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What It Will Take to Slow the Environmental Impact of Waste

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Behind the scenes at Goldman Sachs, thought-provoking insights are bubbling up each day. This space is for a few nuggets we think are worth sharing. From macroeconomics to the genome medicine revolution to the rise of digital gaming, these stories from around 200 West show you how top-level views can impact your life (and maybe even shape the way you think about money).

Only 12% of all plastic waste in the world is recycled. As one of the most widely used materials on this planet, that might seem like a low percentage. But an even more surprising figure might be 0.6% - which is how much the plastic demand growth could slow per year over the next decade. 

That’s in large part due to changing consumer habits, increased recycling and the efforts companies have made to implement plastic alternatives, such as corn and other bio-based plastics. Those alternatives have a lower carbon footprint and can degrade in the natural environment, but can contaminate the entire recycling bin if mixed with plastic bins.

The future of plastic waste is at the heart of this The Long & Short of It video.

“Plastics are extremely durable and versatile,” Goldman Sachs Research’s Nikhil Bhandari said. “Which is why almost every consumer application has some level of plastic intensity today. However, one of plastic’s greatest strengths has become its greatest weakness – it is not degradable. This is what we call the plastics paradox.” 

5 takes on plastics that may surprise you 

Some additional viewpoints from Goldman Sachs Research: 

1

Popular Belief           

Rising pressure on single use plastic will significantly reduce global plastics demand growth.

Goldmans Sachs Belief           

We estimate recycling and changing consumer habits will lower demand growth by 60bps over next decade (versus normalized 3.8% CAGR).

2

Popular Belief           

Many believe traditional packaging alternatives (i.e. Aluminum, Glass) will retake substanial market share.

Goldmans Sachs Belief           

Traditional alternatives carry higher carbon footprints over the full cycle of the environment. We see the biggest threat from alternatives for PET bottles in DMs due to rising consumer perception risks.

3

Popular Belief           

Many believe bio based plastics are degradable in the natural environment and will gain a substantial share in plastics packaging.

Goldmans Sachs Belief           

Bioplastics carry mixed environmental benefits: ~42% of total bioplastics are biodegradable (only when certain environmental conditions are met), they can contaminate the quality of scrap if mixed with a regular plastics bin, and their growing demand generates higher competition for food sources.

4

Popular Belief           

Improving consumer habits and regulations can drive a meaningful rise in plastic recycling rates.

Goldmans Sachs Belief           

Concerted efforts in waste managment are required from all stakeholders like consumers (self-sort waste), governments (economic incentives as returns from recycling are oil linked) and companies in the plastics value chain (packaging redesign).

5

Popular Belief           

All plastics are made equal and will see a demand slowdown ahead. 

Goldmans Sachs Belief           

Plastics that are easier to sort/recycle and have lower substituiton risks could see significant demand outperformance ahead.

Popular Belief           

Goldmans Sachs Belief           

Rising pressure on single use plastic will significantly reduce global plastics demand growth.

We estimate recycling and changing consumer habits will lower demand growth by 60bps over next decade (versus normalized 3.8% CAGR).

Many believe traditional packaging alternatives (i.e. Aluminum, Glass) will retake substanial market share.

Traditional alternatives carry higher carbon footprints over the full cycle of the environment. We see the biggest threat from alternatives for PET bottles in DMs due to rising consumer perception risks.

Many believe bio based plastics are degradable in the natural environment and will gain a substantial share in plastics packaging.

Bioplastics carry mixed environmental benefits: ~42% of total bioplastics are biodegradable (only when certain environmental conditions are met), they can contaminate the quality of scrap if mixed with a regular plastics bin, and their growing demand generates higher competition for food sources.

Improving consumer habits and regulations can drive a meaningful rise in plastic recycling rates.

Concerted efforts in waste managment are required from all stakeholders like consumers (self-sort waste), governments (economic incentives as returns from recycling are oil linked) and companies in the plastics value chain (packaging redesign).

All plastics are made equal and will see a demand slowdown ahead. 

Plastics that are easier to sort/recycle and have lower substituiton risks could see significant demand outperformance ahead.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.