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Here’s Where the World’s Plastic Waste Will End Up, by 2050

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The Briefing

  • Since 1950, plastic production has rapidly outpaced any other synthetic material
  • Although recycling efforts have improved over the years, only a fraction of the world’s plastic is currently being recycled
  • If trends continue, over 12 billion metric tons of plastic waste will end up in landfills

The Future of the World’s Plastic Waste

Plastic use has surged worldwide over the last 50 years. In fact, more than 480 billion plastic water bottles were sold across the globe in 2018—that’s approximately 1 million per minute.

Where does all this plastic go, and how much of it is being recycled? Here’s a look at the end-of-life fate of the world’s plastic.

A Breakdown of Disposal Methods

If current trends in plastic production and waste management continue as they are, here’s where 33 billion metric tons of plastic waste will end up by 2050.

Disposal Method Metric tons % of total plastic waste
Recycled 8.53 billion 25.7%
Incinerated 12.39 billion 37.3%
Discarded 12.28 billion 37.0%
Total 33.2 billion

To clarify, this is a rough cumulative estimate of all the plastic that’s been discarded since 1950. This figure includes both primary and secondary (previously recycled) plastics.

Of the 33.2 billion tons of plastic waste, more than 12 billion metric tons is expected to end up in landfills, or in our natural environment. A large portion of this discarded plastic will find its way into our oceans. In fact, if things remain as they are, plastics are expected to outweigh our ocean’s fish population by 2050.

On the flip side, only about 9 billion metric tons are projected to be recycled—roughly 25.7%.

Recycling Has its Limits

It’s worth noting that plastic recycling is not an infinite loop.

On the contrary, most plastics can only be recycled once or twice before they’re discarded, since polymers in plastic break down during the recycling process.

That’s why many experts stress the importance of reducing and reusing over recycling.

As Beth Porter, author of Reduce, Reuse, Reimagine: Sorting Out the Recycling System said in an interview with the Atlantic, “I don’t want people to think that what they do as an individual doesn’t matter…[but] we won’t recycle our way out of this crisis.”

»Like this? Then you might enjoy this full article, Mapping the Flow of the World’s Plastic Waste

Where does this data come from?

Source: Science Advances: Production, use, and fate of all plastics ever made
Details: This research relies on global annual pure polymer (resin) production data from 1950 to 2015. Check out the full research paper for more details on methodology

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Source: https://www.visualcapitalist.com/the-future-of-the-worlds-plastic/

Visual Capitalist

Animated Map: U.S. Droughts Over the Last 20 Years

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Cocoa: A Bittersweet Supply Chain

From bean to bar, the cocoa supply chain is a bittersweet one. While the end product is something most of us enjoy, this also comes with a human cost.

Based on how much cocoa comes from West Africa, it’s likely that most of the chocolates we eat have a little bit of Cote d’Ivoire and Ghana in them. The $130B chocolate industry relies on cocoa farming for supply of chocolate’s key ingredient. Yet, many cocoa farmers make less than $1/day.

The above graphic maps the major trade flows of cocoa and allows us to dive deeper into its global supply chain.

From Bean to Bar: Stages in the Cocoa Supply Chain

Cocoa beans go through a number of stages before being used in chocolate products.

  1. Harvesting, Fermenting, and Drying
    First, farmers harvest cocoa beans from pods on cacao plants. Next, they are fermented in heaps and covered with banana leaves. Farmers then dry and package the cocoa beans for domestic transportation.
  2. Domestic Transportation, Cleaning, and Exporting
    Domestic transporters carry packaged cocoa beans to either cleaning warehouses or processing factories. Cocoa beans are cleaned and prepared for exports to the chocolate production hubs of the world.
  3. Processing and Chocolate Production
    Processing companies winnow, roast, and grind cocoa beans and then convert them into cocoa liquor, cocoa butter, or cocoa cakes—which are mixed with other ingredients like sugar and milk to produce chocolate products.

Cocoa farming and trade are at the roots of the chocolate industry, and the consistent supply of cocoa plays a critical role in providing us with reasonably-priced chocolate.

So where exactly does all this cocoa come from?

The Key Nations in Cocoa’s Global Supply Chain

Growing cocoa has specific temperature, water, and humidity requirements. As a result, the equatorial regions of Africa, Central and South America, and Asia are optimal for cocoa farming.

