UK Stock Story - Renewi PLC
We live in a throwaway society in which too many things are disposable, packaging, food, electronics and tyres. The problem of litter and waste never seems to go away; in fact, it feels like it’s getting worse. The trouble is that established methods of consumption are linear, in that we take materials from the earth, make products from them and eventually throw them away as waste, where they might end up in landfill or in incinerators. We need to look at the problem of waste in new ways and one option is to embrace the circular economy.
A circular economy tries to break the link between economic activity and the seemingly inevitable consumption of finite resources. The circular economy, which was the theme of a Castlefield symposium a few years ago, is a framework that aims to tackle global challenges like climate change, biodiversity loss, waste and pollution. In a circular economy, we try to stop waste being produced in the first place. The Ellen MacArthur Foundation, https://ellenmacarthurfoundation.org/ has identified the three principles of the circular economy[1];
- Eliminate waste and pollution. In nature, there is no waste – all waste is man-made. Poor or thoughtless design creates products, like crisp packets and drinks cartons, which cannot be recycled easily.
- Circulate products and materials (at their highest value). This means trying to keep materials and products in use for as long as possible.[2] Formerly known as “make-do-and-mend.”
- Regenerate nature. For example, in the food industry; instead of degrading nature through intensive farming practices, we can emulate natural systems which improve soil condition and biodiversity.
The circular economy is captured in two of Castlefield’s positive investment themes, Environmental Management and Resource Efficiency. Environmental Management is an increasingly important theme in the protection of our environment and ecosystem which we support through our investments. The theme relates to companies which try to improve the processes and practices of emissions management, controlling waste, pollution and water usage. Resource Efficiency increases the competitiveness of industries through stimulating innovation and boosting sectors such as recycling and resource recovery while helping to ensure the secure supply of key resources.
Castlefield supports the shift to a circular economy through our investment in companies like Renewi PLC, which we hold in our Castlefield Sustainable UK Smaller Companies Fund and which addresses both of these themes in its day-to-day activities.
Created through the merger of Shanks Group plc and with Van Gansewinkel B.V in 2017, Renewi is a values-driven organisation operating in the waste management industry. More specifically, it a waste-to-product company which provides services such as collection, recycling and treatment of commercial waste as well as the reprocessing and recycling of contaminated soils and materials. The company operates in the UK, Benelux and France.
Resource efficiency is central to what Renewi does as it seeks to extract value from waste and give life to old materials, rather than just burying them. Impressively, of the 14 million tonnes of waste they handle in a year, 89% is either recycled or used for energy recovery.[3]
In 2020, the company reset its strategy to differentiate Renewi as a pure play recycler which focuses on supplying high quality secondary materials. Of course, Renewi cannot achieve its environmental objectives in isolation and so it works on numerous collaborations with other businesses.
Working with sustainable start-ups helps accelerate the transformation to a circular economy. For example, Renewi helped young entrepreneurs from the Rotterdam-based Better Future Factory (https://betterfuturefactory.com/) to make filament for 3D printers from recycled plastics. Renewi played an important role in the transfer of knowledge and, through its subsidiary Coolrec, it also supplied the plastic for a white filament called HIPS. This plastic is obtained from recycled refrigerators. The 3D filaments are supplied on a cardboard spool which is also fully recyclable[4]. Another Coolrec collaboration, this time with the telecoms company KPN and the Royal Dutch Skating Association, resulted in the medals for the Dutch All-Round Championship being made from precious metals from discarded mobile phones. The medal ribbons were made of discarded flags[5].
There are many other examples of collaboration and Renewi’s work goes on in the form of Mission 75, which refers to the plan to increase the firm’s recycling rate from 65% to 75% by 2025. To achieve this, they have issued an open invitation to other individuals and organisations to work with them on accelerating innovation in recycling and are making available access to their waste streams, facilities and networks, all to help achieve this sustainability goal. We will monitor progress closely.
[1] https://ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview
[2] https://ellenmacarthurfoundation.org/circulate-products-and-materials
[3] https://www.renewi.com/en/about-renewi
[4] https://www.renewi.com/en/about-renewi/our-role/case-studies/circular-collaborations/recycled-filament-for-3d-printing
[5] https://www.renewi.com/en/about-renewi/our-role/case-studies/circular-collaborations/skating-medals-made-of-old-mobile-phones
Information is accurate as at 25.08.2022. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.