Three areas of innovation likely to see growth
David Attenborough’s Blue Planet II has highlighted the detrimental environmental impact of the vast quantity of plastic waste in our oceans to millions of viewers. The ever-growing challenge of packaging and plastics waste has drawn intense media coverage, public attention and NGO scrutiny. Furthermore, Theresa May’s announcement on 11 January 2018 has set the tone for the UK Government’s agenda on how to tackle this issue. The increasing awareness around this topic has also begun to influence consumer behaviour, with many reported by Veolia to be willing to pay more for recyclable or alternative packaging. This represents a need for greater innovation, and an emerging business and investment opportunity.
In two recent Environmental Audit Committee (EAC) reports, several potential solutions have been recommended to help address the problems around the disposal of packaging and plastics.
The focus in the first report is on plastic bottles, framed around ocean plastics more broadly. In its conclusion, there are three key recommendations: encouraging packaging design innovation through a reformulation of producer responsibility; building in stronger governmental targets on the use of recycled materials; and introducing a Deposit Return Scheme (DRS) on plastic bottles.
The second report, focused on coffee cup disposal, calls for clearer consumer messaging about what is recyclable, increased producer responsibility to raise a fund to improve ‘binfrastructure’, more robust government recycling targets, and crucially, a 25p levy on disposable coffee cups.
This issue is, and will remain, high on the government’s agenda in the face of growing public demand for action. It is therefore undoubtedly an opportune time for private equity firms, and other growth investors, to consider how the changing narrative on packaging, plastics, and the environment more broadly, will shape innovation in the area and create a thriving climate for disruptive business models, new technologies and product offerings.
The following three areas, build on the recommendations in the EAC reports, and are likely to attract further investor interest.
