Plastics and sustainability

5 min read 21 Jan 21

Single-use plastic has come under intense scrutiny, with both consumers and regulators turning their attention to an issue that has escaped mainstream focus until recently, aided by the Blue Planet series. Among the push for less plastic usage, and general moves towards sustainable products and services, there will obviously be winners and losers in the war on plastics – and investors cannot ignore the financially material impact of future regulation. Over the year, we engaged with a number of our holdings specifically on this issue, several of which are highlighted below.

 

Amcor – plastics and circular economy – Equities

Objective: To understand more about the recent announcement of a US$50 million investment into global packaging company Amcor’s sustainability strategy, plastics and ‘circularity’.

Action: We met Amcor’s chief executive to discuss recent results and the company’s sustainability strategy. Amcor recently had to sell two businesses to satisfy the regulator, and is using some of the proceeds to create value by investing further into its sustainability strategy.The company, in recent years, has seen sustainable products become an essential part of its offering for large tenders.

Outcome: We feel comfortable that Amcor is on track to meet its 2025 sustainability targets and were encouraged to hear the chief executive talk about the importance of sustainability and the continuing development of environmentally-friendly packaging options.

Further information: M&G has engaged with Amcor over the past year on issues including single-use plastics, UN Sustainable Development Goal 17: Life Below Water and the circular economy. This has provided us with a clear insight into how sustainability is integrated into the business strategy, and how it has become a critical component in winning new mandates and working with customers.

Britvic – single-use plastics and climate strategy – Fixed Income and Equities

Objective: To understand how soft-drinks producer Britvic is going to meet its commitments to ambitious 2025 targets to eliminate problematic or unnecessary single-use plastic packaging, including governance, board oversight and incentivisation to meet targets linked to remuneration.

Action: We undertook a series of company meetings, which included meeting the chief executive and the company’s ESG team.

Outcome: We now have a greater understanding of the structures in place, and desire for more structured board oversight and governance with regard to setting and meeting targets in relation to sourcing recycled PET and achieving climate objectives.

Further information: Following a meeting that M&G had with the chief executive, Britvic requested a follow-up meeting to give more clarity and detail on some of the ESG issues that we had raised. The primary objective of this meeting was to understand how Britvic plans to meet its public commitments to ensure that all products have 30% recycled PET (rPET) by 2025 when there is expected to be a shortage in supply. The company outlined its plans to work with academic institutions, leading NGOs, suppliers, retailers and companies involved in the collection and recycling of consumer waste to reduce waste to landfill, ‘close the loop’ and increase rPET feed stock. In order for Britvic to demonstrate to us how seriously it was taking these issues, we requested that the chief executive consider linking remuneration to meeting these targets.