Liontrust Sustainable Investment Annual Review 2022 - Flipbook - Page 16
Circular economy
The way we currently use materials is wasteful and to make better
use of our limited resources we need to increase their lifespan, and
reuse and recycle materials where possible.
Plastics re-use: Plastic has a bad name, largely because single
use plastics aren’t always disposed of correctly which leads to a
shocking build-up of plastics in the environment and our food chain.
For example, the “Great Pacific Garbage Patch” is estimated to
contain at least 79 thousand tonnes of ocean plastic and cover
an area of 1.6 m square kilometres (Nature 2018 https://www.
nature.com/articles/s41598-018-22939-w). But there are many
instances where plastic is a fantastic and appropriate material (look
around a hospital) and its durability can make it very appropriate
for multi-decade use (not single use).
There are two companies we have invested in which recycle singleuse plastics into multi-decade uses and help increase the circularity
and significantly reduce emissions in the process: ADS is a US-listed
company that makes plastic drainpipes used in water and storm
drainage, while TREX makes plastic decking which lasts longer than
wooden alternatives. Both companies use a large amount
of recycled plastic to make their products, which
increases circularity and gives them a
competitive position on costs versus
conventional alternatives.
16 - Liontrust Sustainable Investment: Annual Review 2022
Asset sharing: This is increasing the utilisation of a product so it sits
idle less of the time (I have a mower I share with my neighbour;
this costs us half as much as each buying our own mower and gets
used twice as much, but has used half the resources compared to
us both owning our own mower – win, win win). The SF investment
team identified a trend towards more hiring of equipment, especially
in building and construction, which increases utilisation and
contributes to using materials more efficiently. Ashtead Group is a
rental company we have invested in. As an example, they estimate
that one JCB digger being rented out substitutes ten privately-owned
machines on average.
Waste streams; clothing: Fast fashion (buying lots of cheap
fashionable clothes that you hardly ever wear) is the opposite of
what we should be doing to reduce materials consumption from the
clothes we wear. A string of new companies specialising in reselling
second-hand clothes has caught our attention as they provide an
excellent move towards reuse of fewer higher-quality items that are
affordable. The business model (how these companies make money)
is still in flux and we are following with interest progress at companies
such as Fivrr (not invested).