A couple of things worth calling out today. First, while we discuss some of the Coke ambitions in the ESG and Climate report published earlier today, we note one important concession from Coke that we believe will need to become mainstream to give consumer products companies any chance of meeting recycling goals, and that is product standardization. The decision to get rid of the Green Sprite bottle is consistent with one of the trends we have been looking for – the green color is a contaminant in any attempt to recycle a clear stream of PET and by taking out the color, Coke will increase the pool of recyclable materials fit for clear bottle use. This needs to be a much more widespread activity and is about more than just beverage bottles. Consumer products companies need to be thinking along the same lines to increase volumes of color-free polyethylene and polypropylene available for recycling – this is likely bad news for the compounders, especially those with large packaging exposure.

We are also seeing an increasing number of joint venture announcements as companies pool resources to solve problems – for example, the Siemens/BASF story. We see more collaboration coming where there are opportunities to match technologies, but thinking ahead, we see ESG and climate-related pressures as a likely driver of extensive M&A over the next few years. We have written about this in prior ESG and Climate reports but it is a subject that we will revisit soon as some of the public and private market valuations that we see emerging today should not only drive the M&A strategy of the companies seeing the higher values, but also the strategies of those looking on enviously at the high valuations.