Capturing the opportunity of the circular economy

The plastic crisis we face today is a systems problem that requires a systems solution. We need an ecosystem of players to work together to create a circular economy for plastics.

Efficient use of resources, including water and natural capital, is at the heart of this transition and only now are we seeing the removal of capital as a barrier to critical waste and recycling infrastructure development.

Investment into the UK Circular Economy found a 64% increase in circular investments between 2020 and 2021, with this growth set to continue into this year following capital investments of £500 million in the first half of 2022. That same report highlights increased efficiency and cutting of costs on waste and materials as the first key motivation for venture capitalists and private equity investors to deploy capital into the area.

At Ecoveritas, we believe now is the time for the world of finance to capitalise on this momentum and help accelerate the circular economy. Why? Because mega-trends, such as urbanisation, digitisation and changing customer demands linked to a growing awareness of environmental and social issues, are turbocharging the shift.

More and more companies across industries are adopting circular principles to reduce costs, increase revenues, and manage risks. Governments, too, are accelerating this shift with the number of regulations and policy initiatives multiplying.

 

Unlocking the value of the circular economy

Sustainable packaging needs to be both a solution and an investment opportunity.

The circular economy is much more than recycling or just redesigning our products. It’s about transforming the way our economy works – moving from taking, making, and wasting to eliminating, circulating, and regenerating. The opportunity is clear and sizeable, but ambition alone is not enough, and translating ambition into action will require the unfurling of a series of coordinated actions.

Global production and consumption of plastic has grown relentlessly since the 1960s and plastic packaging now accounts for about 45% of all plastic resin produced today. Just 14% of it is collected for recycling.

Recycling the remaining 86% of used plastics could create $80bn-$120bn in revenues, says a recent report by the Ellen MacArthur Foundation.

So far, action on plastic pollution has largely been driven by increasing regulation and public pressure. This scrutiny will continue to grow and tackling plastic pollution and reducing emissions associated with the use of plastic packaging are critically important elements of the global response to climate change and biodiversity loss.

There must be greater clarity on the source of recycled materials as well as on the environmental and social impact of the methods by which these materials were created, collected, and sorted. This is why filling the data gap and helping businesses understand their impact are core services of Ecoveritas. From light touch right through to holding your hand throughout the process, we apply big data and deep tech to drive efficiency, traceability, and transparency across your supply chain.

What drives us is the need for an all-hands-on-deck approach to creating a circular economy for plastics and other materials used for packaging. We help activate investors, policymakers, innovators, and corporations, who all have starring roles to play.

 

Technology is your fuel

The challenge we face is unprecedented and requires coordinated international effort well beyond the scale of any global challenge humanity has faced to date.

Understanding how to respond effectively to these challenges is embedded in organisational digital transformation. For businesses to act they must first understand and quantify their impact on the environment.

Successful implementation of data solutions to tackle climate change will be determined by the extent to which organisations can collect, analyse, manage, and act upon their data in a timely fashion. These new challenges will require the use of brand-new data sets which have never been analysed in this way or collected for this use. It is a tough ask for many.

Data ingestion, storage and processing represent yet another initial hurdle. These are not traditional data sets which have been used in other reporting. In many cases, they will contain internal and external data sets so the lion’s share of the headache will come when attempting to make it into something useful and meaningful.

The flexibility of data is also important as you need to be able to accommodate the addition of any new data, or the editing of existing data, including things like changing suppliers, as you switch to more sustainable suppliers.

These types of data sets will suffice to provide an initial view, but as organisations become more sophisticated at tracking and analysing their environmental impact, they will need more accurate packaging data. Moving from silos to a cooperative model activates a holistic view of the entire organisation. End-to-end visibility is key, particularly for CPG companies that gather huge amounts of data throughout the product’s lifecycle.

Reaching ambitious sustainability targets requires a granular level of detail, right down to the amount of carbon emitted in each step of the production process. End-to-end visibility requires scale – a huge amount of data. Your tools need to be able to handle huge volumes of data seamlessly and be able to model them together for a unified data set.

Crucially though, you need auditability. Regulatory reporting is key to setting and achieving sustainability initiatives and these reports must be accurate. Numbers don’t lie, and their accuracy will be key to unwrapping the potential of sustainable packaging and waste management innovators and investors. And while the destinations of ongoing revenue funding issued from Extended Producer Responsibility (EPR) payments remain unclear, green businesses will benefit from our collective attention to detail.

The shift towards a cleaner and circular economy has high potential to create new jobs, and to decouple growth from resource use, thereby reducing associated environmental pressures whilst increasing resilience, strategic autonomy, and long-term competitiveness.

The potential comes not just from niche eco-innovative sectors, but by embedding circularity across all sectors of the economy to boost resource and material efficiency and generate new circular business models.

 

To learn more about Ecoveritas, and how its data-driven approach can anchor your packaging sustainability efforts, please visit www.ecoveritas.com

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