Active investment commentary & analysis

The last straw

It is estimated that 4.7bn plastic straws are used in England alone each year with many tonnes of these landing up in our oceans. Leaving the environmental impact of this consumption to one side there is also an economic argument for food and beverage companies to stop providing these products as a charge is very rarely made for their provision hence an arguably unnecessary cost is incurred.

Before a recent meeting with the management of a UK company which is a heavy user of plastic straws we contacted a supplier of paper based alternatives. Based on the published annual company consumption of 4 million soft drinks per annum and assuming 100% straw usage the supplier quoted us an extra cost to the company of £78,000 for switching to the paper based alternative. We met with management only to find they were ahead of us having recently introduced paper straws across 100% of their estate. Encouragingly they had gone even further and introduced a policy of a no straw default option resulting in a 60% reduction on overall usage. The positive publicity and reputational impact such a move can have make such a price worth paying.

The UK government is currently conducting a review of plastic straw usage with a ban likely to be introduced later this year. Our discussions with paper straw distributors lead us to believe this in turn will result in a severe shortage of the environmentally friendly alternative. It is therefore encouraging our ESG research is alerting us to the costs and issues of such events well before they occur and to know we are likewise investing in companies that are proactive on this front.