Investing in innovation to reduce plastic waste

Felix Philipp, PhD  - Senior Research Analyst, Materials and Circularity Lead
Felix Philipp, PhD
Senior Research Analyst, Materials and Circularity Lead
Alexandre Ouimet-Storrs  - Senior Investment Manager
Alexandre Ouimet-Storrs
Senior Investment Manager

key takeaways.

  • Plastic is a hugely versatile material and is involved in most economic sectors, but today’s linear model generates harmful waste and greenhouse gas emissions
  • Moving to a circular model for plastics means investing in innovation that promotes improved recycling; repair, reuse and refill models; and lower-carbon alternatives
  • Our Plastic Circularity strategy, supported by the Alliance to End Plastic Waste (AEPW), invests in pioneering, growth-stage companies addressing plastic waste. What are some examples? 

A linear plastic waste issue

Plastics today are one of the building blocks of modern life. We rely on the versatility and durability of the material to such an extent that our production of plastic has exploded since commercialisation in the 1950s, growing nearly 9% per annum1. This means vast quantities of plastic waste – more than 350 million tons per year. 

Most plastics are technically recyclable, but today’s linear model means most plastic waste goes into landfill. Continuing this trend will have significant consequences. In a business-as-usual scenario, we might expect plastic packaging waste to double between 2016 and 20402; ocean leakage to triple; and plastic stocks in oceans – the total amount of plastic present in the world’s seas – to quadruple.  

FIG 1. Plastic production has risen sharply since the 1950s and most discarded plastic goes unrecycled3

plastic waste solutions

Beyond waste, the linear plastic economy is a significant contributor to global greenhouse gas emissions, and microplastics pollution – with microplastics present in food, the air and throughout the human body – is causing increasing alarm. 

Read also: Plastic wrap: private markets, public policy for circularity

Investing in a circular model

A major effort, involving stakeholders across society as well as public and private investment, is needed to transform the plastic value chain into a circular model. Crucially, increasing circularity in plastics mitigates the industry's impacts on climate and biodiversity. The Circulate Initiative estimates a total of USD 17 trillion of investment will be needed by 2050 to significantly reduce mismanaged plastic waste. 

Fortunately, new and innovative solutions designed to address plastic waste are coming to market with increasing frequency, driven by policymaking, consumer demand and technological developments.

Innovation and private equity

Our Plastic Circularity strategy is built to support the firms addressing the plastic waste crisis while aiming to generate reliable returns for investors. As governments and companies around the world move to tackle plastic waste, we expect more and more attractive opportunities to arise in the dynamic sub-industries exposed to plastics sustainability. Figure two provides a snapshot of some of the technologies and solutions being explored.

FIG 2. A wide range of plastic waste solutions are in the pipeline4

plastic waste solutions

The strategy is supported by the Alliance to End Plastic Waste, a major industry body working towards plastic circularity; the portfolio managers work closely with the AEPW on research and analysis, including site visits, deal sourcing and transactions. 

We have an upper limit of 20 to 25 holdings and invest globally with a focus on European firms and a growth-stage bias. Current investment targets include companies developing lower-carbon circular materials; firms working on repair, reuse and refill processes; and recyclers5. To date, the strategy has made investments in four exciting firms. 


From new usage models to sustainable alternatives, innovation with strong investment potential in this space presents ample opportunities for private equity investors. 

6 sources
view sources.
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 1 Source: Geyer, R., Jambeck, J. R., & Law, K. L. (2017). Production, use, and fate of all plastics ever made. Science advances, 3(7), e1700782.
2  Source: Lau, W. W., Shiran, Y., Bailey, R. M., Cook, E., Stuchtey, M. R., Koskella, J., ... & Palardy, J. E. (2020). Evaluating scenarios toward zero plastic pollution. Science, 369(6510), 1455-1461.
3  Source: Geyer et al (2017), LOIM. In million tons (MT) annually. For illustrative purposes only.
4 Source: LOIM. For illustrative purposes only.
5 Holdings and/or allocations are subject to change. As of 04 February 2025.
6 Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document. Holdings and/or allocations are subject to change. As of 04 February 2025.
 

important information.

For professional investors use only

This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.

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