenge and opportunity, largely because plastic products and packaging are highly engineered, sophisticated materials. Tickner spoke of how even simple things like crisp packets or the packaging for exporting kiwis from New Zealand involve years, even decades, of development and refinement. That kiwi packaging is designed so the fruit arrives weeks later to another country in excellent condition, accounting for things like exposure to oxygen and water.

This means there are thousands of different types of plastic, and each type can have thousands of grades with different performance characteristics. This creates enormous complexity when it comes to sorting and recycling.

"There are a lot of considerations when making investments, but the reality is that likely all the solutions we have to hand are required, to work in complementary ways. For example, the debate over mechanical versus chemical recycling – they are synergistic. Both have a role to play”.  
– Martyn Tickner, Chief Advisor for Circular Solutions, AEPW

Tickner spoke about promising innovations being deployed in recycling and sorting, involving technologies enabled by artificial intelligence. Governments are also implementing EPR (Extended Producer Responsibility) policies to make manufacturers more accountable for products throughout their life cycle. This is encouraging innovation and changes to increase recyclability.  

“The innovation pipeline is tremendous. Some things will take decades. Others are coming through very quickly, such as AI technology for sorting”.
 – Martyn Tickner, Chief Advisor for Circular Solutions, AEPW


Another big hurdle is finding more sustainable raw materials for plastics. Right now, 90% of plastics are made from fossil fuels, and about half are single use. We can address this with a combination of renewable feedstocks and the adoption of circular economy principles so we use these products more efficiently.  

As with other aspects of the sustainability transition, there is an imperative to ensure that any plastic circularity solutions do not cause negative externalities in other parts of the environment. The cultivation of any alternative feedstocks, for example, should not be detrimental to land and forests. At LOIM, our investment process includes verifying negative externalities on planetary boundaries.

“If you find a silver bullet for one problem, you can exacerbate problems elsewhere. That is why we need systems-level thinking”.
– Michael Urban, LOIM Chief Sustainability Strategist

Unlike tobacco

Speakers at our roundtable discussed how an analogy is often made between the plastics and tobacco industries. Due to the take-make-waste economic model, plastic often carries equally negative connotations.

However, plastic is not the tobacco of our time. There is no upside to smoking tobacco; it’s a dead end. Plastics are a vital resource, used to create valuable products used in health care, to reduce food waste and to enable fuel-efficient transportation, to name just some examples.

A circular plastic industry can benefit both the Earth and the economy, with tremendous growth prospects. And it is not a pipe dream.

To learn more about our Plastic Circularity private-equity strategy, please click here.


[1] Source: Systemiq; Lau, Winnie and Reddy, Simon. Breaking the Plastic Wave: Top Findings for Preventing Plastic Pollution, The Pew Charitable Trusts. Published 23 July 2020.

important information.

For professional investors only
This document is issued by Lombard Odier Asset Management (Europe) Limited, authorised and regulated by the Financial Conduct Authority (the “FCA”), and entered on the FCA register with registration number 515393.
Lombard Odier Investment Managers (“LOIM”) is a trade name.
This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue.
Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.
Source of the figures: Unless otherwise stated, figures are prepared by LOIM.
Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.
Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.
No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Asset Management (Europe) Limited prior consent. In the United Kingdom, this material is a marketing material and has been approved by Lombard Odier Asset Management (Europe) Limited  which is authorized and regulated by the FCA. ©2023 Lombard Odier IM. All rights reserved.