Empowering the next generation of responsible investors and promoting plastic circularity

“How can the circular economy for plastics be translated into investable opportunities to attract private investors?”

That was the question posed by the Sustainable Finance Hackathon at the climax of the Building Bridges Summit 2022 in Geneva, an international event dedicated to promoting sustainable finance and the transition to a circular economy.

Presided over by our Senior Managing Partner, Patrick Odier, Building Bridges brought together leaders from across finance, business, academia and policymaking for a week of panel discussions and community-led events, including a high-level debate on the sustainable future of food systems, introduced by Hubert Keller, Lombard Odier Senior Managing Partner. 

The week culminated in the Hackathon, a 24-hour event co-hosted by Lombard Odier and the Global Plastic Action Partnership of the World Economic Forum, and organised jointly by Open Geneva, the United Nations Institute for Training and Research (UNITAR) and the Geneva School of Economics and Management of the University of Geneva. The Hackathon brought together more than 100 passionate students, academics and Lombard Odier experts, who worked continuously for 24 hours to explore the economic returns the circular economy can generate, while simultaneously creating a positive impact on our planet.

Read also: Unlocking decarbonisation – the rise of low price, clean energy

Attracting investors into plastic circularity

Joining forces with the World Economic Forum allowed us to raise awareness around our plastic circularity challenge. At Lombard Odier, we believe that investing in the redesign of plastic delivery models for wider reuse, and in the infrastructure needed to minimise plastic waste, are critical stepping stones towards a net-zero future. While financial institutions are increasingly looking to invest in sustainability, opportunities in the circular economy for plastics remain relatively nascent. Against this backdrop, the goal of our Hackathon team was to conceive investable solutions to facilitate circularity.

The focus of discussions soon centred around the highly fragmented and localised nature of the plastics collection industry in some regions, which consists in mostly vulnerable, undercapitalised companies struggling to reach scale. These small but innovative operations are often outside of the risk-return profile for many institutional investors in their current form. However, private capital can contribute to the formation of a more resilient plastic circularity value chain by bringing these local champions together. Better integrated supply chains would achieve higher efficiency and better profitability thanks to economies of scale and close collaboration. In turn, these scaled operations can become an attractive investment opportunity for a wider range of investors, accelerating their development still further. Jump-starting virtuous financial and environmental circles in this way is the purpose of our innovative circular plastics strategy.

Read also: Eliminating plastic pollution: an investor perspective

Towards a new economic paradigm: transitioning from WILD to CLIC^®

Our participation in the Hackathon contributes to a broader commitment to sustainability, which is core to our corporate culture. As a wealth and asset manager, our primary mission is to preserve and grow our clients’ assets by delivering the best risk-adjusted returns. We believe the ability of companies to fully embrace sustainability-related trends will become key in assessing their future prospects.

Human activity has pushed us across many of the planetary boundaries that define the biophysical safe space within which society can flourish. Unless this is reversed we will see calamitous effects on the economy, which is itself a subset of the earth’s biophysical systems. The root of the problem lies in our ever-growing level of materials consumption, which has led to unprecedented rates of resource extraction, pollution, and waste. We call this model WILD (Wasteful, Idle, Lopsided and Dirty). For example, nearly 80% of single-use plastics produced currently end up in landfills or discarded. This behaviour is pushing the regenerative ability of our ecosystem to the brink.

At Lombard Odier, we believe the solution lies in transitioning to a sustainable economy where we work in partnership with nature, rather than seeing it merely as a resource from which to extract value. We believe this will be achieved through 3+1 fundamental systems transformations. In energy, we will see widespread electrification powered by zero-carbon renewables. In food and agriculture, we will see a dietary shift towards plant-based foods that are better for both planetary and human health and innovations in farming that will reduce pressure on land-use. And in materials, we will see an enormous increase in recycling and re-use and a move towards new bio-based materials. All of this will be underpinned by carbon markets, with a reliably increasing carbon price incentivising polluters to align with a net-zero world. These changes will accelerate the transition to an economy that is Circular, Lean, Inclusive and Clean – we call it the CLIC® economy.

Read also: 10 ways to rethink plastic through technology

Lombard Odier: at the forefront of sustainable investing

Today’s plastics industry is responsible for 2 billion tonnes of CO₂ equivalent emissions each year, 4% of the global total. The majority of this comes from manufacture, with fossil fuels the primary material and energy source used in the production of virgin plastics. If we are to hit the Paris Agreement objective of limiting global warming to no more than 1.5 degrees Celsius, the plastics industry, like other industries, must transition to a net-zero-carbon-emissions economy.