FIGURE 5: BUSINESS RISKS AND OPPORTUNITIES RELATED TO PLASTIC MANAGEMENT
MEASURING, REPORTING AND MANAGING PLASTIC
RISKS TO BUSINESS
OPPORTUNITIES FOR BUSINESS
MARKET & PRODUCT
REPUTATIONAL
LOSS OF MARKET SHARE TO OTHER BRANDS/PRODUCTS/COMPANIES
BRANDED WASTE POOR EMPLOYEE MORALE
MARKET & PRODUCT
REPUTATIONAL
GAIN MARKET SHARE
SPONSORED CAMPAIGNS & PRODUCTS IMPROVED EMPLOYEE ENGAGEMENT
ENCOURAGE INNOVATION
OPERATIONAL COSTS
RISK OF LONG-TERM PRICE INCREASE RISK OF SHORT-TERM PRICE VOLATILITY
DISCLOSURE
NON DISCLOSURE
OPERATIONAL COSTS
REDUCED & STABLE INPUT COSTS & END-OF-LIFE-FEES VIA ALTERNATIVE MATERIALS AND E.G. REUSE, RECYCLING & REPAIR
REGULATIONS & LITIGATION
REGULATIONS & LITIGATION
REPORTING & FINANCING
REPORTING & FINANCING
EXPOSURE TO WASTE TAXES & FINES
PROTECT REVENUE FROM TAXES & FINES
RISK FROM FUTURE LEGISLATION
PLAN FOR FUTURE LEGISLATION
FAILURE TO CAPITALISE ON INVESTOR INTEREST
IMPROVED ACCESS TO CAPITAL
PERCIEVED FAILURE TO ACCOUNT FOR RISK
MEET REPORTING REQUIREMENTS i.e. GRI & CDP
CUTTING COSTS AND IMPROVING EFFICIENCY There is an increasing amount of evidence that companies which proactively manage environmental issues have better financial performance. A Style Research study found that the top 20% of developed country carbon-efficient companies outperformed the rest of the market.31 A Harvard Business School study, using a sample of 180 companies, found that companies which voluntarily adopted sustainability policies more than 15 years ago significantly outperformed other companies over the long-term in the stock market.32 Similarly, a study from Goldman Sachs shows that companies with better environmental, social and governance performance generate higher cash returns, higher incremental returns year-on-year and less volatile return on capital.33 One reason is that such companies tend to be more efficient; cutting energy consumption leads to lower energy bills as well as lower carbon emissions. Another is that they are perceived to be better managers and custodians of the environment by their stakeholders. Additionally, they demonstrate that they are in tune with their stakeholders’ needs, including their “social license to operate”, which de-risks the company in the eyes of investors. Better management of plastic can help companies decrease their direct costs and reduce the risk of price increases. While plastic is a comparatively cheap material compared to alternatives, there are likely to be many opportunities to cut costs from using plastic more efficiently. Most types of plastic are petroleum-based products that also rely on fossil fuels to provide energy for the manufacturing process, making them vulnerable to price volatility as oil and geopolitical balances shift. In addition, depending on its grade, the price of recycled plastic is less that of virgin plastic. Companies that do not know how much plastic they use will be unaware of these potential savings.
INNOVATION IN PRODUCTS AND PROCESSES Thinking more innovatively about plastic could create opportunities for companies by designing more sustainable products. For example, although recycling plastic in each community is to a large extent dependent on infrastructure and available technology, the use of recycled content in products today is viable in a vast range of products. The percentage of recycled content used comes down to one of economies of scale, availability, consumer perception, and understanding that such material can be effectively substituted for virgin grade product. Product design has a part to play by enabling plastic products to be reused or easily dismantled so that the resources they contain can be put to good use rather than sent to landfill or incinerated.
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