The American company has been making sewage pipes to drain away rainwater since 1966. They also make water storage tanks and filter systems. These help to ensure that extreme rainfall doesn’t create too much damage. If rainwater from heavy showers is not drained properly, it can cause flooding, pollution, destruction and erosion. Advanced Drainage Systems  (ADS) saw how heavy rainfall and flooding in the US in spring 2019 left millions of hectares of arable land unplantable.

ADS’ products also help to prevent water shortages – just like extreme rainfall, this is a problem that’s becoming increasingly urgent due to the climate crisis. Prolonged droughts mean that drinking water sources cannot be replenished quickly enough. The best-known example is the situation in South Africa in 2018, where some areas only had a quarter of the normal amount of drinking water available.

“ADS have a huge positive impact, not just thanks to the purpose of their products, but also because of the materials they use," says Fabian Meijs, investment analyst with Triodos Investment Management’s Impact Equities and Bonds team. “The tubes are made of plastic, and ADS is a trailblazer in this area. We do not generally support the use of plastic, but in this case it is a sustainable solution compared to the usual material: concrete. The tubes are lighter to transport, more flexible, need less maintenance, and are less likely to break in an earthquake. A concrete pipe needs to be replaced after 50 to 70 years, whereas a plastic pipe can remain in place for over a hundred years and can then be reused. This fits in with our circular economy ambitions."

Advanced Drainage Systems

ADS is an American manufacturer of plastic sewage pipes, water tanks, filter systems and other solutions for managing rainwater. More than half of the plastic used is recycled. The company is currently worth over USD 8 billion and has around 5,000 employees. ADS purchased a total of 249,000 tonnes of recycled plastic in 2020. By working with recycled plastic, ADS has:

  • saved nearly 1 billion litres of water in 2020
  • prevented 330,000 tons of CO2 emissions (equivalent to 70,000 fewer cars on the road) in 2020

It is also an attractive investment financially, says Meijs. “ADS control 70% of the US plastic sewage pipe market. At present, 35% of sewage pipes are made of plastic and that number is growing.” Half of the products go to companies who use them to prevent flooding on construction sites amongst other things. “Construction companies are also paying increasing attention to sustainability, if only because they can then report lower CO2  emissions from your project.” Just under a third are sold to private homeowners and a tenth goes to farmers, both of whom want to limit flooding and store rainwater. Government infrastructure projects also account for one tenth of sales. Most of the products are sold in the United States, but ADS also have a distribution centre in Rotterdam. 

A plastic pipe can be left in place for more than 100 years and can then be reused
Fabian Meijs, investment analyst with Triodos Investment Management’s Impact Equities and Bonds team

For the past 15 years, ADS have been purchasing recycled plastic for its products – this now accounts for 51% of the total purchase. Household and industrial plastics are collected by regular recycling companies where they are sorted by type. ADS then buy the waste HDPE (high density polyethylene, such as shampoo bottles and buckets) and PP (polypropylene: plastic furniture and baby bottles). The company converts them into sewage pipes in its own recycling facilities. According to ADS, company is the second largest recycler in the United States.

ADS choose recycled plastic because of its sustainable business philosophy, says Meijs, and because it is good for profits as recycled plastic is generally about 15% cheaper than new plastic. Of course, there are factors that can temporarily reduce the price difference between recycled and new plastic, such as low oil prices for oil and gas, which are used to make virgin plastic. Also, demand for recycled plastic is increasing, which may increase its price. However, over a longer period, the expectation is that recycled plastic will remain cheaper on average, says Meijs. “The company has a strong market position, so if the price of recycled plastic does rise, it will have little negative impact on its profit margins. Moreover, ADS’ customers prefer it when a product does not fluctuate too much in price, which is another advantage of recycled plastic over new plastic.”

Meanwhile, this recycled plastics leader continues its mission and aims to use even more recycled material over the next few years.

This is a translation of an article published by Triodos Bank. Text by Leonie Hoselet.

Triodos Pioneer Impact Fund

ADS is part of the portfolio of Triodos Pioneer Impact Fund and fits Triodos Investment Management’s Circular Economy transition theme.