208629

Vehicles

procured for recycling as of Q2 2021

658000

Batteries

were recycled by LKQ in 2020

90%

of materials from total loss and end-of-life vehicles are recycled in LKQ’s North America operations

View Our Analysis

The Path to Drawdown: Industrial Recycling

Project Drawdown defines recycling as the recovery of recyclable post-consumer waste (like metals, plastic, glass, etc.) from the industrial and residential sectors. Recycling replaces the disposal of recyclable materials in landfills and reduces the need to extract new material for production.

Waste from manufacturing, construction, office buildings, schools and mines accounts for about half of all waste. All that is grouped together as “industrial and commercial waste.” Much of it, though not all, can be recycled and several strategies can enhance recycling rates.

Some of these strategies include creating marketplaces for secondary materials to facilitate the exchange of recyclable and reusable goods, innovation in conversion technologies to make more materials recyclable, and adopting circular business models to recapture “waste” as a valuable commodity.

Recycling industrial and commercial material can reduce emissions because producing new products from recovered materials often conserves energy. For instance, forging recycled aluminum products uses 95% less energy than creating them from virgin materials.

Project Drawdown estimates that, by 2050, serious efforts to recycle can help avoid 6.02 gigatons of GHG emissions. To get there, recycling practices need to be adopted much more widely that they are now:

  • <::marker> In 2014, 27% of recyclable waste was recycled
  • <::marker> By 2050, 68% of recyclable materials should be recycled
  • <::marker> That’s 2.6% CAGR between 2014 and 2050

If we can achieve this 68% recycling scenario, we can avoid up to 6.02 gigatons of GHG emissions.

What We Want to See Improve

Switch to Renewable Energy

LKQ currently does not use any renewable energy (p. 20) for their operations. Their distribution fleet also still runs almost completely on gasoline and diesel (p. 10). We urge LKQ to make the complete transition to renewable energy a top priority in their sustainability agenda to be achieved within the next few years.

Set More Aggressive Sustainability Targets

We applaud the commitment by LKQ’s European segment to reduce CO2 emissions by up to 30% within the next ten years. But beyond this relatively modest goal, the company sets no specific sustainability targets. Their annual ESG report should contain bold targets for emissions reduction by a specific date.

Report Scope 3 and Overall GHG Emissions

To their credit, LKQ adheres (p. 20) to the Sustainability Accounting Standards Board’s disclosure standards in reporting their scope 1 and 2 carbon emissions. But since LKQ has a particularly large supplier network from which it procures vehicles and vehicle parts, investors should know what LKQ’s scope 3 emissions are. And given that natural gas is the predominant fuel type that LKQ depends on -- a source of methane, a potent greenhouse gas -- we need to know LKQ’s overall GHG emissions, not only CO2 emissions.

Related Metal Recycling Stocks in the Climate Index

View All Climate Index Stocks →

Allocated Company Description

1.02%

LKQ Corp (LKQ)

LKQ recycles thousands of used vehicles into salable parts, tires, fluids and oil - a circular economy model that reduces virgin material use and emissions

0.52%

IAA, Inc. (IAA)

IAA provides a digital marketplace where total-loss, damaged and low-value cars are bought and sold. It’s a valuable industrial recycling service

0.24%

Commercial Metals (CMC)

CMC buys scrap steel and other metals and recycles them into metal products for construction. This reduces virgin material use, energy use and emissions

0.10%

PureCycle Technologies, Inc. (PCT)

PureCycle sells technology that turns polypropylene into virgin-like plastic material. Industrial recycling conserves resources and cuts emissions

0.09%

Harsco Corporation (HSC)

Harsco recycles industrial materials from the metal, railways and energy sectors, which expands the circular economy and reduces virgin materials use

0.05%

Loop Industries (LOOP)

Loop recycles low-value plastics to create high-quality plastics - a circular economy business that reduces virgin material use and emissions

0.02%

Aqua Metals (AQMS)

Aqua Metals turns used lead acid batteries into pure lead and plastic chips. Now that’s a circular economy model

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