Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 412

Not so plastic fantastic: solving the single-use pandemic

We continue to hear more about the circular economy and how businesses can maximise their use of finite resources while minimising external pressures on our environment. The Ellen MacArthur Foundation has a great report titled “The New Plastics Economy, Rethinking the Future of Plastics” which highlights environmental concerns, along with potential solutions, regarding our use of the “ubiquitous workhorse material”, plastics.

Only 5% of plastic is properly recycled

The report highlights that while plastics deliver highly functional properties at a very low cost, the drawbacks are becoming increasingly apparent. Approximately 95% of plastic packaging material value, or US$80-120 billion annually, is lost to the economy due to its short first use cycle.

More than 40 years after the launch of the first universal recycling symbol, only 14% of plastic packaging is collected for recycling. When additional value losses in sorting and reprocessing are factored in, only 5% of material value is retained for subsequent use.

More worrying is the likely acceleration of this trend. The report highlights that currently at least 8 million tonnes of plastics leak into the ocean each year, the equivalent to one garbage truck every minute. If no action is taken, this is expected to increase to two trucks per minute by 2030 and four per minute by 2050. This is unsustainable and while the plastics economy is highly fragmented, the collection and recycling infrastructure must rise to help minimise this issue.

Fortunately, this issue is high on the agenda of business, governments and individuals and the general consensus is that the response needs to be accelerated but the question is how and at what cost.

Single use plastics are, as the title suggests, only used once or for a short period of time before being discarded. Consumers are increasingly rejecting the use of single use plastics prompting governments around the world to implement regulations. 

The EU Directive was passed in July 2019 with the stated aim:

“to prevent and reduce the impact on the environment of certain plastic products and to promote a transition to a circular economy by introducing a mix of measures tailored to the products covered by the directive, including an EU-wide ban on single-use plastic products whenever alternatives are available”.

Plastics and business risks

Given the short lifecycle, single use plastics are more likely to be found in our oceans and the European Union estimates that 70% of all marine litter is attributable to these 10 most commonly found single use plastic items:

  • Cotton bud sticks
  • Cutlery, plates, straws and stirrers
  • Balloons and sticks for balloons
  • Food containers
  • Cups for beverages
  • Beverage containers
  • Cigarette butts
  • Plastic bags
  • Packets and wrappers
  • Wet wipes and sanitary items

The first-ever Europe-wide strategy on plastics is a part of the transition towards a more circular economy which is focused on sustainable, nontoxic reusable products and reuse systems rather than to single use products in an effort to reduce the quantity of waste generated. Beverage bottles are one of the most common forms of litter in the EU.

In our view, any consumer branded product utilising plastics and not addressing this issue will face significant long-term business risk or conversely, develop long-term consumer loyalty if dealt with properly.

Blue Planet II aired in 2017 and since then consumers have been vocally against the irresponsible applications associated with single-use plastic. As David Attenborough stated in his closing remarks in Blue Planet:

“We are at unique stage in our history. Never before have we had such an awareness of what we are doing to the planet, and never before have we had the power to do something about that. Surely we have a responsibility to care for our blue planet. The future of humanity, and indeed all life on Earth, now depends on us."

Investment opportunities 

We have investments in companies which are at the forefront of addressing this issue however the most relevant to consumer packaging is our investment in SIG Combibloc which is based in Switzerland. SIG understands that consumers want to be loyal to a brand which clearly communicates its green efforts while being totally transparent about its processes. 

According to the 2018 European Consumer Packaging Perceptions Survey of 7,000 shoppers, three quarters of consumers now say the environmental impact of a product’s packaging affects their purchasing decisions and 90% want packaging to be easily recyclable.

To analyse the carbon footprint of its carton packs, SIG commissioned independent experts to conduct lifecycle assessments. In every assessment, the lifecycle carbon footprint of a carton pack was found to be significantly lower than other packaging alternatives - by as much as up to 70%:

Source: SIG

SIG cartons are made from 70-80% liquid packaging board (LPB), which comes from wood, a bio-based and renewable resource. Trees can grow quickly and be regenerated at a sustainable rate, absorbing carbon dioxide as they grow. This means the LPB in its packs, which are allowed to carry the Forest Stewardship Council™ certification label (licence code: FSC™ C020428), has a very low carbon footprint compared with other packaging materials such as plastic (PET).

All the materials in SIG cartons can be recovered and recycled. Carton board is often used to make high-grade tissue, helping that product shrink its carbon footprint. This is because recycled materials need less energy to produce than virgin materials. 

SIG has already taken steps towards a 100% renewable pack by creating combibloc EcoPlus - an aseptic packaging solution that has a significantly smaller lifecycle carbon footprint than the standard aseptic pack. By using a different material structure, it has eliminated aluminium, replacing it with an ultra-thin polyamide layer. This increases the share of renewable materials in the pack from 75% to 82% and cuts the carbon footprint by up to 28%.

Source: SIG

The key takeaway here is that consumers are demanding environmentally friendly packaging products, governments are regulating and limiting the use of harmful plastics and consumer branded businesses are adopting new innovative solutions. Hopefully we can show the Earth she can depend on us.

 

Bill Pridham is a Portfolio Manager at Ellerston Capital. This article is general information and does not consider the circumstances of any investor.

 

RELATED ARTICLES

Three key trends and the power of investing in decarbonisation

The green lining of COVID-19: a time for change

Unseen environmental costs of companies

banner

Most viewed in recent weeks

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

Retirement is a risky business for most people

While encouraging people to draw down on their accumulated wealth in retirement might be good public policy, several million retirees disagree because they are purposefully conserving that capital. It’s time for a different approach.

The challenges with building a dividend portfolio

Getting regular, growing income from stocks is tougher with the dividend yield on the ASX nearing 25-year lows. Here are some conventional and not-so-conventional ideas for investors wanting to build a dividend portfolio.

How much do you need to retire?

Australians are used to hearing dire warnings that they don't have enough saved for a comfortable retirement. Yet most people need to save a lot less than you might think — as long as they meet an important condition.

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Reform overdue for family home CGT exemption

The capital gains tax main residence exemption is no longer 'fit for purpose', due to its inequities, inefficiency, and complexity. Here are several suggestions for adapting or curtailing the concession.

Latest Updates

Retirement

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Retirement

10 ways to fix Australia’s broken retirement income system

Our retirement income system has too many rule changes, too many options, poorly explained and then seemingly at odds with each other when decumulation kicks in. Key experts weight in on how to fix the mess.

Investment strategies

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Shares

An odd and wild ASX reporting season

This is probably the most interesting earnings season in my 20-odd-year career, with share prices meaningfully diverging from earnings and prospects. It’s reflected all the greed and fear of investor behaviour.

Is the Paris Agreement on climate change dead?

The 2015 Paris Agreement is in jeopardy after the withdrawal of the US and Trump announcing plans to bolster fossil fuels production. It has significant implications for the push towards net zero emissions, including for Australia.

Investment strategies

A new capital cycle is driving US exceptionalism

A new capital cycle is upon us and instead of funding dividends and buybacks, many companies are funding tangible projects. This could result in a whole different set of stock market winners and losers.

Property

What does the rest of 2025 hold for commercial property?

Several macro tailwinds seem to have gathered behind high quality commercial properties. Meanwhile, a fresh wave of domestic capital could see more competition for deals and support values in one asset class especially.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.