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Podcast

Plastics and the circular economy

Insight
29 July 2020 |
Stewardship
In April, EOS at Federated Hermes published a white paper – Investor Expectations for Global Plastic Challenges. This set out the scale and complexity of the problem and offered investors ways to engage with companies in three key sectors – chemicals, consumer goods and retail.

In this episode of Amplified, Amy Wilson, an engager at EOS, talks to the co-authors of the report – Aaron Hay, lead engager for the Federated Hermes International fixed income team and its SDG Engagement High Yield Credit fund, and Lisa Lange, an engager at EOS, who leads on the theme of pollution, waste and the circular economy.

How is plastics production linked to the climate emergency?

Although plastic is often used as a replacement for much more carbon intensive materials such as glass or metal, unlike these other materials, plastic is not recovered to the same degree. This means that the carbon embedded in manufacturing the plastic is added to the carbon emissions associated with the full plastics lifecycle, while more hydrocarbon feedstock is required to make yet more plastic.

“This is why we have focused on packaging, and other single-use or poorly recovered plastic in our white paper,” Hay says. “It is poorly recovered on a global basis and much of it is not even designed to be recovered so the value and the embedded carbon can be preserved.”

Will consumer pressure to reduce plastic waste continue or has the global pandemic shifted priorities?

Although there has been some focus on the plastic in single-use face masks, which more people are wearing to prevent the spread of Covid-19, it’s important to remember that 99.5% of plastic volumes are not used in medical applications.

Lange highlights the focus on the chemicals, consumer goods and retail sectors in the white paper, which is intended to act as a toolkit for investors to support their engagement with companies on this topic. In our own engagements we try to set ambitious, but realistic objectives.

“In the retail sector this is quite complex, covering recyclability of materials, recycled inputs and reduction in single use plastics packaging,” she notes.

To find out more, tune in to Amplified. And to read the full paper, visit our dedicated web page, where you can download a copy.

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