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World Ocean Day and the ESG plastic waste offenders in emerging markets

  • Annual World Ocean Day on 8 June is a reminder of the climate change risks ESG investors profess to care about so much

  • Mismanaged plastic waste/capita is worst in Brazil in large EM, and Malaysia, Philippines, Thailand, Turkey in small EM

  • Plastic waste is not as concentrated globally as greenhouse gas emissions: the cooperation of many countries is needed

World Ocean Day and the ESG plastic waste offenders in emerging markets
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
11 June 2022
Published by

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 in emerging markets

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.

Plastic Waste control requires negotiation between many countries (eg US and China are below 25% of global total)

Our EM Country Index in this context

Two environmental aspects are incorporated into our EM Country Index:

  1. Exposure to climate change – via fresh water stress, forestation, elevation above sea level; and

  2. 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