As technology continues to evolve (and end up in landfill), e-waste is proving to be a sustainability disaster. In 2018 alone, humans generated approximately 2.01 billion tons of waste worldwide. To put things into perspective, 2.01 billion tons is comparable to 287,142,857 elephants or 275,342 Eiffel Towers. Certainly, that volume of waste sent into landfills is a significant concern. And along with it, potentially reusable resources are continuously wasted as a result of careless disposal.

Shockingly, e-waste is responsible for 50 million tons of the total generated waste produced each year. Not to mention, it accounts for 70% of the toxic waste lying in landfills.

To uncover more about the e-waste issue, I recently interviewed Amanda O’Toole, a fund manager at AXA Investment Managers (AXA IM). She is a part of the firm’s investment team as the Lead Portfolio Manager for Framlington Equities’s (AXA IM’s qualitative equities business) Clean Economy Strategy.

We discussed the primary challenges in e-waste as well as why financiers are looking towards waste management as an investment opportunity.

Why Is E-Waste So Hard To Recycle?

When dealing with the improper disposal of hazardous materials, there is a constant risk of land and water pollution through contamination. E-waste similarly causes these pollutive consequences.

For example, batteries leak heavy metals such as lead, barium, and lithium into the soil when placed in a landfill.

As a result, these heavy metals seep into groundwater channels, which eventually enter larger bodies of water like ponds or streams. And as technology continues to develop, the demand for new electronics continues to rise. Estimates show that the number of connected devices will reach 31 billion by 2020.

In O’Toole’s words, “without fundamental change throughout the electronic supply chain, the e-waste epidemic will get worse.”

Amanda O’Toole tells us “without fundamental change throughout the electronic supply chain, the e-waste epidemic will get worse.”

Although many companies do already run their own programs for the recycling of e-waste, the reclamation of e-waste is a difficult and complex process.

While complex electronics can contain up to 60 elements from the periodic table, the process of recovering these devices can be complicated and costly.

The question now arises: If it is complicated and costly, what other ways can we deal with e-waste?

Future Economic Potential In E-Waste

The way that O’Toole sees it, e-waste is of particular interest from an investment perspective because of the value of the materials it contains.

When a company is able to extract these raw materials safely, they are able to create a valuable product that can generate revenue.

If the extraction process is cost-effective, it is possible to generate a financial return by reducing e-waste. And in some cases, securing a stable supply of a material may be challenging.

Striving For Clean Technology Through Investments

For the last six months, O’Toole has been working to launch a successful new strategy focused on promoting clean technologies.

In her Clean Economy Investment strategy, she talks about how the fund adopts a unique approach that invests in diverse areas of the market that enjoy structural growth.

Surprisingly, many of these areas are not dependent on macroeconomics. Instead, the product gears towards the interest of mainstream investors.

Through this strategy, O’Toole engages with clients who are not typically interested in environmental value. And with her guidance, clients begin to move towards these areas of the market.

Appealing To the Public

Recently, the rise in social awareness of environmental issues is driving change. This change is partly due to regulations such as building performance regulation and effluence discharge monitoring.

However, consumer demand for things such as meat alternatives and recyclable packaging comprises a majority of the market’s change. In return, brands accommodate this change by developing responsible sourcing policies.

To its advantage, the fund is utilizing this societal trend and implementing it in their own main areas of focus.

Currently, the fund identified four sub-themes to best represent opportunities for long term secular growth in the Clean Economy:

Sustainable Transport Smart Energy Responsible Nutrition Recycling and Waste Reduction

Framlington Equity’s intention is to invest in publicly listed equities in areas of the global economy which benefit from secular tailwinds. And In the long term, O’Toole argues that consumers will continue to demand the transportation of goods and services; the provision of energy, food, and water; and the use of materials.

The Bigger Picture

The common theme across the investments that AXA IM makes through the Clean Economy strategy is that these are companies whose goods and services make economic sense for their customers.

Adoption is not dependent on subsidies or a desire by corporates to address environmental issues.

The business case for adoption is based on the need to meet more stringent regulatory requirements. Additionally, companies can gain market share by addressing the growing demand for sustainable consumer products.

Brands would want to invest in order to mitigate potential reputation damage associated with a poor environmental footprint and build a sustainable production cost advantage.

Summary

Companies operating within the clean economy have a critical responsibility to ensure they offer the best solutions for clients while being mindful of the environment.

What’s more, is that when companies demonstrate how their goods and services outperform on relevant environmental metrics, they can gain a competitive advantage.

Financiers have noticed and made waste management a part of their investment strategy.

Final Notes: Is your company doing something to reduce its e-waste or carbon footprint? If so, we’d love to hear from you at tips@mediusventures.com.