Sustainable Investing Perspectives with Martin Grosskopf (AGF) and Amantia Muhedini (UBS CIO)
Oct 31, 2023
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Amantia Muhedini and Martin Grosskopf discuss achieving circularity in sustainable investing, focusing on challenges faced by companies in finding plastic alternatives. They explore Lego's search for sustainable materials, emphasizing engineering challenges and the need for scalable solutions. The chapter also highlights investment opportunities, demand for alternative materials, and potential of circular economy and waste management in advancing sustainability goals.
Achieving circularity for companies is dependent on their supply chain and material, with aluminum being highly recyclable and able to displace plastics, while industries reliant on plastics face challenges in finding alternatives.
The Lego case highlights the complexity of sustainability efforts and the need for diverse solutions, with hurdles including operational changes, engineering challenges, and scalability, requiring incentivizing economic viability and pursuing alternative materials.
Deep dives
Achieving Circularity in Companies
Companies vary in their ability to achieve circularity, depending on the supply chain and material. Some materials, like aluminum, have high recyclability, allowing for the displacement of plastics. However, for industries reliant on plastics, finding alternatives is more challenging. Challenges include the malleability of plastics and the cost of implementing new recycling processes. Achieving circularity may require government incentives and a diverse portfolio of approaches.
Complexities and Hurdles in Pursuit of Circularity
The Lego case exemplifies the complexity of sustainability efforts. Lego's multiyear quest to use recycled plastic bottles as a replacement material for Virgin ABS plastic faced challenges in scaling due to significant operational changes. This highlights the need for diverse solutions and the importance of considering different business models. General hurdles for companies include engineering challenges, economics, and scalability. Overcoming these hurdles may require incentivizing economic viability and pursuing alternative materials.
Evolution and Investment Opportunities in Circular Materials
The demand for alternative materials continues to grow for reducing reliance on fossil energy and carbon emissions. Opportunities in circularity include exploring subscription or products-as-a-service business models, which can diversify cash flow. Waste collection and management are also crucial. Innovations in these areas provide reliable solutions and can be promising investment opportunities. Additionally, advancements in bio-based materials and recovery processes for oily waste and chemicals expand the potential for substituting petrochemical molecules.
Achieving circularity in order avoid material waste is not a one-size-fits all approach for companies - we discuss how companies are effectively achieving circularity, the hurdles that exist, and the scope of global demand for alternative materials, most notably plastic alternatives. Featured are Amantia Muhedini, Sustainable & Impact Investing Strategist Americas, UBS Chief Investment Office, and Martin Grosskopf, Vice President & Portfolio Manager with AGF Investments. Host: Daniel Cassidy
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