Make it, recycle it, think tank says

A London-based think tank and nongovernmental organization (NGO) called Planet Tracker is contending that global plastic container and packaging (PC&P) companies can afford to fund the plastic industry’s “transition toward a sustainable future.”

Planet Tracker says investors in such firms “must exercise their power to drive PC&P companies” to fund a move toward a more recycling friendly or otherwise sustainable model.

Plant Tracker states, “PC&P companies constitute a major component of the plastics supply chain, acting as the link between the oil and chemical giants and the consumer goods companies and are currently locked in a damaging and pollutive cycle of take, make and waste – but their financial capabilities could make them important agents for change.”

According to Planet Tracker, the idea that PC&P companies survive on narrow margins and are therefore poorly placed to finance a sustainable transition is a common misconception. In fact, many of these companies “have the financial firepower to drive meaningful change within the industry,” the NGO says.

Of the 15 PC&P companies analyzed by Planet Tracker, collectively they could afford to raise an extra $6 billion of debt to fund a recycling-centric transition and a further $2.3 billion each year “if they halved their dividends and share buybacks.”

Planet Tracker acknowledges such an option “may not be an appealing prospect to investors in the short-term,” it says its research finds that if PC&Ps “continue to perpetuate this current cycle of waste, assets could end up [stranded], posing a far greater threat to investor returns over the longer term.”

John Willis, director of research at Planet Tracker, says, “PC&P companies are well placed to fund the move towards a more sustainable model – but a dependence on ‘business as usual’ practices are holding them back from implementing these changes.”

The NGO says that, broadly, the return on capital employed (ROCE) and operating margins in the industry are stable and gradually rising, painting a positive picture of healthy cash flow in the sector.

Planet Tracker says its analysis turns the spotlight onto investors, “who have the power to apply pressure to PC&P management teams to protect the long-term viability of these companies and direct more cash flow into investments that prepare for the transition towards a sustainable model.”