doesn't have to result in extra cost or capital for companies. Often interventions to move away from mixed plastic produ
OUR POINT OF VIEW ON PLASTICS
EXECUTIVE SUMMARY The plastics market is experiencing commercial instability and increased scrutiny from media and consumers. This report explores the socio-cultural factors surrounding plastics, the current global plastics market focusing on the destabilising effects of upcoming Chinese regulations, and provides strategic considerations to help mitigate risk and develop compliant, commercially viable and innovative solutions. Nathan Gray, Head of Sustainability at Helistrat comments:
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The devastating environmental, social and health impacts of plastic waste are undeniable. Being responsible and taking positive action doesn’t have to result in extra cost or capital for companies. Often interventions to move away from mixed plastic production and move waste up the hierarchy can open doors to solutions that can create new revenue streams or cost savings through efficiencies. Inaction will not only perpetuate environmental damage but expose companies and brands to reputational and financial risk premiums. Whether you have already started your journey to remove plastic waste from your business or are taking the first steps now, this report provides both insight and guidance to help you safeguard your business and the environment you operate.
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MALIGNANT MATERIAL: THE PUBLIC PERCEPTION OF PLASTIC The negative environmental and health effects of mass plastic production and waste entered the public consciousness in 2017. Although the existence of the ‘Great Pacific Garbage Patch’, a mass of plastic waste in the ocean totalling 1 million sq. km1, has long been known within the environmental community, the severity of the plastics problem became a universal issue during the past year. We are now producing nearly 300 million tons of plastic each year, half of which is for single use. The result is more than 8 million tons of plastic being dumped into our oceans annually2. Heightened awareness of the issue has been propelled by numerous factors, including: •
Cultural drivers such as the release of David Attenborough’s documentary series, Blue Planet II, which showcased the devastation plastic waste has caused to marine life
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New research, including a global study which showed 83% of drinking water sampled is contaminated with microplastics3
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Emerging technologies such as blockchain have enabled social enterprises to incentivise the collection of plastic in developing communities
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Innovative retail projects like the Adidas x Parley shoes created with marine plastic waste have proven the commercial potential of plastic waste
Increased awareness, coupled with growing global consumer demand for brands to be environmentally responsible, has put a spotlight on the plastics problem. This can pose significant risk to companies who do not take credible actions to reduce their plastic production and waste. A series of global studies throughout 20152017 showed that 33% of consumers actively select brands they believe are environmentally and socially responsible4, 93% of consumers want more brands to support environmental or social issues5 and 62% will not buy a brand they think is not meeting its environmental or social obligations6. Consumers are buying based on shared values, and companies seen to be behaving irresponsibly risk irrevocably tarnishing their brand equity and losing market share. The wave of consumer and media interest in plastics is likely to intensify into 2018 as demand for sustainable, responsible products continue to rise. It is crucial companies scrutinise their existing supply chains and identity potential solutions, including circular economy interventions, to unlock plastics true value and combat the growing plastics crisis.
https://www.theguardian.com/environment/2016/oct/04/great-pacific-garbage-patch-ocean-plastic-trash https://www.wearefuterra.com/wp-content/uploads/2015/10/FuterraBSR_SellingSustainability2015.pdf https://orbmedia.org/stories/Invisibles_plastics/multimedia 4 https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html 5 https://www.plasticoceans.org/the-facts/ 6 https://www.edelman.com/insights/intellectual-property/earned-brand-2016/global-results/ 1 2 3
A VOLATILE MARKET The plastic market is on its way to hitting rock bottom after a year of uncertainty surrounding Chinese regulations. In 2016, China imported over 45 million tonnes of waste commodities, with plastic amounting to 7.3 million tonnes7. China has historically accepted poorer grades of material because of its large manufacturing sector and sophisticated infrastructure. The UK has relied heavily on taking advantage of this market, with British companies shipping more than 2.7 million tonnes to China and Hong Kong since 2012 – nearly two-thirds of the UK’s total waste plastic exports8, but China has now shown resistance. The impact is that the overall value of plastic material has significantly dropped. In 2013, China implemented Operation Green Fence, to reduce the amount of contamination and low-quality materials that they were receiving. Almost 70% of all incoming containers loaded with recyclables were subjected to thorough inspections9. Once the stricter inspections began, both recyclers and shippers experienced the implications first-hand. Shippers were at the highest risk, with anyone caught shipping substandard material potentially having their licenses revoked. Recyclers also faced financial risk with the threat of having to pay for the return of a container full of non-recyclable materials. While the number of containers found to be unqualified for import were very low (about 0.04 percent), it still represented a large number of containers–almost 22,000 in the first year. After approximately 6 months, China loosened restrictions and materials returned. However, this was just an initial glimpse into how the global market would respond to National Sword - China’s next material regulation programme.
