This year’s Earth Day, ‘Planet vs Plastics’, comes ahead of an historic UN treaty on plastics, which is expected to be agreed by the end of 2024. Astonishingly, half of all plastics ever manufactured have been produced in the last 15 years, and only 9% of plastics ever produced have been successfully recycled. This exponential growth poses a significant challenge. Richard Hilson, Principal Consultant, digs deep into why it is uncertain that existing regulation is delivering improvements as planned and how organisations can use readily available digital and data capabilities to exceed regulatory targets and evidence their sustainability leadership.
Earth Day this year is rightly highlighting the plastics problem. When we look around in our daily lives we see just how much plastic we use and not many days go by without articles published on all the negative impacts of many uses of plastic, particularly single-use. Shocking statistics abound on the volume of plastics produced, the limited % that will ever be recycled, the estimated 51 trillion microplastics in our oceans and now in all of our bloodstreams. Although unpalatable, these statistics are dependable and the evidence clear.
What is currently not clear and dependable, however, is both the data on the progress companies are making in reducing use of non-recycled plastics, nor society at large in reducing the escape of plastics into the natural world, and the confidence that the regulatory environment is providing enough incentive for the pace of transition needed.
Why is the progress organisations are making so unclear?
Many of the organisations we depend on for goods and services, such as retailers and healthcare providers, and their respective supply chains, appear to understand the need to reduce the use of virgin plastics. The problem, however, is that the cost and complexity for organisations to evidence that plastics targets are being met by their suppliers far outweighs the penalties they need to pay for missing targets.
A case in point is the Plastics Packaging Tax in the UK. This was introduced in April 2022 with the aim of increasing investment in recycling domestic infrastructure by taxing the import and UK production of plastic packaging that does not have at least 30% recycled content. With a tax in place, payable by players along the UK supply chain, we should be seeing lots of evidence of recycled content increasing rapidly. This, unfortunately, does not seem to be the case. The preference to pay for the tax/penalty, over sustainable investment or transformation, is something we have noticed to be a prevalent policy gap across ESG policies globally.
Two years on it is evident three factors combined are likely to be masking progress being made, are not incentivising the progress required and, even if the 30% target is reached, is probably not going to raise the funding required for the infrastructure needed:
- There is a lack of standardisation in verification. Although there is a recycled content verification framework, this includes several types of 3rd party audit and certification schemes. This leads to a lack of trust in comparative data.
- For an organisation with hundreds of suppliers and thousands of products coming from those suppliers, this makes assurance a complex and costly task.
- The penalty for packaging that does not reach the 30% recycled content threshold is set at only £200 per tonne. This may certainly provide incentive for some packaging manufacturers to reconsider their purchasing decisions (recyclable versus virgin plastic) however when we consider packaging is designed to be light, and often only a few grams per product, a tonne of plastic packages a lot of products!
For those companies in the middle of the supply chain, such as logistics providers, or the end of the supply chain, such as retailers or healthcare providers, it is far cheaper and easier to pay the tax than to track down and analyse all the evidence and data to provide assurance for the reporting they are required to provide to HMRC. This is the worst of both worlds – both companies that are potentially hitting the target, but lack verification, and companies that know they haven’t reached the target are paying the same level of penalty to HMRC per tonne of packaging.
UK retailers and healthcare providers are also often desperate to better understand the material make-up of the plastic goods and packaging they receive to drive improvements in the waste management of those plastics post-use. Again, the complexity of the data and assurance burden is thwarting progress in this area.
How can we solve this problem?
There are two key developments in the ESG space with the potential of addressing these policy gaps. It is important that we collaboratively ensure that these issues are being recognised and put forward.
Firstly, increased alignment on reporting standards for plastics is on the horizon. At a global and country level this will be driven by the UN’s International Legally Binding Instrument (ILBI) on plastic pollution, due to be applied in 2025. At a corporate level the EU’s Corporate Sustainability Reporting Directive is also starting the ball rolling next year, the first year of disclosure for large firms based in the EU. There are also various other workstreams on establishing the specifics of plastics reporting protocols, to consolidate the numerous metrics and measurement methodologies down into something more manageable.
Secondly, the pace of development of large data processing, blockchain, AI and automation means it is now possible to dramatically reduce the complexity and cost involved for organisations to analyse all the data and evidence potentially available to them, to deliver more accurate and assured reporting. Partnering with a provider who can remove the burden of complexity and deliver assurance and granular data will both reduce cost and risk of reporting true performance and unlock the greater collaboration required for system change.
On the regulatory side, consideration should be given to the way penalties are calculated to incentivise improved reporting for all players in the supply chain.
The tonnes of plastics produced, and their content, is only half the story. The scale of the negative impact of plastics on us and the natural world has come about due to the multitude of pieces of plastics we have created, and its toxic effects. We don’t need to weigh the plastic content in a fish’s stomach to calculate the harm.
References:
Thinking about Plastic and the Circular Economy – Gemserv Plastic Free July
https://gemserv.com/our-thoughts/healthcare-systems-become-too-reliant-on-single-use-plastic/
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