These regions host the biggest cocoa exporters by value.

Rank (2019) Exporting Country Value (US$, millions)
1 Côte d’Ivoire 🇨🇮 $3,575
2 Ghana 🇬🇭 $1,851
3 Cameroon 🇨🇲 $680
4 Ecuador 🇪🇨 $657
5 Belgium 🇧🇪 $526

Côte d’Ivoire and Ghana are responsible for 70% of global cocoa production, and cocoa exports play a huge role in their economies. Although the majority of exporters come from equatorial regions, Belgium stands out in fifth place.

On the other hand, most of the top importers are in Europe—the Netherlands and Germany being the top two.

Rank (2019) Importing Country Value (US$, millions)
1 Netherlands 🇳🇱 $2,283
2 Germany 🇩🇪 $1,182
3 U.S. 🇺🇸 $931
4 Malaysia 🇲🇾 $826
5 Belgium 🇧🇪 $719

In third place, the U.S. primarily sources its cocoa from Côte d’Ivoire, Ghana, and Ecuador. Mars, Hershey, Cargill, and Blommer—some of the world’s biggest chocolate manufacturers and processors—are headquartered in the U.S.

Finally, it comes as no surprise that the biggest importers of cocoa beans are among the biggest chocolate exporters.

Rank (2019) Country Value of Chocolate Exports
(US$, millions)
1 Germany 🇩🇪 $4,924
2 Belgium 🇧🇪 $3,143
3 Italy 🇮🇹 $2,100
4 Netherlands 🇳🇱 $1,992
5 Poland 🇵🇱 $1,834

Not only is the Netherlands the biggest importer of beans, but it’s also the biggest processor—grinding 600,000 tons annually—and the fourth largest exporter of chocolate products.

Belgium is another key nation in the supply chain, importing cocoa beans from producing countries and exporting them across Europe. It’s also home to the world’s largest chocolate factory, supporting its annual chocolate exports worth $3.1 billion.

Breaking Down the Cocoa Supply Chain: Who Gets What

Without farmers, both the cocoa and chocolate industries are likely to suffer from shortages, with domino effects on higher overall costs. Yet, they have little ability to influence prices at present.

cocoa supply chain breakdown

Farmers are among the lowest earners from a tonne of sold cocoa—accounting for just 6.6% of the value of the final sale.

Low incomes also translate into numerous other issues associated with cocoa farming.

The Bitter Side of Cocoa Farming

The World Bank has established the threshold for extreme poverty at $1.90/day. Cocoa farmers in Ghana make $1/day, while those in Côte d’Ivoire make around $0.78/day—both significantly below the extreme poverty line.

Farmers are often unable to bear the costs of cocoa farming as a result of low incomes. In turn, they employ children, who miss out on education, are exposed to hazardous working conditions, and get paid little or no wages.

Country Cocoa Farmers Making $1/day or less Children in Cocoa Agriculture
Côte d’Ivoire 🇨🇮 600,000 891,500
Ghana 🇬🇭 800,000 708,400

To make matters worse, cocoa farming is primarily responsible for deforestation and illegal farming in Côte d’Ivoire and Ghana—adding environmental issues to the mix.

These interconnected problems call for action, so what is being done to fight them?

Combating Cocoa’s Concerns

Mars, Nestlé, and Hershey—some of the world’s biggest chocolate manufacturers—have made several pledges to eradicate child labor in cocoa farming over the last two decades, but haven’t reached their targets.

In addition, organizations such as UTZ Certified, Rainforest Alliance, and Fairtrade are working to increase traceability in the supply chain by selling ‘certified cocoa’, sourced from farms that prohibit child labor.

More recently, Côte d’Ivoire and Ghana announced a fixed premium of US$400/tonne on cocoa futures, aiming to improve farmer livelihoods by creating a union for cocoa, also known colloquially as the “COPEC” for the industry.

While these initiatives have had some positive impacts, more still needs to be done to successfully eradicate large-scale child labor and poverty of those involved in cocoa’s bittersweet supply chain.

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Source: https://www.visualcapitalist.com/animated-map-u-s-droughts-over-the-last-20-years/

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Visualized: The Power of a Sustainable Investment Dollar

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Today, the surge in green investing has been compared to the dot-com boom of the 2000s.

