The annual World Ocean Day on 8 June served as a reminder of the climate change risks that environmental, social and governance (ESG) investors profess to care about so much.
Plastic accounts for c12% of global solid waste and this share increases with economic growth and urbanisation.
Mismanaged plastic waste per capita — the metric that perhaps should matter most from an ESG-minded investor's perspective – is highest (worst) in:
Brazil in large emerging markets; and
Malaysia, Philippines, Thailand, Turkey in small EM.
Below, we chart this metric across global EM, with the US as a developed market comparable, along with total plastic waste (properly disposed of and mismanaged) on a per capita and per US$ of GDP basis.
Plastic waste control is not like greenhouse gases
Plastic waste is not as concentrated globally as greenhouse gas emissions – the cooperation of many countries is needed.
China and the US drive c45% of global emissions of carbon dioxide (the main greenhouse gas) but merely c25% of global plastic waste.
During negotiations like COP26, a longer list of countries matters in the case of plastic waste, including, particularly, India, but also the likes of Brazil, Indonesia, Mexico and Russia from the emerging markets.
Our EM Country Index in this context
Two environmental aspects are incorporated into our EM Country Index:
Exposure to climate change – via fresh water stress, forestation, elevation above sea level; and
Pollution – C02 emissions and plastic waste.
Our index weights c30 factors on growth (short and long term), policy credibility, politics, sanctions, ESG, equity valuation and liquidity.
The weights in the index can be changed in order to model different global themes and portfolio styles.
Related reading
A new index for ranking the investability of emerging markets, April 2022
The 'E' in ESG: 4 charts on plastic waste in emerging markets, October 2021
ESG needs to focus on countries, not just companies, Oct 2021