This blog is part seven of eight in the scenario analysis series: Circular Economy 2030.

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What would the world look like if we created return systems for all types of plastic packaging similarly to how we recycle beverage containers? Influential factors such as technological innovation and policy developments can dramatically impact the future of sustainability. In continuation of exploring probable outcomes for the circular economy of 2030, FutureManagementGroup AG has developed four alternative scenarios that describe significant industry transformation.

The story below, written from a future perspective in the year 2030, is a fictional piece that describes the effects of transformative change.

ALTERNATIVE SCENARIO 3
PROLIFERATION OF DEPOSIT RETURN SYSTEMS

Rodrigo Cazalla is the CEO of ConLore, a Spanish supermarket chain that has significantly expanded throughout Europe over the past three decades. When the global pandemic hit Spain in 2020, many retailers began speculating about its implications for their business environment – only few approached these acts of anticipation systematically and with a long-term perspective. ConLore was one of the few that profited largely from thinking beyond the visible horizon and eventually did not shy away from grasping an opportunity in times of high uncertainty and risk.

One implication in particular occupied Rodrigo’s mind during the pandemic – food safety. Intense expert workshops that intended to explore changing dynamics in their industry resulted in their forecast that food security was going to become ever more important. So, despite growing public pressure against the use of plastics in packaging, ConLore’s experts foresaw that the crisis would severely increase plastics food packaging over the next decade.

As with most aspects in the sustainability debate, one of the largest issues is usually the source. With ConLore’s concentric position in the value chain, the company’s direct impact on the source was negligible. In order to diminish the effects of said source in the chain, they saw a high potential for innovation in smart collection. With such a focus, Rodrigo and his innovation team came up with a bold strategy that would require drastic changes in the way stakeholders along the value chain work together, emphasizing the need for consumers to step in and assume some of the accountability in the fight against plastic packaging waste.

Preceding the global pandemic in 2020, a number of trends were particularly prominent. Remaining confusion among consumers regarding best practices in recycling as well as the lack of transparency in general created growing awareness of a needed change in material choices, labelling and general packaging design. Consumers’ demands as well as producers’ own strategic focus on expanding sustainable practices resulted in a demand for recycled content to go into food contact. At the time, much was merely possible with PET, but innovation in chemical and mechanical recycling andconversion was promising for improving design-for-recycling for polypropylene, polyethylene and polystyrene. As the demand grew, chemical companies saw their chance to increase their influence in the industry by driving new solutions that were needed in times of growing plastic production. This marked the beginning of a significantly stronger consolidation of players in the recycling industry. Leading investors had a stronger command over the value chain, and transparency of material flows increased. Transparency also became much more important to the end consumer, as was evidenced in the solutions that began to emerge, with apps making information on best practices more accessible, reducing confusion and driving consumer engagement.

With its mission set on effectively tackling the anticipated growth of plastic packaging production, ConLore initiated a cross-industry alliance that worked out a concrete plan for driving innovation of smart collection systems, increasing the amount of household-used plastic packaging that can be collected through deposit systems, and then expanding access to these systems. This required large investments. ConLore proved willing to pay the high price for such a move and acquired an emerging smart collection start-up and invested in research and development conjointly with converters.

A major obstacle was convincing brand owners to adhere to the new packaging requirements that such a collaboration and expansion of ConLore’s deposit systems would demand. Promises needed to be made to shareholders and the outside world for this movement to gain momentum and receive the support of governments, too. With their support, legislations would create a globally expanding business environment, in which laws supported better partnerships and improved collection and recycling rates. To make this work, companies had to start telling producers and their designers to consider not only the recyclability of packaging, but also the need for easy retrieval through deposit systems, which previously was less of a concern. ConLore’s acquisition of a smart collection start-up was crucial for success, as intelligent collection and sorting technology and services are the last stronghold for a greater yield and quality of recyclates.

