Talking circular economy at the Event on Circular Economy and Business Transformation panel session.
The worm has turned for the acceptance and uptake of reusable packaging, but significant challenges remain. Regulatory changes in the U.S. and greater commitment from brands in driving demand for recycled content would go a long way toward creating the robust recycling infrastructure needed to promote the diversion of plastic from the waste stream. The panel session at Cabka’s Event on Circular Economy and Business Transformation provided some straight talk on both hurdles and opportunities for the greater adoption of recycled content in reusables. To read our first report on the meeting, click here.
First, the good news is that interest in reusables is growing quickly. “We spent 20 years talking about why reuse, and it’s becoming much more apparent today than it was even five years ago, said Tim Debus, RPA CEO and panel participant. “So we’re pivoting our resources to talk more about how to reuse, and that also includes consumer packaging because there’s a lot of upstart energy, enthusiasm and critical needs to look at reuse and refill models in the consumer products space.”
Other panelists included Robert Flores, Vice President of Sustainability at Berry Global, and Greg Janson, President and CEO at Granite Peak Plastics. The session was moderated by Jean-Marc Van Maren, Chief Product Officer at Cabka.
ESG and Circular Economy: Terminology and Expropriation
Flores commented that as a publicly traded company, Berry’s investors have made it known that ESG is “critically important.” Berry has committed to using 30% circular plastics by 2030, including recycled and bio-based resins. “We’ve also committed a science based target to reduce our greenhouse gas emissions in alignment with limiting global warming to one and a half degrees C.,” he added. “So we’re taking some fairly bold actions.”
Debus discussed the differences between ESG and circular economy. He noted that ESG is an investor tool. “ESG is about reporting performance and measuring that performance,” he said, “so that investors can hedge the risks in investing in the companies.”
Circular economy, he noted, is distinctly different than ESG and sustainability. Circular economy is an economic growth model designed to achieve economic growth that is decoupled from resource consumption. “So that’s why there’s an emphasis on things like source reduction in reuse and a circular economy,” he said, because it does stop that the flow of continuous the consumption of natural and raw materials.”
Debus observed that some companies and trade groups are claiming to be circular, when in fact they operate or support linear supply chain models. “Many of them are greenwashing,” he said.
The Economics of Recycling and Reuse
In the absence of regulatory changes, the developing of a robust plastic recycling infrastructure must be driven by demand. And a consistent demand for recycled material, along with signed longterm contracts, is something that recyclers can take to the bank to get the financing needed to build the recycling infrastructure.
At the present time, Janson noted, however, not enough resin buyers are committed to supporting recycled content. The U.S., he commented, is the cheapest place in the world to produce virgin resin, and capacity has risen dramatically. At the same time, anywhere from 8-12% of new resin production is off-spec or wide-spec, which he said is dumped into the market by petrochemical producers at cost. “It’s very shortsighted,” he said. Wide-spec being dumping disrupts recycled resin demand and recycled plastic sales, making it difficult for recyclers to convince lenders to supply the necessary capital to grow.
By doing so, Janson believes they are destroying the very industry (recycling) that they point to as the end-of-life solution for the plastics they produce. “I’ve got a problem with that,” he said.
Price-sensitive customers can be quick to take advantage of off-spec, but this false economy from a sustainability perspective. Off-spec new resin has the same environmental footprint as on-spec virgin resin. (A recent artice by Janson provides a deeper dive into this topic.)
The two biggest challenges that Flores sees relate to the availability of recycled content material suitable for food contact, as well as the economics of supporting recycled content. “Every business is a for profit business, so when you say I want you to pay a lot more for recycled content, or maybe it’s only a small amount, but spread over millions and millions of packages and products,” he said, “it starts to add up, so it’s really difficult. One of the greatest challenges is ultimately the economics. We need the right quality material at the right price. And when we have that it truly will be sustainable and it’ll just take off like wildfire.”
Comparing the U.S. and Europe: Driving Circularity Through Regulation or Through Market Forces
It is always fun to explore whether or not Europe is ahead of the United States when it comes to recycling and reuse, and this topic sparked some lively debate. Certainly, regarding collection infrastructure, government policy, and reusable packaging penetration, Europe is ahead, generally speaking. However, as Tim Litjens, Cabka CEO, noted, the U.S. is ahead of the game regarding the brands driving circularity through enforcing ESG policies to support recycled content and reusable packaging through an informed procurement policy.
How can thoughtful regulation help drive change? Flores spotlighted UK’s plastic tax, which takes effect if a plastic product is not a minimum o 30% recycled content. “That drove significant demand for recycled plastic in the UK,” he said.
The draft EU legislation to promote reuse and recycled content was discussed. Last November, proposed EU regulations regarding reusable packaging targets were released. The result has been active lobbying efforts from both single-use packaging and reusable packaging sectors to protect their particular interest groups. Debus commented that it is “causing a significant firestorm of activity related to lobbying groups trying to protect their individual markets.”
“We don’t have that here in the United States, he commented, although noting that California’s extended producer responsibility initiative (SB 54) was passed in 2022.
Debus discussed ongoing efforts in the United States to address plastic pollution and regulate plastics. The government’s approach is evolving, and there are various initiatives at the federal level. For example, the US federal government is involved in the UN plastic pollution treaty, and the US EPA issued a draft national strategy on plastic pollution. This strategy aims to collect ideas on how to tackle plastic pollution and provide a framework for negotiators to implement the treaty’s goals in the United States.
While predicting specific outcomes is challenging due to potential changes in administrations, it is noted that certain political affiliations, particularly the Democratic side, seem more inclined towards addressing plastic pollution. The Biden administration is viewed as proactive in pushing initiatives related to climate change and plastics regulation.
Various departments and agencies, such as the Department of Defense and the Department of Energy, are actively exploring ways to manage materials better, set standards, and increase the use of recycled materials. Additionally, individual states, like California, Colorado, Maine, and others, are implementing their own programs to address plastic pollution.
Debus observed that the US is behind Europe in terms of plastics regulation but predicts that federal legislation will eventually be enacted to significantly alter plastic consumption and market dynamics. It also highlights the need for coordination and harmony between states’ strategies to develop a comprehensive approach to tackling plastic pollution nationwide.
“I think EPR is necessary,” Janson said. “I think it’s going to be putting putting money into the system and and that money could possibly help equal out the economics.”
ESG and Plastic Pallets
One hurdle facing the growth of recycled content plastic pallets is the belief that they do not perform as well as virgin material pallets. This claim was challenged. “You can come up with a product that’s made out of 100% recycled content that will perform just as well as any virgin alternative,” Litjens stated.
The conversation shifted to how more customers can be enticed to buy recycled content products. The panelists agreed that while recycling to reintroduce into new food grade packaging is daunting, secondary or tertiary packaging applications provide an ideal solution. A wider adoption of plastic tertiary packaging could create demand needed to support the growth of recycling infrastructure.
Flores noted that while he has never seen an ESG checklist that identified reusable pallets, the adoption of reusable packaging can help improve sustainability metrics in areas such as procurement, shipping and waste reduction. Moreover, he observed that a sustainability report is a narrative, and the adoption of reusable pallets can be part of your success story.
“If you’re making good business decisions that make the business more money, by increasing efficiency, and you also have an environmental story to tell, that’s the ESG Holy Grail. That’s the home run.”