Why Should Investors Consider Investing In Sustainability?

Why Should Investors Consider Investing In Sustainability?

How is investing in waste management value chains important and what are the potential for success in this sector? On The Soul of Business, Rob Kaplan, CEO of Circulate Capital, an investment manager based in Singapore focusing on fighting plastic pollution across South and Southeast Asia, shares with Claressa Monteiro on why investors should consider investing in sustainability.

Claressa Monteiro: How are investments in waste management value chains [considered as] essential services and critical in protecting local communities’ health and livelihoods?

Rob Kaplan: The UN environment programme has publicly urged governments to treat waste management as an urgent and essential public service because it is critical to minimising both health and environmental risks. If you think about it, it makes sense. Right now especially, with Covid-19, sanitation and hygiene are of utmost importance and that's really where waste management can shine. As we change our consumption and purchasing behaviours and spend more time at home, there are increased risks with waste and trash if we're not managing it properly.

Plastic is obviously the biggest problem. But if you think about it more as an opportunity, you are not just investing in resilience and essential services in these sectors, but also [investing in] local economies and manufacturing because we're talking about hundreds and hundreds of jobs - the people who helped collect the waste, sort it and process it all the way through.

CM: Circulate Capital Ocean Fund (CCOF), the world's first investment fund is dedicated to ocean plastic or the ocean plastic crisis in South and Southeast Asia. Why the focus on ocean plastic?

RK: Researchers found that most of the plastic that gets into the ocean comes from a handful of countries in South and Southeast Asia. The plastic that's getting in is about 8 million tons a year. That's basically the same as a garbage truck backing up to the beach and dumping a load of plastic every minute. But what we're talking about is more than 10 billion dollars losses each year to the tourism, fishing or shipping industries across the Asia-pacific region alone. Sea creatures and wildlife are affected by [ocean plastic pollution]. There are also health concerns as well - we eat fish and they eat plastic. So, I think the world is resolutely aligned that plastic pollution is not a good idea, whether you make plastic products, you’re a recycler or a consumer, nobody wants this stuff in the environment and that is why CCOF exists.

CM: How is the industry coping with the impact on waste management from Covid-19 and how is it going to be like as lockdown measures start to lift?

RK: Due to Covid-19, we're seeing a surge in single-use plastic usage from eating more takeout or delivery, and ordering more things. Medical wastes from Covid-19 testing are also using a huge amount of single-use plastic for good reasons, but it is creating a spike and our systems are already challenged with dealing with it.

The question is how will all this play out in [the next] six months. Will consumers who have been outraged about plastic pollution continue that outrage, will that increase exponentially alongside the amount of plastic pollution that gets into the environment, and how that balances with our purchasing patterns and new habits. There are a lot of dynamics that are uncertain right now.

CM: How does virgin plastic versus recycled or reusable plastic products work into sustainability plans for a business moving forward?

RK: I think the biggest challenge is oil prices because the price of recycled plastic floats with oil. With oil [prices] so low, making it cheap and easy for single-use plastic, manufacturers continue to use virgin [plastic]. Despite this, companies we work with are sticking with their move toward more recycled packaging products and reaffirming their long-term sustainability commitments. That is why we're continuing to invest [in these companies] in order for them to meet these goals as we need to see more recyclers and improve the quality and quantity of recycled materials that are available for use in manufacturing.

CM: Given the global uncertainty, what should an investor’s consideration(s) be?

RK: Instead of thinking about price premium opportunities or paying more when we're about to have serious economic challenges, companies and services that can help supply chains save money and be more efficient are going to be poised for success in the coming years.

CM: How did Covid-19 change your projections on what are you going to be investing in?

RK: We have spent a lot of time working with our portfolio and updating the business plan to not just think about pre-Covid-19, but also what post-Covid-19 business assumptions [might] look like. We've started to focus on technical assistance and crisis management support. We’ve launched a special training programme for the companies we're working with to do coaching and education on crisis management and leading through uncertainty because while these are incredibly exciting companies to work with, nobody has dealt with this type of crisis before. We need to help them not only with the financial needs but also the skills and emotional needs they're facing as they work through this crisis.

Listen to the full podcast to find out how has Covid-19 changed business planning for companies in waste management:

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For more, tune in to MONEY FM 89.3 to Workday Afternoon with Claressa Monteiro on Weekdays from 1PM to 4PM.
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This interview was broadcasted on MONEY FM 89.3 on 4 June 2020.

Disclaimer: All analyses, opinions from interviews, recommendations and other information broadcasted, podcasted, published or printed herein are for general information. You should not rely solely on the said information and are advised to seek independent financial advice from your own financial or investment consultant prior to making any investment decisions. Before acting on the information you hear or read on MONEY FM 89.3, remember to consider if it is suitable for your own investment objectives and financial situation. SPH Radio does not accept any liability for any loss whatsoever arising from any use of the information broadcasted, podcasted, published or printed herein.

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