In March this year 107 containers were returned to a producer in Ireland as a result of non-compliance10. Combined with these inspections, China has banned the import of mixed papers, recycled PET, PE, PVC and PS with the added issue of only 1% contamination. By 2020, China will have banned importing more plastic types, reduced the quotas on plastics and increased the domestic usage of plastics by 104 million tonnes. This is resulting in decreased revenue from plastics and poses a significant financial risk to companies.
The commercial instability, plus the quality of the plastics, could eventually turn plastic into a cost as depicted in the below graph11. Plastic Film 2017
National Sword, ran from 1 March 2017 until 30 November 2017, on the same premise as Operation Green Fence, with customs officials being told to focus on the quality of waste paper and plastics. All containers were checked using x-ray machines, and where these were not available, the containers opened for examination. All containers were weighed for verification. If there were issues they were sent back to the producer, at their own cost.
⁷https://uk.reuters.com/article/us-china-plastics-demand/chinas-plastic-demand-to-rise-as-foreign-garbage-ban-to-curb-recycled-supply-idUKKCN1BO0J8 ⁸https://transform.iema.net/article/chinese-ban-plastic-waste-imports-presents-crisis-uk-recycling ⁹http://www.waste360.com/business/what-operation-green-fence-has-meant-recycling 10 https://www.letsrecycle.com/news/latest-news/market-braces-waste-paper-price-fall/ 11 https://www.letsrecycle.com/prices/plastics/plastic-film/plastic-film-2017/
WHAT DOES IT MEAN FOR BUSINESS? Taking into account these market and cultural forces, what are the implications for businesses? BUSINESS
• Prices have dropped for all material meaning suppliers have the pick of the best material • Suppliers are focusing their attention on the material that is easier to recycle • Lack of joined up approach with government Councils to understand what can actually be recycled (e.g. which polymers do they accept?) • Vietnam and Malaysia, the other main Asian plastic markets, do not have the capacity to take the volume of materials that will no longer be accepted in China • New, riskier markets are being opened. These markets pose financial opportunity but also significant risk due to less stringent labour and human welfare regulations • Moving plastic waste to different markets creates C02 implications related to transit • Plastics that are difficult to recycle or are mixed plastics are being sent to RDF • New technologies including converting plastics to diesel or petrol are continuing to develop and attract attention within the marketplace • Social enterprises focussed on plastic waste are increasingly partnering with brands • The speed of innovation means companies who are slow to take action risk being outpaced by their competitors
BRAND
• Increased scrutiny by consumers on companies use of plastic means companies will face continue threat of negative press if they’re perceived to be offenders • Trust and goodwill in brands seen to be as offenders can quickly erode, reducing sales and growth over the long-term With the plastics market having made such a significant shift in the past 12 months, and trends showing that there will be further change on the horizon, there needs to be a joined-up and long term planned approach on how to safeguard your business the materials it uses and processes.
STRATEGIC CONSIDERATIONS • Understand and shape the procurement Based on the above there are a requirements for plastic packaging range of recommendations Helistrat suggests for businesses, which we can Currently only 14% of plastic packaging collected globally is recycled. This is because of the challenges work with you to plan and deliver. posed by mixed plastics used in packaging . Is there an 12
• Assess your business‘ risk level
opportunity to explore moving to single polymer packaging to unlock circular economy solutions?
Do you publicise or celebrate your sustainability credentials?
Are you in a sector currently experiencing increased plastics scrutiny?
Why use something once, that is designed to last for hundreds of years?
• Evaluate your supply chain
• Challenge your business and supply chain to uncover and provide more sustainable solutions
What is your brand purpose or vision?
Do you have a transparent, auditable supply chain for both sourcing and disposing of plastic? Where are your plastics coming from and going to? What type and grade of plastics are you currently using? What are you currently sending to general waste and is there an opportunity to move it up the waste hierarchy?
Consider whether it’s necessary to use plastic at all. There are innovative packaging alternatives, such as plant-based bio-plastics, that can perform the same job but will not take hundreds of years to decompose.
How is your plastic waste currently being captured? Can segregation be improved? What opportunities exist to design-out plastic waste either by reducing packaging requirements are unlocking circular economy solutions? Are you maximising the social value of plastic? Could you collaborate with innovative partners to repurpose or offset plastic waste?
https://www.theguardian.com/sustainable-business/2017/feb/02/packaging-plastics-pollution-recycling-unilever-dove-marks-spencer
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CREATING A BESPOKE PLASTICS SOLUTION If you are interested in exploring the above considerations and mapping out your specific challenges and opportunities, Helistrat can work with you to undertake a business review of your waste and resource streams, including plastic. We create bespoke blueprints for how companies can design-out waste, including plastics, in order to deliver long-term cost benefit and achieve sustainability targets.
[email protected] www.helistrat.co.uk
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