Phoebe Stone, Head of Sustainable Investing
The motorways lay empty, the skies lacked their usual vapour trails and industrial activity stalled. Millions worked from home, cycling became an increasingly popular mode of transport and across the country, roads became pedestrianised. A recent International Energy Agency report estimates that the COVID-19 pandemic could result in global carbon emissions dropping as much as 8% in 2020 as compared to 2019. This would be a larger decline in carbon emissions than that of any previous economic crisis or war. However, this is by no means a time for celebration. To put this figure in perspective, the United Nations (UN) has estimated that global carbon emissions must fall by 7.6% every year this decade to achieve the goal of limiting global temperature increases below 1.5 degree above pre-industrial levels. Added to this, one of the most pressing environmental consequences of the pandemic is the mounting waste resulting from the recent health and safety measures.
While supermarkets have encouraged customers to abandon reusable bags, the use of single-use disposable items such as plastic gloves, masks and other personal protective equipment (PPE) has dramatically increased due to efforts to reduce the spread of the coronavirus. Global sales of disposable facemasks are predicted to hit $166 billion in 2020, up from $800 million in 2019. Even as we are encouraged to 'eat out to help out', reusable coffee cups have been banned and social distancing measures have resulted in an increase in takeaway meals and other home deliveries, causing a corresponding spike in the use of single-use plastic packaging. The plastics crisis is being compounded by a fall in the oil price, which has made virgin plastic cheaper than ever to produce. Furthermore, based on historical precedent, around 75% of this plastic will end up in landfill sites or floating in our oceans.2
Whilst we continue to wait for a COVID-19 vaccine, it is evident that the need for disposable PPE items will remain high for the foreseeable future. So what can investors do to encourage businesses to continue plastic reduction and stick to their sustainability targets? A recent report by McKinsey 'How the packaging industry can navigate the coronavirus pandemic' propagates a three-part response to the crisis; navigate the now, plan for the comeback and shape the next normal. Aiding the development of the circular economy through targeted and purposeful investments is key to navigating the current situation to produce a plan and shape the future. The New Plastic Economy Global Commitment by the Ellen MacArthur Foundation is a key example of partnerships between governments, non-governmental organisations and businesses behind a common vision. The initiative targets plastic waste and pollution by promoting the concept of lifecycles, which see the reuse of old materials to produce new products. A further example is the End Plastic Waste Alliance, which brings together companies to increase investment by developing, accelerating and deploying solutions that will collaboratively help solve the plastic waste crisis.
The stark reality facing the world was summed up by Tom Szaky, Founder and CEO of TerraCycle: "This is the great irony – the world will breathe better but wake up to an even bigger garbage crisis". Focus has begun to shift from the origins of the pandemic to the sustainability challenges that it has caused and aggravated in its wake. The Sustainable Development Goals continue to provide investment framework for an action plan to tackle the crisis, and simultaneously promote sustainable development. According to the UN, the pandemic has negatively impacted the progress of 13 of the 17 goals. The commitment of investors, such as those invested in the LGT Vestra Sustainable Portfolios, is therefore crucial in the effort to drive capital towards these issues, which also address the immediate sustainability challenges caused by the pandemic.
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