WWF: Tighter regulations may shrink plastics demand growth by up to 73%

Governments and institutions around the world are developing new regulations and measures to curb marine plastic pollution, even as consumer awareness of the issue continues to increase. According to the latest WWF report Shrinking Plastics: Implications of Tighter Regulations on the World Industry, this may reduce the annual growth rate of virgin plastics demand over the next decade by as much as 73% compared to the recent annual growth rate.

Jean-Marc Champagne, Head of Environmental Finance, Asia-Pacific at WWF-Hong Kong said, “While a cyclical short-term downturn in the industry is currently underway, longer-term expectations for plastic demand growth remain solidly positive. As equity markets do not appear to be fully discounting the risks of tighter regulation, from an investor perspective disappointment with long-term earnings is likely if demand suppression results in long-term oversupply of plastics.”   

WWF-Hong Kong anticipates the increase in plastics regulation will

  • reduce the annual growth rate of virgin plastics demand over the next decade to 1.1%-2.5% from the recent annual rate of 3.5%-4.0%, depending on the extent of the new regulations.
  • increase plastics recycling, 
  • impose extra cost burdens on makers and users of plastics, and 
  • thereby threaten industry profitability.

“Plastic pollution has increasingly emerged as a focus of public attention,” said Paul Milon, ESG Specialist Asia Pacific, BNP Paribas Asset Management. “This well-documented report provides an insightful overview of the issue at stake, and details how this could impact companies through lower demand growth and enhanced regulation.” 

The introduction of new regulations and measures stems from the fact that recycling of plastics is unlikely to grow rapidly enough to stop this pollution worsening. The pressure on governments to act will probably continue to increase, with plastic packaging and single-use plastics among the key targets of recent and upcoming regulations and measures. In May 2019, 187 countries agreed to amend the Basel Convention on the Control of Transboundary Movements of Hazardous Waste and their Disposal to include plastic waste and improve the regulation of its trade. Alongside this agreement, single-use plastics suppression strategies are currently being considered in Malaysia, the European Union, the United Kingdom and Japan. 

 
Peter Cornthwaite, CEO of WWF-Hong Kong said, “Improved regulation, and especially improved international regulation, is in the economic interest for an investor in a circular economy. A level playing field and harmonization of regulations across borders also improves economic efficiency. As such, responsible investors should support new global regulations on plastic pollution, as it would be in their best interests over the long term.”

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