Back then, the internet was anticipated to radically reshape economies. Many companies fell to the wayside, and now 20 years later, tech stocks currently make up roughly 40% of the S&P 500 by market capitalization. Like the dot-com era, green firms are projected to structurally change the way businesses function.

Given the rising interest in green assets, this infographic from MSCI answers the most important questions advisers need answered on sustainable investing.

1. Which type of sustainable investing is right for my client?

First, let’s start with the basics—understanding the terms used to describe sustainable investing:

  • Sustainable investing: An umbrella term that typically refers to all types of sustainable, impact, and environmental, social, and governance (ESG) integration approaches
  • Impact investing: A type of investing approach that generates measurable social or environmental benefits
  • Socially responsible investing (SRI): An investing approach that aligns with an investor’s ethical, religious, or personal values, while actively reducing negative environmental or social consequences
  • ESG integration: Considers material environmental, social, and governance factors to enhance long-term risk adjusted returns through its investment approach
  • Climate investing: Looks to reduce exposure to climate risk, identify low-carbon investment opportunities, or align portfolios with “net-zero” climate targets

Knowing the key terms of the sustainable landscape allows advisers to more accurately address client objectives, goals, and beliefs.

2. How can I start a conversation with clients about ESG?

Begin by asking what motivates clients. Typically, motivations fall into one of three core objectives:

  • Can ESG factors improve my risk-adjusted returns?
  • Can I have a positive impact on society through my investments?
  • Are my investments consistent with my ethical, political, or religious beliefs?

Client priorities could include financial returns, impact, values, or a combination. Once these have been established, investors can choose from a universe of funds and investment vehicles that more strongly align with their goals.

3. What is ESG data and why is it important?

At the heart of ESG-focused strategies is data. In some cases, ESG analysis of companies is based on over 2,000 data points from a wide cross-section of sources. For MSCI ESG Research, they fall within these three categories:

  • Mandatory company disclosures: 20%
  • Voluntary company ESG disclosure: 35%
  • Alternative data: 45%

Alternative data commonly makes up 45% of the total ESG dataset—constituting far beyond what a company publicly discloses. Still, ESG data can seem vague or elusive. But this doesn’t have to be the case. Rather, ESG data can be broken down and obtained from the following five sources:

  • Company filings: Shareholder results, voluntary ESG disclosures
  • Non-governmental organizations (NGOs): Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), UN Sustainable Development Goals
  • Government: U.S. Environmental Protection Agency (EPA), European Central Bank (ECB)
  • Media sources: Major headlines
  • Alternative data: Geo mapping, water scarcity data, flood risk analysis

Importantly, after ESG analysts identify the risks and opportunities most relevant to a company, multiple data points coalesce to inform a company’s ESG profile.

4. Why are environmental risks becoming more important?

Rising global temperatures and ecological disruptions pose imminent risks to humanity.

Along with this, other future risks could include: eroding shareholder value, blocked project proposals, regulation compliance costs, and higher borrowing costs. In response, national, corporate, and investor commitments to achieving net-zero emissions in alignment with the Paris Agreement have proliferated.

How does this affect the risk-return profile of investments?

According to research, climate change could erase $7.75 million in value over five years from a hypothetical $100 million portfolio that shared similar returns and volatility over a five-year period to the median global developed market fund as of December, 2019.

5. Will the consideration of ESG in a portfolio lead to underperformance?

Let’s turn our attention to performance, one of the most pressing questions surrounding ESG.

Companies with strong ESG profiles have an MSCI ESG rating of AAA or AA, meaning they lead their industry in managing the most significant ESG risks and opportunities. Studies show that companies with better ESG ratings have illustrated stronger performance, higher dividend payouts, and stronger earnings stability historically, on average.

They have also illustrated the following attributes:

  • Lower cost of capital
  • Less exposure to systemic risk
  • Lower volatility
  • Higher profitability

In addition, companies with strong MSCI ESG ratings may possess greater resilience. Stocks with high MSCI ESG ratings have had lower financial drawdowns during crises compared to their market-capitalization-weighted parent index.

Sustainable Investing: Shaping the Dialogue

Companies with higher environmental risks—including heavy carbon polluters, waste emitters, and poor water management—are facing greater scrutiny. At the same time, client demand is shifting to ESG, and the conversation is changing.

These questions can serve as a launching point for advisers to help clients seize new opportunities and mitigate investment risks.

