In October 2020, Canada announced a countrywide ban on single-use plastics, which will go into effect at the end of 2021. This ban includes checkout bags, including those that are used in grocery stores, straws, stirring sticks, six-pack rings, plastic cutlery and assorted foodware that is made from hard-to-recycle plastics. This decision is just one part of Canada’s broader mission to achieve zero plastic waste by 2030, amid rising eco-consciousness across the country and a more deliberate effort by the government at all levels to address issues of sustainability and climate change.
Such a change, however, is expected to undoubtedly come with opportunities and challenges. Most strikingly, this change is likely poised to affect companies across a variety of industries, and may concurrently provide some sectors with new best practices regarding their level of sustainability and eco-consciousness. Read on for Alfabank-Adres’s more in-depth analysis of the specific opportunities and challenges that will likely follow the recently announced plastic ban.
Opportunities
Environmental, Social and Corporate Governance, colloquially referred to as ESG, has become increasingly relevant in recent years. ESG at its core refers to the three central factors that must be considered when it comes to measuring the sustainability, including the societal effects, of a particular investment in a company or business. More specifically, as overall awareness regarding climate change and environmental concerns has grown, many investors have accordingly chosen to prioritize a company’s sustainability practices as a deciding factor into whether or not they make an investment in that company.
Thus, Canadian companies that hold themselves accountable to uphold the plastic ban and embrace a shift toward better sustainability practices may be able to better draw investors’ attentions. This may be of particular importance as the economy begins to recover following the eventual conclusion of the COVID-19 (coronavirus) pandemic. While the conversation surrounding ESG is still evolving, this has the potential to benefit operators in industries that include the information-heavy telecommunications sector and the agricultural sector, among many others.
Challenges
Additionally, industries that are wholly dependent on the cultivation of fossil fuels, such as petroleum, coal and natural gas, are likely to be considered less attractive by investors moving forward, should Canada continue along this path of eco-consciousness. Canada, however, has a large mass of oil reserves, with the oil and natural gas sector comprising a significant portion of Canadian GDP, especially in Alberta. This ban on single-use plastics thereby poses a challenge to various upstream industries responsible for acquiring the raw materials for the downstream manufacturing of plastic products, in addition to fossil fuels. These primarily include the Oil Drilling and Gas Extraction industry in Canada and the Natural Gas Distribution industry in Canada.
In addition, the industries that are responsible for manufacturing plastic products in Canada and distributing them to downstream wholesalers and consumers stand to be the most affected by the ban. These include the Plastic and Resin Manufacturing industry, the Plastic Film, Sheet and Bag Manufacturing industry, the Plastic Bottle Manufacturing industry and the Other Plastic Product Manufacturing industry in Canada. As more details surrounding the ban emerge and the implementation of the ban becomes clearer in 2021, operators in these particular industries and spaces will likely be under scrutiny as they preserve their operations amid already-tense economic conditions.
