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Consumer goods groups join war on plastic

Monday, January 22, 2018   (0 Comments)

Financial Times
John Aglionby, Anna Nicolaou, and Scheherazade Daneshkhu



When Coca-Cola announced ambitious new targets for package recycling last week, the decision was not solely driven by concern for the environment. It raised the stakes in the latest battleground for consumers’ wallets.

A pledge by the US beverage company, which uses 120bn bottles a year, to collect and recycle the equivalent of all its packaging by 2030 comes as a number of large consumer groups announce commitments to reduce packaging and make more of it recyclable.

Makers of everything from crisps and drinks to shampoo and laundry detergent are responding to growing public alarm about pollution as a younger generation, deemed to be more environmentally aware, becomes the biggest spending group. In addition, documentaries by Sir David Attenborough, the British naturalist, and others, have alerted people to the level of plastic in our oceans and its destructive impact on wildlife.

The war on plastic is now "part of a marketing plan” for consumer goods companies says Ali Dibadj, analyst with Bernstein. "Millennials in particular are a target of these companies. And millennials are broadly looking for opportunities to do good in the world, not just financially.”

Climate change was the number one issue that voters aged 18-28 wanted politicians to prioritise, according to a poll from BrightBlue, a UK centre-right think-tank. In a YouGov poll, 59 per cent of Americans under 35 said they care about how their habits affect the environment, compared with 39 per cent of those age 55 and older.

The trend stretches beyond recycling plastic. Brands that promote themselves as "natural” or "green”, such as Seventh Generation, a Vermont maker of plant-based cleaning products, have gained market share in recent years. Unilever last year bought Seventh Generation, a move the Anglo-Dutch group said would help it "meet rising demand for high-quality products with a purpose”.

Erik Solheim, executive director of the UN’s environment agency, welcomes companies’ new-found enthusiasm for recycling as a "climb to the top rather than a dive to the bottom”.

"Both business and government have been sleepwalking up to now,” he says. "Just a couple of years ago there was very little action on plastic and packaging. Now there’s been a sea change.”

McDonald’s, which last week announced goals to make all of its packaging from renewable or recyclable sources by 2025, says packaging waste is the top environmental issue customers have asked the company to address. Just 10 per cent of McDonald’s restaurants offer recycling, which the world’s largest restaurant chain plans to raise to 100 per cent by 2025.

Iceland, the UK grocer, citing the "scourge” of pollution, promised last week to eliminate plastic packaging from its own-brand products by the end of 2023. Evian, the water brand owned by Danone, pledged to make all of its bottles from recycled plastic by 2025.

Companies are unveiling these strategies just as governments are stepping up their intervention. Theresa May, the UK prime minister, this month set a target of eliminating avoidable plastic waste by 2042, as part of a 25-year plan to improve the environment. The EU said last week it would ensure plastic packaging within the bloc would be recyclable by 2030.

James Quincey, president and chief executive of Coca-Cola, which also aims to make all of its bottles with an average of 50 per cent recycled content by 2030, says the new targets will be an integral part of the company’s business model. He intends to use his trip to the World Economic Forum at Davos this week to encourage other businesses to make similar commitments. "Consumers around the world care about our planet and they want and expect companies to take action,” he says.

Unilever, Mars, PepsiCo, Marks and Spencer and Procter & Gamble are among companies that have made similar commitments. Nestlé last year teamed up with rival Danone to help build a greener plastic bottle, made from waste such as sawdust or cardboard.

Unilever, which has had a target since 2010 of doubling its sales while halving its environmental footprint, set a goal last year to make the plastic it uses recyclable or reusable by 2025.

The maker of Sunsilk shampoo, Axe deodorant and Surf detergent, says 2bn people use a Unilever product every day. It buys 2m tonnes of packaging a year, but says it has managed to cut back, citing a "28 per cent fall in the amount of packaging waste per consumer since 2010”.

P&G, whose brands include Tide detergent and Gillette razors, has set a goal of ensuring90 per cent of its packaging is recyclable by 2020, and says it is well on its way. One of the big challenges in converting the remaining 10 per cent is "flexible packaging”, such as the plastic film for paper towel rolls, or small sachets of individually packaged shampoo, says Steve Sikra, director for solid waste management at the US group.

This is especially problematic in developing countries, where low-income consumers tend to buy individual sachets of shampoo or soap. To tackle this, P&G is offering discounts and coupons to encourage people to recycle, while also backing investments to build recycling facilities in countries where there are none.

"If one product is more sustainable than the other, they’ll choose it, but they don’t want to pay more for it,” says Mr Sikra. "That puts the onus on companies.”

John Sauven, of Greenpeace UK, says Coke should be more ambitious, citing Iceland’s 2023 deadline. Ben Jordan, head of environmental policy at Coke, justifies its target date by saying much of the collection "is not within our control”.

"The most advanced collection systems typically bring in bottles at the 80 per cent collection rate,” says Mr Jordan. "But you’ve got a large part of the world with very little visible management structures at all.”

Coke has not calculated how much investment will be required to meet its goals, but it has spent $2bn over eight years on its last major environmental campaign, water replenishment, according to Mr Jordan. The company made $40bn in annual sales and $6.5bn in profits in 2016.

Research in 2015 by the Ellen MacArthur Foundation, a charitable groupthat promotes environmentally-friendly business models and a so-called circular economy, found that 40 years after the introduction of the recycling symbol on packaging, only 14 per cent of such packaging was collected and only 2 per cent actually recycled.

Rob Opsomer, the foundation’s head of systemic initiatives, says: "Not every company is saying what Coke is and not every company is going far enough, but we’ve seen a significant change from 18 months ago.

"There will be greenwashing efforts but we see those big companies are truly changing the way they look at this issue.”

Coke turns to army of scavengers

A global army of scavengers gathering plastic waste will be key to Coca-Cola to meeting its target of collecting and recycling 100 per cent of its packaging by 2030, writes John Aglionby in Nairobi.

Ben Jordan, head of environmental policy at Coke, says so-called informal systems will be one of the pillars of its strategy. The others are government-run and owned infrastructure and industry-owned infrastructure.

"More recycling happens where you have a formal infrastructure, whether that’s government- or industry-run,” he says. "But if you look at an apples-to-apples comparison of the percentage of bottles and packaging coming back, [the different systems] are currently equal.

"We aren’t going to be collecting those bottles physically in most markets. We’re going to be partnering.”

Scavengers will also not be paid a premium to collect Coke bottles, Mr Jordan insists.

"In many places there’s enough inherent value in the product for that to be the incentive,” he says. "People make their livelihoods by collecting the highest-value material from the garbage, including from New York City apartments.”

He recognises, however, that consumers "need motivation” to recycle. Coke is therefore considering incentives such as scan-and-win programmes, in which consumers will be entered for prize draws when bottles are returned.

John Sauven of Greenpeace UK believes Coke’s policy will motivate scavengers. "I don’t have a magic bullet solution but if something has value, and Coke bottles now do, it will be collected.”

But Rob Opsomer at the Ellen MacArthur Foundation says a focus on scavengers is not the solution.

"The most effective thing to do is for these major companies to positively engage with governments on recycling systems,” he says. "Is the most effective thing really for every company to do its own little thing?”

In the longer term companies should "go beyond recycling”, says Mr Opsomer.

"It’s absolutely critical we recycle the packaging; it’s more critical we reduce the packaging we’re putting into the market in the first place,” he says. "Can we get products to people without using all this single-use packaging?

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