Global PC&P companies could fund plastic industry’s transition towards a sustainable future

Plastic, Circularity, Transparency & Traceability, Equity

Investors must exercise their power to drive plastic container and packaging companies (PC&P) to fund move towards more sustainable model, finds Planet Tracker’s latest research

LONDON, 12 April 2022: Plastic container and packaging (PC&P) companies constitute a major component of the plastics supply chain, acting as the link between the oil and chemical giants and the consumer goods companies and are currently locked in a damaging and pollutive cycle of take, make and waste – but their financial capabilities could make them important agents for change, Planet Tracker’s latest research reveals.

According to Planet Tracker, the idea that PC&P companies survive on narrow margins and are therefore poorly placed to finance a sustainable transition is a common misconception. In fact, many of these corporates have the financial firepower to drive meaningful change within the industry.

Of the 15 PC&P companies analysed, collectively they could afford to raise an extra USD 6 billion of debt to fund transition and a further USD 2.3 billion each year if they halved their dividends and share buybacks. While Planet Tracker acknowledges that the latter option may not be an appealing prospect to investors in the short-term, its research points out that if PC&Ps continue to perpetuate this current cycle of waste, assets could end up disrupted, posing a far greater threat to investor returns over the longer term. And broadly, the return on capital employed (ROCE) and the operating margin in the industry are stable, and gradually rising, painting a positive picture of healthy cash flow in the sector.

John Willis, Director of Research at Planet Tracker, comments: “PC&P companies are well placed to fund the move towards a more sustainable model – but a dependence on ‘business as usual’ practices are holding them back from implementing these changes.”

Planet Tracker’s analysis turns the spotlight onto investors, who have the power to apply pressure to PC&P management teams to protect the long-term viability of these companies and direct more cash flow into investments that prepare for the transition towards a sustainable model.

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Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates breakthrough analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.

The goal of our Plastics Programme is to stem the flow of environmentally damaging plastics and related products that are creating global waste and health issues by transparently mapping capital flows and influence in the sector starting from resins production through to product use. By developing transparent financial modelling and forecasting tools, promoting circular economy principles and end of life solutions and identifying financial and profitability risks of continuing business as usual practices in the midstream and upstream of the supply chain, Plastics Tracker seeks to constrain production of environmentally damaging plastics which are feeding the plastics waste problem while supporting development of sustainable solutions.

Media contact
Ellie Hyman
Aspectus Group
+44 (0) 7890 072 773