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Source: https://www.visualcapitalist.com/visualized-the-power-of-a-sustainable-investment-dollar/

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How Powerful is Your Passport in a Post-Pandemic World?

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Trade and commerce are the lifeblood of the global economy. Naturally, agreements among nations in a certain geographical area help facilitate relationships in ways that are ideally beneficial for everyone involved.

In late 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed, officially creating the biggest trade bloc in history. Here, we break down everything you need to know about it, from who’s involved to its implications.

Who’s in the RCEP, and Why Was it Created?

The RCEP is a free trade agreement between 15 nations in the Asia-Pacific region, and has been formalized after 28 rounds of discussion over eight years.

Member nations who are a part of the RCEP will benefit from lowered or completely eliminated tariffs on imported goods and services within the region in the next 20 years. Here are the countries which have signed on to be member nations:

Country Population (M) Nominal GDP ($B)
🇦🇺 Australia 25.7 $1,359
🇧🇳 Brunei 0.5 $12
🇰🇭 Cambodia 15.7 $26
🇨🇳 China 1404 $14,723
🇮🇩 Indonesia 270.2 $1,060
🇯🇵 Japan 125.8 $5,049
🇰🇷 South Korea 51.8 $1,631
🇱🇦 Laos 7.3 $19
🇲🇾 Malaysia 32.9 $338
🇲🇲 Myanmar 53.2 $81
🇳🇿 New Zealand 5.1 $209
🇵🇭 Philippines 108.8 $362
🇸🇬 Singapore 5.8 $340
🇹🇭 Thailand 69.8 $502
🇻🇳 Vietnam 97.4 $341
RCEP Total 2,274.2M $26,052B

Source: IMF

But there is still some work to do to bring the trade agreement into full effect.

Signing the agreement, the step taken in late 2020, is simply an initial show of support for the trade agreement, but now it needs to be ratified. That means these nations still have to give their consent to be legally bound to the terms within the RCEP. Once the RCEP is ratified by three-fifths of its signatories—a minimum of six ASEAN nations and three non-ASEAN nations—it will go ahead within 60 days.

So far, it’s been ratified by China, Japan, Thailand, and Singapore as of April 30, 2021. At its current pace, the RCEP is set to come into effect in early 2022 as all member nations have agreed to complete the ratification process within the year.

Interestingly, in the midst of negotiations in 2019, India pulled out of the agreement. This came after potential concerns about the trade bloc’s impacts on its industrial and agricultural sectors that affect the “lives and livelihoods of all Indians”. India retains the option to rejoin the RCEP in the future, if things change.

The Biggest Trading Blocs, Compared

When we say the Regional Comprehensive Economic Partnership is the biggest trade bloc in history, this statement is not hyperbole.

The RCEP will not only surpass existing Asia-Pacific trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in size and scope, but also other key regional partnerships in advanced economies.

This includes the European Union and the U.S.-Mexico-Canada Agreement (USMCA, formerly known as NAFTA). How does the trio stack up?

  Nominal GDP, 2020 Population, 2020
EU $15.2 trillion 445 million
USMCA $23.7 trillion 496 million
RCEP $26.1 trillion 2.27 billion
World $84.5 trillion 7.64 billion

With the combined might of its 15 signatories, the RCEP accounts for approximately 30% of global GDP and population. Interestingly, the total population covered within the RCEP is near or over five times that of the other trade blocs.

Another regional agreement not covered here is the African Continental Free Trade Area (AfCFTA), which is now the largest in terms of participating countries (55 in total), but in the other metrics, the RCEP still emerges superior.

Implications of the Regional Comprehensive Economic Partnership

The potential effects of the RCEP are widespread. Among others, the agreement will establish rules for the region around:

  • Investment
  • Competition
  • E-commerce
  • Intellectual property
  • Telecommunications

However, there are some key exclusions that have raised critics’ eyebrows. These are:

  • Labor union provisions
  • Environmental protection
  • Government subsidies

The RCEP could also help China gain even more ground in its economic race against the U.S. towards becoming a global superpower.

Last, but most importantly, Brookings estimates that the potential gains from the RCEP are in the high billions: $209 billion could be added annually to world incomes, and $500 billion may be added to world trade by 2030.

