Material science and engineering is the process of using clean sources, processes, and/or recycled/reused materials to create a newly augmented, more efficient, and sustainable material, product, or technology. The main problems that material science companies are attempting to solve are improved product durability and performance, pollution, waste, carbon emissions, and the destruction of already scarce natural resources. The goal is to combine superior-performing products with sustainability at a time when consumers globally are becoming more conscious of their purchasing habits and corporations and governments are striving to meet ESG goals and regulatory standards.
In his report titled Material Science Technology in Construction and Packaging, global industrial infrastructure analyst Ryan Merkel, CFA, writes that material science technology companies are disrupting traditional products across many industries by melding innovation with environmental responsibility. Two markets we believe are ripe for change are construction and packaging. U.S. construction is a $1.9 trillion market in which incumbent materials such as concrete, wallboard, and lumber contribute to global CO2 emissions and significant landfill waste. The U.S. packaging market is $230 billion and includes materials like plastic and Styrofoam that harm both consumers and the planet. In his report, Merkel discusses why material science technology is important and which companies will be winners as newer, more sustainable, and higher-performing products take share across verticals including decking, flooring, outdoor furniture, pallets, packaging, and others.
To solve the climate crisis, we need to address the building materials and packaging industries by shifting to more sustainable alternatives. According to the International Energy Agency (IEA), the construction industry accounts for 34% of worldwide energy usage and nearly 40% of CO2 emissions. Plastic packaging, the largest use of plastic, is a threat to the environment as it takes anywhere from 20 to 500 years to decompose. As single-use plastics break down, harmful microplastics are scattered in the air, bodies of water (18 billion pounds of plastic pollution enter oceans annually), and soil, and have been found in our food, drinking water, and even human tissue. Plastic also contributes to air pollution given that over 99% of plastic is made from chemicals sourced from planet-warming fossil fuels.
Fortunately, material science companies are launching new, sustainable, and more durable options to address these problems. Over the long term, we expect a significant shift away from traditional products due to 1) the longevity and durability of material science products proving to be more superior and dependable; 2) consumers prioritizing sustainability, high product performance, and ease of maintenance in their purchasing habits; 3) shareholders and consumers demanding more Earth-friendly products and processes from companies; 4) rising regulatory standards and mandates; and 5) companies aspiring to meet ESG goals.
We believe material science technology companies can solve the mega problem of hazardous environmental pollution by both reducing carbon emissions and keeping waste out of landfills and oceans. Material science business models can include using recycled materials to make sustainable products with superior performance or creating patented new products that outperform traditional materials with greater sustainability, improved durability, easier installation, or less maintenance. Many first movers, public and private, are capitalizing on these opportunities.
To request a copy of the full-length Material Science Technology in Construction and Packaging report, or for more information on the companies from Ryan’s coverage list, please contact us or your William Blair representative.