A major legislative change supported ConLore’s new strategy. In a 2022 push for higher-quality waste streams, EU legislation began pressing for simpler packaging designs and urged an increased share of separate collection through means of EPR and deposit schemes. When these laws were put into place, more countries began looking towards the model that Spanish retailers such as ConLore were experimenting with, and quickly found that consumer-engaged collection with state-of-the-art deposit systems were superior at raising recycling rates. Along this journey, Rodrigo Cazalla and ConLore set new standards and sparked a collaborative and harmonized approach towards more effective collection and recycling.

Today, as the proliferation of deposit systems has made handling plastic waste more efficient, the use of plastics in packaging is widely accepted too. However, this is mostly true of multi-use packaging, as single-use applications have been widely abandoned and consumers began reusing certain containers more commonly, resulting in approximately 10% of all plastic packaging being reused today. Some of this progress was sped up by the intensifying competition with other materials, such as brown glass, which also saw a slight increase with the growing popularity of packaging reuse.

The global expansion of deposit schemes has mainly been made possible through a collaborative approach of industry stakeholders. While ConLore pushed a new agenda in Spain and other European countries, the help of converters and committed brand owners drove the demand for moving a vast amount of packaging from multi-layer to mono-layer designs. This greatly increased recyclability, and approximately 75% of plastic packaging worldwide is now designed to be recycled. Actual recycling rates also evolved. About two-thirds of all plastic packaging waste produced for households is being recycled, half of which is done to closed loop. This leaves just over 20% of all plastic packaging waste produced ending up in landfills or incinerators.

The nature of deposit schemes obviously necessitates consumer efforts in time and money. Surveys conducted in the US showed people responding positively to this development, as this sort of waste retrieval provides them with a sense of control over an issue that has become a concern over the years. Global plastic waste collection has seen a dramatic increase. Deposit schemes have played a large role in this development, as the proliferation in the developed world kept collection rates high and inspired infrastructural change in many developing nations. Rather than following an earlier EU model of curbside pick-up with separate waste collection in bins, developing countries invested in deposit systems and began educating their citizens on their use. Such campaigns were necessary, as they also intended to create a healthy transition of the informal collection sector prevalent in many of these countries. Widespread collection systems did not mean the end of the informal sector, but a change in the way it was being done and by whom. Growing consumer engagement meant less of the conventional ‘informal waste pick-up’, as the informal sector saw the rise of entrepreneurship, emerging public-private partnerships and new services and innovative business models, which would diminish the perceived inconvenience of using deposit systems. This built a necessary infrastructure for collection, which was previously either inefficient or lacking completely. The result is a collection rate of close to 90% globally. Just over half of all household plastic waste is now collected through deposit systems, close to one-third continues to be retrieved in mixed waste streams, while only 6% is collected through the once popular separate-bin model.

The rise of deposit schemes around the world has proven a successful endeavor in the fight against plastic packaging waste. The more collaborative nature of the industry that developed over the past decade has given rise to transparency of financial and material flows and allowed for less complexity in packaging – a necessary step for enabling consumer engagement with positive feedback loops (remuneration, for example) and incentivizing a greater sense of accountability across value chain and consumers.

What is another alternative scenario for the circular economy of 2030? Read about Reuse as the Primary Circularity Strategy.

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To read more about the future of circularity in both developed and developing markets, download the TOMRA Circular Economy white paper entitled “Resource Recovery Playbook: expectations for the circular economy of 2030 and the steps required to achieve a sustainable future.” The publication features expectation scenarios from FutureManagementGroup AG based on the expertise of stakeholders, diligent research and interviews with representatives across the value chain.

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Up Next → Broad bans of plastic packaging

Editor:
Enno Däneke | Managing Partner, FutureManagementGroup AG
Enno Däneke consults large enterprises and innovative medium-sized companies on future issues and supports them in developing their long-term strategies. In addition, Enno Däneke is keynote speaker at conferences across Europe and lecturer for business model innovation and future management at several universities.