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Source: https://www.visualcapitalist.com/how-powerful-is-your-passport-in-a-post-pandemic-world/

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China’s Economy: 40 Years of Soaring Exports

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China has the second highest GDP in the world, and it exports 15% of all the world’s goods. But how did this come to be?

A mere 40 years ago, China’s economy was in an entirely different situation, making up less than 1% of global exports and still in the infancy stages of building its economy. The above animated chart from the UNCTAD showcases China’s rise to global trade dominance over time.

Timeline: The Rise to Power

The China of the mid-20th century looks remarkably different when compared to the modern-day nation. Prior to the 1980s, China was going through a period of social upheaval, poverty, and dictatorship under Mao Zedong.

The 1970s

Beginning in the late 1970s, China’s share of global exports stood at less than 1%. The country had few trade hubs and little industry. In 1979, for example, Shenzhen was a city of just around 30,000 inhabitants.

In fact, China (excluding Taiwan* and Hong Kong) did not even show up in the top 10 global exporters until 1997 when it hit a 3.3% share of global exports.

Year Share of Global Exports Rank
2000 4.0% #7
2005 7.3% #3
2010 10.3% #1
2015 13.7% #1
2020 14.7% #1

*Editor’s note: The above data comes from the UN, which lists Taiwan as a separate region of China for political reasons.

The 1980s

In the 1980s, several cities and regions, like the Pearl River Delta, were designated as Special Economic Zones. These SEZs had tax incentives that worked to attract foreign investment.

Additionally, in 1989, the Coastal Development Strategy was implemented to use strategic regions along the country’s coast as catalysts for economic development.

The 1990s and Onwards

By the 1990s, the world saw the rise of global value chains and transnational production lines, with China offering a cheap manufacturing hub due to low labor costs.

Rounding out the ‘90s, the Western Development Strategy was implemented in 1999, dubbed the “Open Up the West” program. This program worked to build up infrastructure and education to retain talent in China’s economy, with the goal of attracting further foreign investment.

Finally, China officially joined the World Trade Organization in 2001 which allowed the country to progress full steam ahead.

Made in China

Today China is a trade giant and manufacturing behemoth. Only the U.S. and Germany come close to its share of global exports, sitting at 8.1% and 7.8% respectively.

Rank Country Share of Global Exports (2020)
#1 🇨🇳 China 14.7%
#2 🇺🇸 U.S. 8.1%
#3 🇩🇪 Germany 7.8%
#4 🇳🇱 Netherlands 3.8%
#5 🇯🇵 Japan 3.6%
#6 🇭🇰 Hong Kong SAR 3.1%
#7 🇰🇷 South Korea 2.9%
#8 🇮🇹 Italy 2.8%
#9 🇫🇷 France 2.8%
#10 🇧🇪 Belgium 2.4%

China’s manufacturing industry has become dominant in producing just about anything from commonplace household items to integral pieces in automotive manufacturing. Some staples of Chinese manufacturing are:

  • Precision instruments
  • Semiconductors
  • Industrial machinery for computers and smartphones

COVID-19 made China’s integral role in the global economy even more visceral, as major delays in the supply chain occurred when the virus hit the country.

An Economic Superpower

In 2021, China’s trade recovery from the crisis has bested most other countries—in Q1 2021, its exports grew by almost 50% compared to the previous year’s quarter, to around $710 billion.

And the country is not slowing down any time soon. Further plans for economic development are well under way, like Made in China 2025, with the goal of becoming a dominant player in global high-tech manufacturing. Additionally, the famous One Belt, One Road initiative has been funding infrastructure projects globally over the past decade, and the country is also a founding member of the RCEP—which is soon to be the world’s biggest trading bloc.

However, China still faces a series of challenges, such as:

  • Population decline
  • The onset of labor saving technology
  • Trade wars with U.S. and sanctions from other trade partners, like Europe
  • The emergence of ASEAN trade powers, like Vietnam

A declining population has many implications like a shrinking workforce and domestic market. Additionally, many companies are setting up shop in less costly manufacturing hubs like Vietnam.

Furthermore, inexpensive innovations in labor-saving technologies, such as robotics and automation, have already begun to undermine the cheap manual labor that has made China the world’s manufacturer.

All of these elements and more could potentially spell a slowing of growth in China’s export dominance. However, while the future for China may not be certain, currently, global trade and production could not function without it.

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Source: https://www.visualcapitalist.com/chinas-economy-40-years-of-soaring-exports/

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