The Founder’s Guide to ESG - (Part III)

Her green plastic watering can/ For her fake Chinese rubber plant/ In the fake plastic earth

Radiohead’s words play in my head every time I see the ever-increasing numbers of plastic consumption in India. Fake Plastic Trees may be a song from 1995, but the ubiquity of plastic it describes is completely 2024.  

So much plastic

Across the world, plastic production has surged from just 2 million tons in 1950 to over 450 million tons by 2020. Plastic consumption in the USA alone has multiplied a hundredfold between 1960 and today. If this continues, our planet is set to produce a billion and a half tons of plastic every year by 2050, outweighing the entire population of the world.

India’s fast-growing Indian consumer economy is an important piece of the puzzle, with more than half of all plastic waste coming from FMCG products and packaging. In fact almost half of the plastic produced is done so specifically to be used for packaging.

Indestructible plastic

I am of the opinion now that the word should have been “plastics” and not “plastic” - it is, after all, not one material or chemical, it’s a combination of tens of thousands of them! Derived from the Greek plastikos, meaning moldable, plastics are defined as a polymer, a substance made of many repeating units that cannot be disintegrated, only divided – and that’s where we get microplastics from. 

Engineered to be one of the most versatile, durable, economical, and complex inventions, plastic has gained huge popularity since World War II for its convenience. But the same qualities have ensured that it stays around forever. Its ingenious engineering is the reason why plastic recycling or reuse has never become mainstream. 

 Managing all that plastic

The true tragedy has been that plastic disposal is mismanaged in almost 80% of cases. And this includes landfills. Plastic waste is mismanaged in as many ways as it is used: Dumped in large yards, formerly on the outskirts of cities, but now areas that are neither remote not uninhabited. Unsegregated, unmanaged plastic ends up producing toxic chemicals like methane – 28 times more potent as a greenhouse gas than CO₂.

The types of plastic recycling

The fact that plastic comes in very many forms dictates that recycling it will be a complex solution.  You will come across 7 different types of plastics, and not all of them are equal.

Some kinds of plastic are more damaging than the others, while some are significantly ahead of the curve when it comes to recycling. Next time you pick something, look for the symbol, if it’s 1 or 2 – there is some hope that it will reach the recycling units and contribute towards Post Consumer Recycled (PCR) plastic. But from 3 to 7 – all of these are a tough sell to the recycler.

The market value of PCR is expected to rise to nine times that of today. While still small compared to new or virgin plastic, increasing the share of PCR would unlock a massive opportunity – big enough to lead to decline of new or virgin plastic.

Solutions

The dialogue on climate has advanced the dialogue on plastics, and as a result, solutions are emerging, action is being taken, and regulations are being strengthened. For instance, more than 20 countries in the EU levy a landfill tax. Several have also introduced pay-as-you-throw (PAYT) schemes. An astonishing 18 million homes in the EU are powered through incinerators by burning quarter of its trash. And finally, several countries have banned the use of some kinds of plastic, ensuring that the plastic used is largely PET and HDPE, both of which have proven technology for recycling.

We took a look at some of the most exciting solutions emerging in the circular economy:

1. Closed-loop systems are being explored with plant-based material like rice straws, mycelium, algae, bagasse, bamboo, banana, and hemp. Currently they are priced higher than plastics, and their viability and versatility  needs to be proven. The funding landscape is also evolving towards circular economy with dedicated climate investors emerging, and funding directed towards packaging innovations. In parallel, setting up industrial level composting units will be critical to ensure true biodegradability of these.

2. With growing pressure on large consumer brands to be more sustainable, the adoption for reuse and recycle packaging innovation has grown. The quality and commercial viability of PCR - rPET and rHDPE is now proven, and the recycling industry is at an inflection point. In the last few years, leading players like HUL, Godrej, Nestlé and many new-age brands have shifted to PCR plastic for their primary packaging. Global brands like The Body Shop have taken action through community-traded plastic and/or return/reuse.

3. Going “old school” has been another way forward. Many companies now use conventional non-plastic packaging like aluminium, glass, and paper. The recycling and reuse industry for all of these is far more mature, and has several additional benefits. For instance, recycled aluminium uses 92% less energy and emits 90% less carbon than producing virgin aluminium. Similarly, recycled glass requires 30% less energy to produce, while paper requires 40% less. A recent example has been the ITC Aashirvaad range of organic atta like khapli, and ragi in paper bags.

4. Finally, there is a transition towards the waste to value mindset. While not all plastic packaging can be recycled in to packaging again, it can be used as raw material for other industries – construction, furniture, automotive parts, and more. What the sector needs is innovation and technologies to make this happen in a carbon efficient manner. Take Ashaya, makers of Without, for example. The brand is working to recycle multi-layered packaging into materials used to make coasters, sunglasses, and eventually a multifaceted material itself. Similarly, Deluxe Recycling recycles a variety of commonly used packaging materials into pellets and rickshaw seats.

For years, the mantra has been Reduce, Reuse and Recycle. There’s a reason it’s in that order - to truly impact packaging and plastic consumption without reducing its use only maximises the burden on recycling.

The invention of plastic has been a springboard to some of mankind’s most revolutionary breakthroughs. From making cars and jets lighter, thereby saving fuel and reducing pollution, to actively saving millions of lives through medical devices, its virtues cannot be denied.

What we need to create, though, is the exact opposite of the throwaway culture that is burying our planet – and us – in plastic bags, wrappers, and boxes. We’d love to hear about founders and startups creating meaningful disruption in this space.