A new report by sustainability pressure group Changing Markets Foundation (Utrecht / The Netherlands; www.changingmarkets.org) claims that a “concerning level of attention” is still being paid to unproven solutions for resolving the plastics crisis, while investors also lack a full understanding of the policy landscape and its implications.

The investor briefing, titled “Hot tickets and hollow promises: solutions to the plastic crisis”, gives the NGO’s view on the driving forces that will shape the next decade of investor and corporate response to the plastics pollution problem, highlighting the opportunities along with the risks.

The study sets three core trends. First, polymer production will skyrocket and the amount of plastics leaking into the environment will triple by 2040. This will spur further public backlash and louder calls to address the problem, with plastics producers facing a high risk of stranded assets as they continue to expand output.

Second, growing consumer pressure will create increased scrutiny on corporate action and a mandate for stronger and more comprehensive legislation. This will push producers to adopt ambitious targets on reuse, reduction, and recycling.

Related: 50% reuse in Europe could lead to enormous CO2 reduction by 2030

Third, regulation will become an increasingly dominant market force, shaping which technologies win and fail.

The Changing Markets Foundation finds significant risk for investing in chemical recycling, advising investors to opt for recycling technologies that are less liable to restrictions on emissions, such as mechanical processes.

According to the NGO, the high energy costs and immature technology of chemical recycling mean that the vast majority of projects are “dead in the water”, even after decades of development. It said technologies such as pyrolysis and gasification produce low yields and have persistent problems with contamination, while depolymerisation technologies are still only lab-scale, with none able to compete commercially.

“Investors should avoid being drawn in by the hype surrounding chemical recycling, and should steward those they invest in away from reliance on this technology. Although there may be a niche role for depolymerisation in the long term, most technologies in the chemical recycling arena are exposed to a number of risks, and are unlikely to bring returns in the short term,” the report advised.

In contrast, there are good opportunities for both short-term and long-term investments in companies with reverse vending machine technology, optical sorting and washing facilities, and mechanical recycling infrastructure.

These opportunities will be driven by expanding legislation on deposit-return schemes (DRS) and minimum obligations for recycled content. Analysis by the Container Recycling Institute (Culver City, California / USA; www.container-recycling.org) predicts that more than a billion people will live in jurisdictions with DRSs in place by 2030, compared to the nearly 300m people in 2017. This will in turn lead to growth in the global reverse vending machine market from 84,100 machines installed in 2019 to potentially more than 705,000 in 2029.

Related: Technology giant Google unveils plastics recycling report

Taking market leader Tomra (Asker / Norway; www.tomra.com) as an example, Changing Markets Foundation forecasts compound average growth of more than 20% for the four years from 2021 for the sorting machine manufacturer.

The reuse and refillables area is also one for investors to watch closely. According to the report, while global data shows a steady decline in refillables, a shift towards both voluntary and mandatory reuse-and-refill quotas is underway, stimulated by societal pressure, investor interest and changes in consumer behaviour. Crucially, legislation will also revolutionise reuse and refill and there are promising opportunities and disruptive innovations across packaged goods, food-to-go, beverages and logistics that show the breadth of the market’s potential for growth.

For example, the global returnable-packaging market – valued at USD 30.5 bn (EUR 27 bn) in 2019 – is projected to grow at a rate of 5.4% from 2020 to 2027. The global market for reusable water bottles, worth about USD 8 bn in 2018, is forecast to reach almost USD 11 bn by 2025.

The Changing Markets Foundation said the investment community has a vital role to play by responding to legislation and societal pressure and has recognised the economic opportunities in scaling up a circular economy. The Dutch organisation also pointed out that the number of private-market funds focused on circular economy has jumped from just three in 2016 to 30 by the first half of 2020. The funds are also said to have performed better, on average, than their non-circular-economy-related alternatives.