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Terry Slavin rounds up a slew of new initiatives as BlackRock enters partnership with the Ellen MacArthur Foundation, Unilever commits to halve its use of virgin plastic by 2025, PepsiCo launches a green bond, and Andrew Forrest's Sea the Future initiative to tax plastic use wins Fortune 500 backing
BlackRock this week announced a partnership with the Ellen MacArthur Foundation, the latest in a trio of recent developments that hold hope for progress on tackling the plastic waste crisis.
At a press conference in London announcing the tie-up, Evy Hambro, global head of thematic and sector investing at BlackRock, said the BGF Circular Economy Fund, which went live last week, was the first step in an ongoing global partnership with the UK circular economy charity.
The new thematic fund, which starts with $20m in seed funding, will invest in businesses already benefiting from, or contributing to, the transition to a circular economy, and has been designed by tapping into the nine-year-old foundation’s expertise.
The fund realised there is a big investment opportunity in the circular economy because it is driven by global megatrends
Hambro said he had been working on a thematic fund invested in the mining sector over the past three years.
The fund had looked at investing in recycling and more sustainable battery technology, but realised there was a much bigger investment opportunity in the circular economy because it is driven by global megatrends like combating climate change, resource scarcity, technological disruption and rapid urbanisation.
He said when he met Ellen MacArthur at an event in London “it was a lightbulb moment. … I was convinced we could get to a point where we could actually deliver what she was talking about to our clients.”
He said the fund broke new ground, and was the result of complex negotiations between the charity and BlackRock to structure both the portfolio and the partnership itself.
“But the more work we have done in this space, the more enthused we get about the impact the companies we are investing in are having on the world.”
Sumana Manohar, head of thematic research for fundamental active equity, who is co-managing the new fund, said it would invest circular economy “adopters” like Adidas, which made 11 million pairs of shoes last year using upcycled plastic waste from the oceans, “enabler” companies like TOMRA, the Norwegian reverse-vending machine company, and circular economy beneficiaries like Ball Corporation of the US, the largest manufacturer of aluminium cans, which has seen a surge in business as food companies seek alternatives to plastic packaging.
The fund will not only focus on plastics, but invest in other companies in the circular economy, including fashion, food systems, mining and e-waste. BlackRock has identified around 800 firms that the fund could back in the future, Manohar said.
The way we make and use products is 45% of the solution space to reach the 1.5C climate agenda
Andrew Morlet, chief executive of the foundation, said the links between circular economy and climate are increasingly being understood. He added: “The way we make and use products is 45% of the solution space to reach the 1.5C climate agenda, and companies are waking up to the economic opportunities this represents,” with hundreds of companies, and thousands of products moving into this space.
But he said there was an urgent need to accelerate the transition to a more circular economy, and it was critical to attract investors to back circular economy solutions. “By working with BlackRock we are hoping to raise awareness and interest” in the circular economy as an investment opportunity.
Rob Opsomer, who leads on systemic initiatives at the Ellen MacArthur Foundation, pointed out that the foundation already has some financial partners, including Intesa Sanpaolo, the Italian banking group, but the BlackRock partnership was an important further step in a direction that the foundation will increasingly pursue.
Asked by Ethical Corporation whether the fund fell into the category of ESG (environmental, social, governance) or impact investment, Hambro said: “It’s not ESG, though ESG is integral to the focus of the fund. Nor is it a pure impact fund. We are sitting in an area that touches a whole range of points that we think are important for our clients. In a way we’re trying to create value from the transition of the global economy in this [circular economy] direction, but doing it in a responsible way, with ESG embedded in the investment process.”
The BlackRock announcement came on the same week that another global partner in the Ellen MacArthur Foundation, Unilever, announced ambitious new targets for cutting plastic waste, in line with the foundation’s New Plastics Economy Global Commitment.
CEO Alan Joppe said Unilever will halve its use of virgin plastic by 2025, by reducing its absolute use of plastic packaging and accelerating its use of recycled plastic, and by helping to collect and process more plastic packaging than it sells.
This demands a fundamental rethink in our approach to packaging and products
“We can only eliminate plastic waste by acting fast and taking radical action at all points in the plastic cycle,” Joppe said.
“This demands a fundamental rethink in our approach to packaging and products. It requires us to introduce new and innovative packaging materials and scale up new business models, like re-use and re-fill formats, at an unprecedented speed and intensity.”
Meanwhile, PepsiCo, another signatory to the New Plastics Economy initiative, this week launched its first green bond, with proceeds from the $1bn offering going to fund its commitment to reduce 35% of virgin plastic content across its beverage portfolio by 2025.
The bond is led by Morgan Stanley, which in April agreed a Plastics Waste Resolution “to facilitate the prevention, reduction and removal of 50 million metric tons of plastics waste by 2030 through facilitating green bonds as well as other measures in alignment with these goals”.
Unilever’s Jope is one of the CEOs who is backing the “Sea the Future” initiative, launched at the UN General Assembly last month by Australian philanthropist Andrew Forrest, in which a US-based alliance of Fortune 500 firms will agree to a voluntary levy on their use of plastics derived from fossil fuels.
According to Forrest’s Mindaroo Foundation the levy, of between $300-$500 per ton, will raise more than $20bn annually to incentivise use of recycled plastics for production, passing the cost on to consumers, who will pay an extra two cents per bottle.
The funds will be collected and co-managed by a global environmental and industry body, and channelled into new recycling technologies, collection infrastructure, and the recovery of existing marine and terrestrial pollution.
If you put a tax on polymers then you change the fundamental economic value of plastic ... no longer is it a waste product, it's a commodity
In an interview earlier this year with Ethical Corporation, Forrest, who has put up $300m for the initiative, said he came up with the idea for a tax on polymers while studying for a PhD in marine ecology, which he completed last year. “The way the plastic market is constructed we have absolutely no choice but to destroy our oceans with plastic,” he said. “And the only way to solve a global system-wide problem is through a system-wide solution.”
He said there are at least a billion people in the world who have no choice but to discard plastic into the environment because of lack of collection and recycling infrastructure.
“If you put a tax on polymers, the raw material behind plastic, then you change the fundamental economic value of plastic all the way down the supply chain. That means when it gets used in Indonesia, or Thailand, or in England, no longer is it a waste product, it's a commodity."
Other companies that support the Sea for the Forest initiative include leading polymer producer Dow Chemicals, which is also part of the Alliance to End Plastic Waste, India’s largest polymer producer Reliance Industries, The Coca-Cola Company, Walmart Inc and Tesco plc. Analytical support for the initiative is being provided by SYSTEMIQ, and McKinsey & Co.
The Ellen MacArthur Foundation’s Andrew Morlet told Ethical Corporation: “What’s most interesting for me is that for the first time we are seeing a global response to the problem of plastics that matches the scale of the challenge. If this model that [Mindaroo] are promoting gets off the ground and can be successful it will generate hundreds of billions of dollars that can be directed at the collection infrastructure and polymer-to-polymer chemical recycling.”
He added: “There’s a lot of detail to go through and a tremendous amount of work to get this to reality, but Andrew Forrest has put $300m on the table to get this moving, and that is extraordinary.”
Transitioning from a linear to circular economy will be a major theme at Ethical Corporation’s Transform 2019 event in Amsterdam next week. Speakers will include TOMRA, Ball Beverage Packaging Europe, IKEA, Signify, Philips, Tetra Pak, TerraCycle, The Body Shop, Stora Enso, Walgreens Boots Alliance and Rabobank. Ethical Corporation is now part of Reuters Events.