According to a recent article published on Business Green, Bank of America Merrill Lynch has predicted that the global waste industry could benefit from the resource crunch.
A latest report published by Bank of America Merrill Lynch suggests that due to a combination of urbanisation, environmental regulation and the impending resource shortages the global waste industry could be in for a major expansion.
The published report, No time to waste – global waste primer, calculated that the global waste, including municipal and industrial waste management, recycling, waste-to-energy and sustainable packaging, is currently worth $1tn a year (more or less £625bn).
It also suggests that there is the potential for the market to double in size in just seven years’ time, with a wide range of demographic, environmental, regulatory and commercial factors driving investments right across the sector.
The report notes:
“We believe that the global dynamics of waste management mean that the sector offers numerous growth opportunities for those with exposure to the value chain.”
“By 2020, we estimate that the waste industry could be worth up to $2tn, with Europe facing the toughest strategic challenges, and Asia and South America seeing the fastest growth. We see opportunities across waste management, industrial treatment, WtE (waste-to-energy), wastewater and sewage, E&C (engineering and consulting), recycling and sustainable packaging among other areas.”
There is a large and expanding market for waste management firms to exploit, according to the report, it notes that currently only a quarter of the 11billion tonnes of waste that is collected each year is recycled or reused, whilst 3.5bn people globally still haven’t got the basic waste management services.
Meanwhile, the expansion of the middle class in emerging markets such as China and Brazil means that waste volumes are growing faster than both GDP and urbanisation rates, and are projected to double by 2025 against 2005 levels.
The overall result of this is a looming environmental health crisis, mounting concerns about the depletion of scarce resources and an enormous commercial opportunity for the waste industry.
“We are seeing a shift away from waste as a mandatory public service to waste management as a sustainable business opportunity,” the report states.
“We see the fastest growth in the next decade coming from diversion, recycling, and recovery of valuable secondary raw materials, waste-to-energy, e-waste and sustainable packaging – as well as from emerging markets. We see considerable low hanging fruit potential given that 70 per cent plus of global waste is currently landfilled. ‘Greening’ waste management will require increasing MSW recycling by a factor of 3.5 times and doubling industrial waste recycling.”
The report also highlights some of the stocks that are likely to benefit from these trends over the next seven years, arguing that:
“Although it is difficult to accurately gauge the link between such exposure and share price performance (as many factors outside the scope of this analysis are likely to play a role in short- and long-term price development), we still consider waste-related exposure an important and positive point to track given that waste is a sustainability megatrend with a 25-50-year lifespan.”