Improving plastic packaging and the circular economy in India

Half the plastic currently in existence has been produced after 2005, and manufacturing of these materials might double in the next two decades.¹ While the convenience, light weight, and durability of plastic has its advantages, its mere hours of use for human beings results in environmental impacts over the hundreds of years it takes for the material to degrade.

When Stewart Investors allocates clients’ capital to the companies we invest in, we consider both their use of plastics for packaging and how they think about the post-consumer waste it generates. A focus on safety and hygiene during the pandemic has caused a further increase in the consumption of disposal plastic materials, making the issue more urgent than ever.

This tremendous growth in plastic usage, and consequently plastic waste, is particularly significant in emerging markets like India where plastic consumed per capita each year is still relatively low by global standards (at approximately 8-11 kg, compared to Europe at 50-65kg and the US at 68-109kg) but is growing at an average annual rate of 20%. This confluence of current low usage, but the potential for rapid growth, suggested an opportunity to engage with some of the Indian consumer goods companies we own shares in, on behalf of our clients.

In 2018, Stewart Investors convened an interactive forum in Mumbai with these consumer goods companies and the Institute for Sustainable Futures at the University of Technology in Sydney. The discussion centred on the collection of post-consumer plastic waste, increasing the use of recyclable materials in packaging, and reducing the total weight of packaging materials used. The timing of the forum coincided with the introduction of nation-wide Extended Producer Responsibility policies that focused on these issues and galvanised companies to find innovative and collaborative solutions.

In the two years since this forum, many of our Indian consumer holdings have made real progress in terms of their approach to plastic packaging material. Most now collect more than 50% of the postconsumer plastic waste generated, by weight, with a goal of collecting a 100% by 2022 at the latest.

Specific highlights include Godrej Consumer Products, which aims to use at least 10% of post-consumer waste they collect in new packaging material and use 100% recyclable/reusable material by 2025. Marico is trialling a postconsumption collection initiative of their own-brand bottles, which they will convert into pallets made from 100% recycled plastic to use in their own supply chain handling operations².

The steps these companies have taken make a major contribution towards a circular economy and a more sustainable approach to consumption. We believe that engagement between investors and companies is one of the most effective ways to drive positive change, and we continue to work with manufacturers on how they approach plastic usage.