Enduring opportunity
Indeed, these new targets don’t merely equate to a rise in costs and operational headaches for businesses. The prospect of a plastics-heavy supply chain becoming more expensive is driving businesses to collaborate with industry partners to explore new ways of manufacturing packaging so that it includes less plastic.
There are some upsides for businesses. First, there is the chance to appeal to consumers and investors by displaying a bold and decisive approach to environmental, social and corporate governance (ESG) policy.
Then there’s the opportunity to benefit from a vast range of economic incentives being offered by governments, as another key tool to drive businesses to innovate new production habits.
In 2018, for example, the United Nations Environment Programme (UNEP) laid out a recommended roadmap to sustainability, centered on single-use plastics. It included suggesting economic incentives — such as tax rebates — to encourage the use of environmentally friendly alternatives and support the transition.
Meanwhile, extended producer responsibilities (EPR) is a policy measure which encourages producers of plastic to improve design. This incentivizes recycling by giving the producer responsibility for the cost of waste past the point of the consumer,9 encouraging businesses to improve design for recycling and reduce waste generation through the financing of the waste collection and recycling system.
The UK plans to update the EPR system for packaging in 2023, having previously implemented a first system for producer responsibility in 1997. Its Department for Environment Food and Rural Affairs (DEFRA) said the existing system had helped increase the recycling of packaging waste to 63.9% in 2017, up from a quarter 20 years earlier.10
“Economic incentives will certainly have their effect,” says Toon Borghgraef, EY Climate Change and Sustainability Services Manager at EY Assurance Services BV for Belgium. “As the responsibility for plastic packaging is increasingly passed back to businesses, they will look to produce less plastic waste.”
As stated, innovation will become increasingly important to businesses grappling with the changes — as they explore new ways to produce plastic, and thus avoid the levy.
“Brands are really thinking about this,” says Sims. “How can they boost their recycled content? A lot of the focus is on consumer packaging and consumer-facing plastics, but there are lots of industrial plastics, too. So, this plastic levy is focusing on minds right now.”
While such incentives can help producers in the short term to transition to a circular economy, one natural question is what happens to those new habits and directions once the incentive period comes to its inevitable end. Here, says Sims, it’s essential to “have an economic as well as an environmental rationale behind it,” so the process remains viable for businesses once those incentives are removed.