Photo of the interior of a trash collection center in Vine Hill, Calif., Dec. 8, 2020. (Photo by Smith Collection / Gado / Getty Images)
Smith Collection / Gado | Stock photos | Getty Images
Recycling may make you feel very little better about your role in averting a global apocalypse, but even in “friendly” places, from John Oliver to NPR podcasts, recycling, especially plastics, becomes one exposed hard look. More and more people are asking: does it work?
The debate is not new. The profitability of plastics recycling has been called into question for years. But the problem doesn’t go away. The globe already produces two trillion tons of solid waste a year and, according to the World Bank, is well on its way to adding more than one trillion more waste annually over the coming decades. A recent study found that the world’s top 20 petrochemical companies, including Exxon Mobil and Dow, are responsible for 55% of the world’s single-use plastic waste. In the USA in particular, we produce around 50 kilograms of disposable plastic per person per year.
The Covid pandemic has drawn attention to the issue as consumption of single-use items rose from 30% to 50%, according to Tom Szaky, CEO of recycling company Terracycle and Loop, who recently collaborated with CNBC’s Leslie Picker on a CNBC Evolve livestream is sustainability and business. He says macroeconomic concerns of waste management systems that suffer economically are real, and there are ways to address them that don’t just depend on the government. We all need to take a closer look at how we recycle beyond the blue feel good bin and what we can do to overcome the problems.
1. The economy of recycling is broken.
According to Szaky, the latest reports on the economic problems of plastics recycling and the global restrictions on imported recyclables, both of which weigh on the sector, are not an environmental attack but “absolutely factual”.
He says it’s important for consumers to understand that just because you are recycling an item, it doesn’t mean it will end up being recycled.
“What causes something to be recycled in a country has nothing to do with what we normally think: can it be recycled? Most of the things we put in blue bins that aren’t recycled go in the trash thrown because they are waste companies I can’t make money and that’s the real bottleneck, “he said.
The real question is, “Can a waste company that is actually responsible for recycling in the area recycle it at a profit?”
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According to Szaky, a profitability model has happened that is decreasing with the drop in oil prices that started in 2015 and has also decreased after a rebound in the commodity market after Covid compared to recent history. The petrochemical companies that make plastics are less reliant on recyclables when the price of their core product, oil, is lower. Second, China stopped importing recyclable waste, a move that other countries followed in 2018.
Both topics are critical to the recycling business model and infrastructure health as they focus on how much need there is to collect these types of materials.
“And all of this has hurt business development for recycling companies, and that means our recycling capabilities are deteriorating,” said Szaky. “Recycling is not out there to do your best, but to maximize profits, and we need to think about it if we are to go for a circular economy,” he said.
2. A megatrend in the packaging industry is counteracting recycling
The world’s biggest trend in packaging doesn’t help. Efforts to reduce the cost of products and packaging “objectively reduce the value,” said Szaky, “which also makes them less recyclable.”
The “light weight” of packaging, which means that it has less physical material and more complexity due to this design challenge, makes recycling less profitable.
All of these economic problems create a situation where people don’t want to see what they would actually see if they went behind the scenes in the recycling industry. At the same time, Szaky says that consumers want to recycle more and more and more companies are relying on their own recycling.
What companies do for recycling on their own initiative – and pay for it – can be done despite the challenging cost-effectiveness and can also pay off for companies in the future. This is the Terracycle business model, which works with companies to fund their own voluntary recycling efforts. And that’s more important at a time when the economics of consumer recycling are jumbled.
3. Why companies shouldn’t recycle enough and should recycle more
According to Szaky, right now it’s really important that companies make the decision to sit back and create their own recycling programs. But he says it’s still not easy for the company’s philosophy to embrace.
“As a retailer or brand, funding is low and sporadic if you just label them ‘the right thing’ as there is no P&L logic for it. But if you can use it to drive pedestrian traffic like Walmart using car seats or staples Donations can be monetizable, “he said.
Brands running their own recycling programs should do so as part of a plan to gain more market share and brand preferences. And he says it becomes “recognizably monetizable” the bigger they get and the faster they can grow. “This applies to every sustainability measure that a company would like to implement in the short term.”
Some products are only recycled if companies are the recycler.
A dirty diaper, toothbrush or cigarette cannot be recycled because it costs too much. It’s another economic problem, not a physical or chemical one.
Terracycle recently started a diaper recycling program in Holland and is now expanding into many countries.
“Diaper recycling does not make sense from an economic point of view. Collecting and processing is expensive,” said Szaky. But for the leader, “it may do better than television advertising,” he added.
Consumers want to do the right thing, and companies may also want to do the right thing to acknowledge an environmental crisis – and fund a feel-good marketing campaign – but Szaky insisted that they “need to see not only the right thing, but the right thing” that it does pays off. “
Szaky’s other business, Loop, which works with circular economy companies, recently teamed up with a luxury watch manufacturer in the world’s highest landfill: Everest. The mountain is littered with oxygen tanks from previous climbs, and the watchmaker has been able to clean up the mess, an expensive endeavor, as well as metal for his watches, which can add to the story he is selling to consumers in a way that competitors cannot can keep up.
4. The real solution is obvious: consume less
The white elephant, the basic answer to the challenge, is modulating consumption down, but Szaky says it is difficult for the business community to advocate. “It’s basically a growth.”
Loop, even if you work with companies to make products from recyclables and where recycling is part of the product story and the selling point, “is not the answer to the garbage problem,” he says.
It may be one of the best ways to manage waste in a circular economy, but Szaky says we must aim to return to a world where there is no waste.
“Before the 1950s, we would get milk from the milkman and fix clothes and cobblestones,” he says.
In certain markets such as beer kegs and propane tanks, there is still large scale reuse today, but nowhere near enough and without the convenience of an infrastructure that makes return easy and widespread. That is one of the keys he sees for the future.
5. Reusable versus recyclable
While the goal of zero waste is ambitious, it is realistic to envision a world where more consumer goods will become reusable when they can be easily returned in the circular economy.
Reusable versions of products from Nestle, Procter & Gamble, Kroger, Walgreens and hundreds of other retailers are or will be made available to consumers in the future.
We can switch a consumer who may not even care about sustainability, and that’s frankly the most important thing. We have to bring everyone, not just people, who see this as a project with great passion.
Szaky sees the buy-and-return anywhere model as the key model for the future.
“Buy your favorite reusable shampoo bottle from a Walgreens in New York and drop it off at Burger King. Also, buy a reusable Impossible Whopper and drop it off elsewhere.”
This model can help solve a big problem: consumer behavior. Szaky says that while there is a significant consumer market that is motivated by environmental concerns and consumption, the recycling industry does not need to rely on the most motivated consumers for it to really work. Even today’s economical recycling of plastics such as soda bottles only results in every fourth bottle being recycled. The main goal for most consumers remains convenience and value.
A reusable package is an objective upgrade of a disposable package. With the convenience of dispensaries, it can result in easier behavior change, but it must be offered to consumers at the right price. “When all three things come together, we can switch a consumer who may not even care about sustainability, and that’s honestly the most important thing,” said Szaky. “We have to bring everyone, not just people, who see this as a project with great passion.”
6. The economy is broken, but the recycling mindset is important
Despite all the debates about recycling and the hard facts about its economics, Szaky says there’s a reason we talk about it so much.
The individual journey with sustainability always begins with recycling. And that remains the key and a reason to find out how to solve the short-term and long-term challenges.
When people start recycling, the path opens for a broader mindset change.
“It can lead to a plant-based diet instead of animal protein, or a shorter lifespan, or cycling … which leads to even more important results,” he says. “But first we have to solve the business problem.”