Closing the loop:
the gap in the circular economy
In 2022, two of Coca-Cola's largest North American brands, DASANI and Sprite, took substantial steps to support the circular economy for plastic packaging. Sprite is switching from green, to clear plastic, in the hope of increasing the likelihood that the material will be reprocessed into new beverage bottles, with DASANI, introducing 100% R-PET bottles (caps and labels excluded).
The DASANI launch paved the way for the Coca-Cola system to bring higher recyclable volumes into the market and optimise production procedures required to create bottles made entirely of recycled plastic -- as targeted by Coca-Cola.
"Demand for R-PET currently exceeds supply, so the first step to scaling up use of 100% R-PET across our [North American] portfolio is building a sustainable pipeline of high-quality material,"
Coke launched its "World Without Waste" initiative in 2018, with the ultimate goal of collecting, and recycling, one bottle or can for every one sold by 2030.
This occurs at a time when consumers are demanding plastic products. European attitudes toward the environment are regularly examined by Eurobarometer surveys in the EU. According to a recent survey, a sizable majority of respondents were concerned about the effects of commonly used plastic products on the environment. A third-party study commissioned by SmartestEnergy found that, four out of five people would choose a brand that takes a positive approach to environmental sustainability.
Though this is a promising contribution to the circular economy, it draws attention to a significant issue many other companies still face, namely the gap between the high demand for recycled plastics and the low supply. This low supply results in high costs which mean that companies are more reluctant to prioritise circular economy initiatives.
The rising pressure for change
Despite a limited supply of recycled materials, there is increasing pressure on companies to begin using recycled content. Governments and regulatory bodies around the world are implementing extended producer responsibility (EPR) regulations. Manufacturers are held accountable for the recycling, reuse, or disposal of their products under these 'polluter pays' regulations. Rather than simply reducing waste and pollution during manufacturing, the regulations are intended to ensure that the end product, or the materials in it, have the longest possible life. The United Kingdom has already implemented a plastics tax to encourage businesses to use more recyclable packaging.
Consumer pressures aggravate this. With each passing year, more consumers consider a company's ethical credentials when making purchasing decisions. Companies that incorporate sustainability into their business model can improve their reputation by demonstrating social responsibility in waste management.
Investors are also taking notice; large investors expect companies to be as open about their environmental performance as they are about their financial performance. Such "responsible investors" will consider environmental data when assessing the long-term risks of investing in a specific company, securing ESG objectives is an imperative for financial performance.
The gap in the circular economy
All these factors have led to many companies setting reduction targets. Over 1,000 businesses, government agencies, and organisations, representing 20% of the plastics packaging market have signed on to the Ellen MacArthur Foundation's (EMF) Global Commitment to catalyse a circular economy for plastics since 2018.
A circular economy is intended to be regenerative and restorative. This means that materials flow continuously around a 'closed loop' system instead of being used once and then discarded. In the case of plastic, this means preserving the economic value of plastics while preventing leakage into the natural environment.
However, though the circular economy for plastics is progressing, it is not yet fully developed. Many factors have influenced this, such as the lack of investment, technological development and regional differences in regulations.
There are many stages in the supply chain where processes are still not efficient. For example, consumers frequently include all types of plastics in their recycling, which must be carefully sorted by type and is expensive for municipalities and other organisations to manage. For example, a water bottle is typically recyclable, but a tray is not. Multi-material plastic products exacerbate the problem by making them more difficult to recycle.
Both mechanical and chemical recycling sourcing requires consumer education and awareness, to reach the total potential volume of plastics. Governments must improve education and infrastructure before this issue can be resolved.
As a result, there is currently insufficient input material and sorting capacity. Companies can invest millions in reprocessing capacity, but they will never meet their targets if they don't have access to waste. The fact that there is volatility in the prices of recycled plastics adds to the difficulty for companies and government working to achieve global circularity.
Closing the loop
It is necessary to take steps to increase both the supply of post-consumer recycled (PCR) plastics and the quality of the subsequent feedstock. Efforts should also be made during the design stage to improve the sustainability of plastic materials and products.
These changes will take time to implement, but sustainability is crucial, and change must be imminent. The challenge for most companies then becomes sourcing these scarce recycled plastics while remaining profitable.
There are now emerging solutions to help companies navigate the difficulties of adopting a circular economy for plastics, an example being the ICIS 'Recycling Supply Trackers' - one for mechanical and one for chemical recycling to help manufacturers locate recycled plastic materials. Through a comprehensive global database, it enables businesses to gain a deep understanding of current recycled plastics capabilities while also facilitating new supplier relationships. The global database is intended to increase transparency and aid in the transition to a circular economy.
There is still much work to be done to implement a fully functioning circular economy. This is a systems challenge that no single country, consumer, business, or government can address alone, and single-solution strategies will not suffice—a portfolio approach is required. Global transparency will be crucial in informing the development of these different factors that will lead to a circular economy.
Author:
Ropafadzo Mugadza is a content writer at ICIS, working across energy, chemicals and sustainability to tell the story of market movements.
She has previously worked as a writer and content strategist in the fields of green infrastructure, sustainable development, and environmental technology.
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