Host: Reese Tisdale
Guest: Cullen Mitchell | Analyst | Bluefield Research
Category: 🔬 Research
Podcast’s Essential Bites:
[6:37] “In June of 2021 […] the Singapore based investment firm Circulate Capital disclosed $14 million for its Circulate Capital Disrupt Fund, which is a companion fund to their larger $106 million Circulate Capita Ocean Fund that was launched in 2019. And the goal of that is to reduce ocean plastic. And it's been in partnership with a lot of the major food and consumer product brands […] like PepsiCo, Procter and Gamble, Unilever and Coca Cola.”
[7:07] “At the same time, we're seeing some policy shifts, too. The European Union has launched their […] plastic strategy, which is a goal to reduce and recycle 55% of all plastic packaging in that region by 2030. […] And just for some context, the Center for International Environment Law […] has found that product packaging accounts for 40% of all global plastic demand, but only about 14% of that is recycled.”
[7:37] “This tells us, one, that the big multinational corporations are really starting to focus on packaging, and its impact on the environment, and the kind of associated brand risk that can come with that. And then, any […] shift from plastic to paper packaging […] is going to have a big impact on water management throughout the supply chain.”
[8:54] “I think what's interesting about this […] anti plastic sentiment […] is [the] visible nature of it. So consumer preferences are really susceptible to what they're seeing. […] You see stores banning plastic bags or charging for them due to […] this public outcry or plastics in the oceans, and the overall climate impact of producing plastics. And then we have this thing that people are calling the Amazon effect. So everyone [is] shifting from shopping in person to wanting everything delivered to them, which again, was gaining traction before the pandemic, but has really been accelerated since then as well.”
[10:54] “The US Census Bureau's quarterly analysis back from May of this year, estimates that e-commerce sales have increased 39.1% in the first quarter of 2021, compared to that same time last year in 2020. So this kind of growing prevalence of online purchasing and door to door deliveries, […] even in the absence of the pandemic, has really accelerated this, […] Amazon effect, which is the disruption of online digital procurement in lieu of in person purchasing. And then against that kind of movement, we're also seeing a lot of corporate sustainability and ESG initiatives from big multinational consumer product companies that are focusing on water management and supply chains across pulp and paper and petro-chem verticals.”
[13:12] “Pulp and paper is interesting, because it is known as this heavy water user, but not necessarily a consumer of large water volumes. So it does require high volumes of water per ton of paper produced for things like wood chip digestion, processing of fiber, even the bleaching of papers. But on average, 85 to 95% of that water that's used in production of paper products is typically returned to the environment from where it came. So there's less of a financial risk in this industry, in comparison to others that are more directly dependent on municipal wastewater treatment.”
[13:48] “But then if you look at […] longer term in the industry as a whole, the pulp and paper sectors water usage has actually been declining at a rate of about 3 to 5% annually over the last decade. But that kind of hides the fact that it's primarily propelled by a 70% decline in printing and writing papers since 2005.”
[14:09] “At the same time, there have been gains in water efficiency through things like conservation, water management and reuse at the plant level. And so while traditional paper products have been declining, and sales consistently over the past couple decades, a bright spot for the sector has been containerboard products, which is what's primarily used in the cardboard packaging that we're talking about. And so this transitioning of customer preferences towards online delivery has really spiked demand for cardboard packaging in the last year.”
[16:37] “We're […] seeing these larger corporate sustainability trends influencing now even the pulp and paper sector water management. We're seeing these leading firms set various water related targets, particularly towards water conservation. So most of these firms, like a lot of heavy industries, are reliant on groundwater and surface water discharge. So they're confronted less with financial pressure related to water than regulations. But then chemical treatment companies are really at the forefront […], particularly [in] water treatment. [They are] the primary water management solution for pulp and paper.”
Rating: 💧💧💧
🎙️ Full Episode: Apple | Spotify
🕰️ 23 min | 🗓️ 07/13/2021
✅ Time saved: 21 min
Additional Links:
Bluefield Research Newsletter: Waterline
