By Johan Griesel, ESG and Impact Analyst at Sanlam Investments
As the world’s population continues to grow, so does the amount of waste generated each year. According to estimates, global waste generation will reach 2.2 billion tonnes by 2025. Shockingly, high-income countries, which only account for 16% of the world’s population, produce 34% of the world’s waste. And, despite efforts to increase recycling rates, only 15%-20% of waste generated globally is recycled.
One of the leading causes of waste pollution is inefficient production processes, product design and improper waste disposal practices, such as illegal dumping, and ineffective waste collection services. Manufacturers of products should embrace the principles of circular economy in their product design to ensure that their product maintain a level of value post use. Due to the products not having post use value, unreliable or non-existent refuse collection services in certain areas, consumers resort to disposing these products in inappropriate ways. It is estimated that South Africa alone generates about 122-million tonnes of waste a year, 90% of which still goes to landfills. Waste products that end up in landfills become an environmental and social cost to society, with little accountability from manufactures. We should move towards the principle of Cradle to Cradle, where there is greater accountability for product manufacturers in the waste value chain.
Considering the impact of waste pollution on the environment, society, and governance practices, what actions can investors take to mitigate these challenges?
At Sanlam Investments, our approach has recognised investing in waste management as a core part of our sustainability strategy. Investing in innovative waste management technologies can play a crucial role in improving waste management by encouraging innovation and investment in sustainable technologies. This could include investing in companies that are developing new materials, technologies, or business models that support a circular economy and reduce waste.
To demonstrate our commitment towards sustainable investments, SkipWaste recently became Sanlam Investment’s Private Equity division’s fourth acquisition in the fund, following that of Cavalier Group, Absolute Pets and Q Link.
SkipWaste has an integrated business model, spanning onsite waste management, primary storage, waste logistics, recycling and recovery as well as alternative disposal and conversion. With more than 1 000 clients and 3 000 sites primarily in Gauteng, SkipWaste is indicated to be well-positioned to sustain its access to waste-at-source and the company’s ability to redirect more waste towards alternative forms of disposal.
In addition to investing for impact, asset owners can engage with investee companies to encourage them to adopt sustainable practices, such as reducing waste, improving recycling, and increasing their use of renewable energy. One practical measure is for companies to set specific, science-based, and well-thought-out targets so that investors can track the company’s performance and hold management accountable. This can not only have a positive impact on the environment but can also positively influence the long-term financial performance of companies.
Waste management can also contribute to achieving several United Nations Sustainable Development Goals (SDGs), including SDG 8, which focuses on promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
Effective waste management can help create employment opportunities, particularly in low-income communities. For instance, waste management and recycling already provide job opportunities for people involved in collecting, sorting, processing, and marketing of waste. According to Plastics SA the plastic industry provides some 60 000 informal jobs, many of whom are waste-pickers and collectors. This, in turn, helps to reduce poverty and increase economic growth.
Furthermore, sustainable waste management practices such as recycling, composting, and waste reduction can also contribute to achieving SDG 12, which aims to ensure sustainable consumption and production patterns. By reducing the amount of waste that ends up in landfills, waste management can help reduce greenhouse gas emissions and environmental pollution, thereby promoting a more sustainable future.
Finally, waste management also contributes to the development of resilient infrastructure, which is critical for sustainable economic growth. Proper waste management helps to prevent environmental degradation and health hazards, thereby supporting the development of resilient communities.
In conclusion, innovation is crucial in the fight for sustainability amidst increasing environmental challenges worldwide. Entrepreneurs, innovators, and researchers are developing new technologies, processes, and products that can help us reduce our impact on the planet and create a more sustainable future. By investing in companies that promote circular economies and sustainable practices, asset managers can encourage the development of innovative solutions. And as showcased, effective waste management can also contribute to achieving United Nations Sustainable Development Goals, including sustainable economic growth, reduced poverty, and sustainable consumption and production patterns. By supporting innovation and investment in sustainable waste management, asset managers can drive progress towards a brighter and more sustainable future.
The Sanlam ESG Barometer in partnership with Business Day was launched on 23 March. It is the first barometer in South Africa that assesses how JSE-listed companies are actively improving environmental and social outcomes in society through their activities. To view the results www.sanlamesgbarometer.co.za/report
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