Reuters says that a decade ago, private equity couldn’t get enough of plastic packaging. They snapped up companies making bags, films and trays to contain everything from food and fashion to drink to drugs, drawn by reliable cash flows and consolidation prospects.
But now the sector’s not quite so in vogue. This reversal illustrates how much the investment world has recalibrated itself in a matter of years, with environmental factors becoming dealmakers or breakers.
“No plastic packaging firm would pass our internal ESG check and we would pass even if such an investment would promise a large return,” said Marcus Brennecke, co-head of EQT’s private equity advisory team.
Such ESG – environmental, social and governance – risks include new EU rules due to be brought in next year requiring packaging to be reusable or recyclable by 2030.