Packaging industry prepares for tougher recycling rules

A walk along an urban high street before the rubbish collectors arrive is to confront society’s love of packaging. From street bins overflowing with paper cups and pizza boxes to cardboard stacked up by shops for recycling, the message is that packaging is here to stay.

In response, governments have been redoubling their efforts to rein in packaging waste, by adopting rules that will force producers to roll out more recycled and biodegradable products.

In November 2022, the EU proposed new rules for plastic bags, coffee cups and improved recycling, generally. The proposal calls for all plastic packaging to be recyclable or reusable by 2030. Aluminium, glass, cardboard and other materials face recycling quotas, too. The EU also defined what constituted compostable packaging and set targets for compostable coffee and tea bags.

In the US, California imposed packaging prohibitions in June 2022 that require all packaging to be recyc­lable or compostable by 2032. It will raise $5bn from packaging companies to help pay for the transition.

California has the fifth-largest economy in the world so the new law is likely to drive changes both in the US and internationally, says Javier de la Fuente, head of the industrial technology and packaging department at California Poly­technic State University. “I don’t think companies will start making packaging for California only.”

And the impact of packaging on the environment, globally, is growing — even if it is less obvious to the general public than pollution from oil and gas.

About 40 per cent of packaging in the EU is made of plastic, and all types make up about 36 per cent of municipal solid waste across the bloc, according to its own figures. Between 2012 and 2020, “the share of unrecyclable packaging has grown significantly,” warned the European Commission, in November.

In the US, total plastic waste that ends up in landfill rose to 10mn tons in 2018, up 3.6 per cent from 2010, says the US Environmental Protection Agency. Less than 2mn tons of plastic is recycled.

But big US waste companies have been invest­ing hundreds of millions of dollars to improve their recycling facilities, inc­luding new tech to sort materials, a Morgan Stanley report noted in June 2022. “Greasy pizza boxes can [now] be salvaged by recyc­ling it for its grease while the other paper products in the same bin can still be processed and sold to be remanufactured,” it said.

New regulations have spurred investments nearer the start of the supply chain, too. The business case for packaging recycling has been strengthened by the Californian and European laws, says Martin Mulvihill, a general partner with Safer Made, a California investment fund specialising in companies that remove and reduce harmful chemicals in packaging.

New options include bioplastics, which are often made from cellulose, a plant-based fibre. For a long time, there was not a big enough supply of bioplastics to make products at scale, Mulvihill says, but California’s new rules are starting to change that.

Another development is to use mono-materials, rather than a mix of substances, he adds. Mixing materials, such as nylons, into packaging products can greatly add to the cost of recycling them to make new beverage bottles.

Investors have started to demand that big companies adopt sustainable approaches, like these. In 2022, six companies — including Amazon, Exxon­Mobil and McDonald’s — faced shareholder petitions asking for more disclosures on efforts to reduce plastic, according to regulatory disclosures.

Although the number of companies facing these shareholder proposals was small, such resolutions related to plastic and sustainable packaging “received material support from shareholders”, the Morgan Stanley report pointed out.

After Amazon shareholders voted on public packaging disclosures, the ecommerce giant said last December that it is using recycled paper for certain frozen or chilled grocery items delivered from Amazon Fresh or its subsidiary Whole Foods. This recycled paper eliminates the need for plastic liners or bubble-bag insulation, it said.

Amazon’s move is in line with a growing shift towards paper. “There is a war between the paper industry and the plas­tic industry [over recycling],” says de la Fuente, who observes that, in the US, “paper has a higher recycling rate” than plastic. Paper and cardboard comprised more than half of all recycled waste in the US in 2020, according to Morgan Stanley.

However, the California packaging law highlights the fact that many paper products are still coated with a thin layer of plastic, Mulvihill says — which shows how paper has struggled to compete with plastics on versatility and cost. Yet “paper is the clear winner” under the new laws, as well as in the court of public opinion, he suggests.

For now, though, cost is set to remain the biggest factor in the uptake of sustainable packaging. “The cost of packaging components drives everything,” says de la Fuente. New regulations may help drive changes in the industry, but “the big challenge in competing with plastic is that it is so inexpensive”.