The pressure is on to decarbonise manufacturing supply chains. Everyone involved in manufacturing should be aware that the push is happening now from consumers and EU regulations. This development will boost the urgent need for greater control over a company’s product supply chain. To evolve and stay relevant in a changing market, the plastics industry must drastically reduce its impact on the environment, developing new technologies to promote circularity.
The problem is acute. Only around 14 per cent of plastic packaging is collected for recycling, according to the Ellen Macarthur Foundation. They also caution that we can no longer simply recycle or reduce our way out of the plastic pollution crisis. I have to agree, and consumers do too, as increasingly shown by their buying behaviour.
We now have a growing awareness of how carbon emission levels influence our climate and impact the environment. As a result, consumer demand for lower-carbon products and services is rising. At the same time, the economy faces considerable challenges since our resources are not infinite. Technology is the centrepiece in closing the loop if we want to move toward a circular economy.
Four 2022 trends for the plastics industry
The industry will continue to receive pressure from multiple stakeholders. However, these are four pressure points that I predict for the coming year.
1 Consumer demand for low carbon footprint products
Consumer spending is increasingly based upon a growing understanding of how carbon emissions impact the supply chain and the environmental cost of purchasing disposable products, from manufacture and distribution. Therefore, it’s encouraging to learn that shopping habits are changing. People are considering their own carbon footprint when making purchasing decisions. The Carbon Trust found that 70 per cent of consumers say they would also follow simple energy-saving advice on product packaging to reduce their carbon footprint.
Most importantly, for businesses, brand loyalty is also at stake. Trust research reveals that 45 per cent of shoppers would stop buying from favourite brands if they’re not measuring their products’ carbon footprints. And 56 per cent would be more loyal to a brand if they could see it was taking steps to reduce its carbon footprint.
There is no doubt that many major global brands and businesses are taking real notice. As more shoppers seek out eco-friendly products, sustainability becomes key to current and future company planning.
2 Socially conscious investors and ESG criteria
ESG criteria (Environmental, Social, and Governance) are also gaining importance in investor markets. Environmentally conscious investors, when considering a potential investment, will assess a company’s environmental footprint by analysing their ESG standards. It’s striking how quickly environmental criteria have been taken up and included in a company’s performance and broader influence.
The new outlook is highlighted in a recent report by J.P. Morgan Global Research, exploring how climate change impacts the consumer staples sector. Reducing climate change has become one of the most critical decision-making issues for the world’s largest personal care, food, and drink companies. The report suggests that investments will only increase in a circular economy and will also include carbon neutrality pledges in their ESG frameworks. In my opinion, it will become increasingly difficult to secure funding without strict ESG covenants.
3 EU regulatory pressures to decarbonise
Manufacturers and commercial companies aren’t the only ones responding to consumer demand for decarbonising product supply chains. As I mentioned at the start of this article, regulatory pressures continue to be applied.
The EU actively addresses plastic pollution and is accelerating the transition to a circular plastics economy. We know that the impact of plastic waste on the environment has reached catastrophic levels: almost 26 million tonnes of plastic waste is generated in Europe every year, according to the European Commission. They also report that an overwhelming majority (87 per cent) of Europeans say they’re now worried about plastic pollution.
In addition to the EU Commission policies, there’s also a global agreement on plastics to support the shift towards a circular economy. Plus, there are rules on packaging and packaging waste and on importing and exporting plastic waste.
One particular item of legislation I’m greatly encouraged to see is the new EU Green Deal, proposed in July 2021, which aims to speed up CO2 emission reduction by 2030. It’s important to note that the European Commission will set out more strict reduction targets to meet the new 2030 deadline, while also achieving net zero by 2050.
Proposed legislation in the new EU Green Plan includes ambitious CO2 reductions for vehicles
Emissions from new cars are to be cut by 55 per cent from 2030, and to net zero from 2035. It’s a significant tightening of the current target of a 37.5 per cent reduction from 2030.
But it does fall short of the expected 65 per cent cut necessary to achieve net zero in 2030.
The new EU Green Deal also sets out measures for developing sustainable industry, and the urgent need for eliminating waste through building a circular economy. One document which I’m particularly excited about is ‘Fit for 55’.
Fit for 55 is named after measures aimed at a 55 per cent cut in greenhouse gas emissions by 2030 (compared to 1990 levels). The package, which may become law in 2022, includes measures for the additional support for clean transport, renewables, and the Carbon Border Adjustment Mechanism (a carbon tax for high-carbon imports from countries that lack sufficient GHG reductions). It promotes recycling as a means of reducing emissions.
Only 12.8 per cent of raw materials used by Europe’s industry comes from recycling, but many companies are developing new technologies to close the loop. BASF, for example, has a project called ChemCycling™, focusing on chemically recycling plastic waste that is not recycled mechanically for technological, economic or ecological reasons. This includes mixed plastic waste, plastic with residues, and even used tires. Using pyrolysis technology developed with their partners, ChemCycling™’s first commercial products include pharma boxes, transport packaging, and food packaging.
4 Circular manufacturing more mainstream
Circular economics is fast becoming mainstream, as it’s seen as the way forward to achieving industrial sustainability. The circular economy considers the entire lifecycle of a product; a model that will transform worldwide manufacturing. Business analysts believe it’s the biggest change to impact manufacturing in 250 years.
Developing a circular manufacturing solution is attractive for another reason, too: companies realise there are financial incentives to adopting sustainable business practices. Applying the measures of a circular economy could increase the European GDP by an extra 0.5 per cent by 2030, according to the EU Commission.
There was a time when manufacturers feared that recycled products, in their second or third life, would undermine their current or new product lines. However, research suggests we are seeing goods increasingly developed for a growing new consumer market – one that demands sustainability across a product’s lifecycle.
Manufacturers are now focused on creating more than one product lifecycle, involving processes that use materials and goods for much longer than ever before. The previous production model no longer works as the access and resources they were dependent upon are increasingly consigned to manufacturing history.
The business case for the circular model is gaining recognition worldwide. Manufacturers are aware they need to shift radically, moving away from established linear systems in a traditional supply chain.
For example, recycled polyethylene tetraphyte (rPET) is quickly becoming a much more valuable resource than virgin PET (vPET) – consumers are putting more pressure on brands, making more conscious purchases. This is the fourth most used plastic resin, utilised in food packaging to clothing – and its price can maintain the overall packaging procurement cost, avoiding a final price increase on the consumer side.
Company decision-makers understand they’re being asked to take greater responsibility for the total lifecycle of a product, from material resourcing to production and, finally, disposal at end-of-life.
The future of the plastics industry
There’s no doubt we’re at a decisive moment in the history of global manufacturing and industry, involving not only the critical and urgent problem of plastic product life-cycles and disposal but also the radical decarbonisation of material sourcing, production, and end-of-life waste management.
The circular economy is a powerful model that considers the entire lifecycle of a product. We all need to recognise its potential to reduce greenhouse gas emissions and reduce the annual volume of discarded plastics by 2050.
Manufacturing based upon a sustainable circular economy requires nothing less than closing the recycling loop. To achieve that, technology developments are crucial since they find innovative solutions to process waste. It’s a challenge our industry needs to fully embrace – adapting their processes and products to a more sustainable approach.
