Reimagining Plastic: Opportunities and Risks in the Circular Economy
This month we’re recognising Plastic Free July, a global movement that began in Australia in 2021. This initiative encourages people to reduce plastic use for the month, aiming to increase awareness about plastic demand and disposal. The goal is to inspire lasting changes in participants' product choices. This weeks’ news wrap-up will focus on the plastic value chain, exploring how each stage of the supply chain can be disrupted, presenting both opportunities and risks, based on a three-part publication by the UN PRI on the circular economy and plastics (unpri.org).
The global plastic market is valued at USD 624.8 billion in 2023, with global production and consumption of plastic having increased over 20-fold since the 1960s. The plastic value chain can be divided into three main sectors:
Risks
Currently, there are no specific policies targeting the raw material production sector. However, regulatory changes in manufacturing, use, and disposal will have significant knock-on effects. Increased focus on climate change, reducing greenhouse emissions, and decreasing dependency on fossil fuels may lead to decreased demand, potentially turning O&G and petrochemical industries into stranded assets.
In the Manufacturing and Use sector, the container and packaging, food and beverage, and consumer goods sectors face significant reputational and regulatory risks, including taxes, levies, bans, and cleanup liabilities. Consumers are increasingly influencing businesses and regulators, particularly concerning the end-of-life and collection/sorting stages of the value chain. Environmental and health concerns have intensified scrutiny on this industry. Packaging accounts for 40% of global plastics production, with 95% being single-use. Plastic Free July encourages reducing single-use plastic as a simple initial step. Risks in this part of the value chain include regulations on incorporating recycled plastics, take-back programs, and changes in plastic waste trade agreements. Emerging market players and new technologies also pose threats to current players across the value chain.
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Opportunities
The industry is expected to develop workable solutions, and companies that adapt their business models and create scalable solutions will be best positioned to grow their market share. The raw materials sector is increasingly exploring alternative inputs for plastic feedstock, such as agricultural products like corn, sugarcane, and seaweed as biodegradable options. Businesses are also addressing manufacturing, use, disposal, and waste management by redesigning and reconceptualising the end-of-life of anthropogenic creations. Advances in recycling technologies have enabled higher-quality recycled plastic production. Creating a market for recycled plastic will increase the value of plastic waste as companies find ways to repurpose it for new products.
Businesses are Responding
Businesses are increasingly recognising these risks and opportunities. Company filings show an increase in initiatives around plastic recycling, plastic waste, and the circular economy, as evidenced by MSCI research using natural language processing to quantify these trends. New business models and ideas, such as TerraCycle’s Loop, encourage refillable packaging. Retailers like Marks & Spencer, Sainsbury’s, and Tesco are collaborating with waste management company Viridor to tackle the recycling challenge of black plastic. Patagonia has launched a recycled polyester clothing collection made from plastic bottles. Umincorp has developed a magnetic density separation-based technology to assist in sorting post-consumer mixed plastic.
Read more on: Circular economy and plastics (unpri.org).
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Susanna Yang is the Managing Director's Associate at RisCura and is this week's guest author.
The content in this newsletter is not intended to serve as a recommendation or endorsement of any specific product or company.