Turning trash into treasure

A rising demand for action

After almost two weeks of tense negotiations – the sixth round in under three years – efforts to finalise a landmark UN treaty to end plastic pollution once again collapsed. Delegates from over 180 countries were unable to agree on whether the treaty should cap new plastic production or focus only waste management.

Despite frustration at the lack of consensus, this is not the end of the story. As we’ve recently noted, the descent of the ‘plastic curtain’ cannot obscure the fact sentiment and regulations are moving in one direction. The linear model – take, make, waste – is no longer fit for purpose. Each year we generate ~400 million tonnes of plastic waste[1], roughly the weight of all humans. Only 9% is recycled, half is landfilled, and the rest is burned or dumped, releasing carbon and toxic pollutants.

Consumers and lawmakers alike recognise these health and environmental costs and, critically, the business case for circularity is growing stronger. Investors and companies shouldn’t wait. Delay now risks falling behind competitors and being exposed once a binding framework eventually materialises.[2]

A backwards trade war

In an increasingly multipolar world, there is geopolitical motive for supply chains resilience, which strong local recycling supports. A decade before recent shifts in international trade policy, the flow of plastic drastically changed. For years, China accepted the bulk of global traded plastic waste, before effectively banning imports from 2013 to reduce leakage and promote domestic recycling.[3],[4] Other destinations emerged but many soon started pushing back against the waste coming their way. This year Malaysia, Thailand, and Indonesia all banned imports.

Without an overseas outlet, Western nations are now confronting the limits of their own infrastructure. The US offers a striking example: in a twist of economic irony, once a major exporter of plastic waste, it’s now a net importer. This reversal isn’t just a logistical oddity, but a signal of infrastructure failure.

Despite strong public support for recycling, only 43% of US households participate, often due to lack of access or poor communication. Even for PET bottles – one of the easiest plastics to recycle – the rate is just 28%.[5] Even with ~100,000 tonnes of imported waste a year, recyclers say they have enough spare capacity to increase throughput by ~40%. This suggests the US waste collection and recycling system is badly underdeveloped.

It’s a trade war in reverse: importing rubbish instead of exporting solutions. In a world where raw materials are increasingly scarce and geopolitically sensitive, this is a strategic blind spot. The fact the US is buying what it could be recycling is a missed opportunity – economically, environmentally, and competitively.

A take-make-wasted opportunity

Solving the plastic crisis will require coordinated action across governments, companies, and consumers – but the direction is clear. Circularity is fast becoming a competitive edge, and a political necessity.

For companies, circular business models can unlock new revenue streams while reducing costs by design. A transformed plastic economy could deliver US$1.6 trillion in such direct benefits by 2040 – tripling to US$5.6 trillion when externalities are considered.[6]

Here are some illustrative ways we see circularity creating potential winners:

• Producers: Investing in recycled feedstock and scaling complementary chemical recycling tech could help secure supply, maintain social licence, and capture higher-margin markets.
• Brands and retailers: Consumers are willing to pay for circularity in their products and packaging. Retreating from ambitious goals risks reputational damage, while leading on demand signals can build brand loyalty and support the growing recycling industry.
• Waste management firms: With demand rising and high-quality recycled material in short supply, these firms are critical to scaling infrastructure – and potentially have the most to gain. Those who move first could lock in long-term value and customer relationships.

 

Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecasts made will come to pass. Whilst L&G has integrated Environmental, Social, and Governance (ESG) considerations into its investment decision-making and stewardship practices, this does not guarantee the achievement of responsible investing goals within funds that do not include specific ESG goals within their objectives.

 [1] OECD (2024), Policy Scenarios for Eliminating Plastic Pollution by 2040
[2] Talks for the Global Plastic Treaty are expected to resume, although a date is yet to be set. A UN Environment Assembly resolution passed in 2022 mandates an internationally legally binding instrument be delivered.
[3] Brooks, Wang & Jambeck (2018), The Chinese import ban and its impact on global plastic waste trade
[4] OECD (2022), Global Plastics Outlook
[5] Recycling Partnership (2025) State of Residential Recycling 2024
[6] UNEP (2024), Turning off the Tap