Circular Economy Circular Economy Organizational Governance

Opinion:
Why Some Big Brands ‘Aren’t Convinced’ by Plastic Credits

80M tons of plastic waste will end up in the environment just in the next 10 years. Without voluntary, global producer responsibility programs to unlock capital towards infrastructure and bridge the policy vacuum, how else do polluters suggest for us to tackle this massive financing gap in the meantime?

Brand Provided | By Peter Wang Hjemdahl | Published 2 years ago | About a 10 minute read

Image: rePurpose

Late last month, while friends, family, and strangers came together across the world for the World Cup, Thanksgiving, and perhaps the first real holiday season we’ve had in years, a gathering of an entirely different nature kicked off in Punta del Este, a seaside town in southeastern Uruguay.

This was the site for INC-1 — the first out of four UN-led intergovernmental negotiating summits to develop a legally binding global treaty to end plastic pollution (think COP, but dedicated to the plastic problem). Thousands of delegates ranging from ministers, technical negotiators, and waste workers to activist groups, top FMCGs, and Big Oil descended upon the tiny South American country, each armed with our uniquely vested interests and ambitions to influence the unfolding of this multi-year treaty-development process.

This was no casual affair. Throw out the small talk, mainstage keynotes, and cozy afterparties of a quintessential sustainability summit, and enter position papers, political alliances and realpolitik. At the end of the day, everything was being put on the table — billions of dollars of potential new foreign aid, massive increases to corporate compliance spending, livelihoods of millions of waste workers, future existence of entire sectors, and the career ambitions of every individual involved in this process.

And of course, the media joined in, as well. On the second day of the negotiations, an article was released titled, “Coca-Cola and Unilever: We're not convinced by plastic credits.” The piece chronicled the positions pronounced by members of Coca-Cola’s and Unilever’s senior leadership in Asia. Both have purportedly explored the viability of plastic crediting, and decided that the idea is not incredibly attractive to the companies they represent or “the people that we might be leaving out as part of that process.” Instead, they endorsed the creation of government-led Extended Producer Responsibility (EPR) schemes and wanted to have “maximum participation” in the design and development of these programs.

When somebody first told me about this development, I was bewildered on a few levels. What prompted Coca-Cola and Unilever to all of a sudden take such a stance against the plastic credit ecosystem? Why are they painting plastic crediting as almost a ‘competitive’ concept to EPR? And finally, what’s their intention behind coming out so strongly for government-led plastic action, when the companies they represent have lobbied against much of it for decades?

As always, the reality is deeply complex; but trust me — unpacking this was a worthwhile endeavor.

Laying out the facts on producer responsibility

Before analyzing big CPG brands’ involvement in all of this, it’s important for us to first get the facts straight.

First introduced in 1990 by academics in Sweden, EPR is a policy approach under which polluters are given a significant financial responsibility by regional or national regulatory bodies for the management of post-consumer waste. Since then, the concept has been successfully operationalized in various shapes by dozens of governments in the last few decades, primarily in the developed world.

If implemented effectively, the theory is that EPR can mobilize unprecedented financial and technical resources that can be directed to increase capacity and improve infrastructure for waste management within a particular region or country. Through EPR policies, governments first allow for the creation of Producer Responsibility Organizations (PROs); plastic producers then pay annual fees to them based on the quantum and severity of their waste footprint in that jurisdiction; and PROs ultimately use this capital to deploy into waste collection and recycling efforts on the ground.

Fundamentally, EPR is a brainchild of the widely accepted ‘Polluter Pays’ principle — and so is the plastic credit ecosystem. EPR is simply a ‘national’ and ‘mandatory’ version of this principle, while the plastic credit ecosystem is a 'global' and ‘voluntary’ manifestation of Producer Responsibility.

Let’s get real about policymaking

So, at the end of the day, if both EPR and the plastic credit ecosystem hold the same worldview, then don’t government-led mandatory systems make more sense? They would level the playing field, prevent any one actor from free-riding, and mobilize resources to solve local pollution problems at a local level. If we have EPR, why do we then need voluntary producer responsibility schemes such as plastic neutrality and crediting?

This is where theory differs from reality; and the simple truth is that the probability for governments across the globe — particularly in the developing world — to create and enforce high-quality, comprehensive EPR legislation that rapidly tackles the plastic waste crisis is virtually zero. There are often just too many idiosyncratic roadblocks for this to happen (e.g. lack of technical capacity, country-level lobbyists for polluters); and on top of that, many EPR schemes pass the critical task of creating, staffing and running Producer Responsibility Organizations to the very companies responsible for the plastic problem in the first place, which allows for a whole host of hidden, perverse incentives to minimize cost and actual impact on the ground. And you wonder why some of these companies would like “maximum participation” in designing such government programs.

And what about the global plastic treaty — can the INC process add much needed momentum and alignment on EPR best practices amongst countries? With financial mechanisms, technical assistance and national action plans as potentially critical components of a global plastic treaty, I think yes. However, even if alignment does occur, the treaty’s level of prescriptiveness is still a big question mark; and its implementation will take many years. In other words, not a panacea, either.

So, while countries across the world go through the crucial yet painstaking process of legislating actions nationally and negotiating for common rules internationally, a staggering 80 million tons of plastic waste will end up in the environment just in the next 10 years. Without voluntary, global producer responsibility programs such as plastic neutrality & crediting to unlock capital towards infrastructure and bridge this critical policy vacuum, how else do polluters suggest for us to tackle this massive financing gap in the meantime?

Why pay more now if you can pay less later?

Trust me — I have not said anything so far that companies like Coca Cola and Unilever don’t already know. They know that if they endorse mandatory policy actions and treaty-led global obligations over and above voluntary actions through mediums such as the Business Coalition for a Global Plastic Treaty and the INC process, they gain moral credibility and help keep their seats at the table in front of advocacy NGOs, state negotiators and domestic policymakers.

They know that high ambitions at early stages of international negotiations get increasingly watered down throughout the process in favor of consensus amongst countries, and that ‘national action plans’ and their corresponding corporate compliance costs can be much more easily influenced and minimized at a country-by-country level.

They know that if they publicly rail against the concept of “compensation” (when EPR is just a different flavor of the same core Polluter Pays principle), they can gain brownie points with a media environment that’s wary of greenwashing and audiences who are often too strapped for time to go beyond the heuristics (e.g. understanding the fundamental difference between carbon offsets and plastic removals).

And most importantly: They know that if they sow doubts about the plastic credit ecosystem and create a false dilemma between voluntary efforts and regulatory actions, it reduces the likelihood for the environmental action space to finally unite and collectively call for them to pay up the hundreds of millions of dollars that are needed to take producer responsibility — and do so today, instead of years from now.

Taking a policy stance that might or might not affect your bottom line in the future is cheap. Putting your money where your mouth is and creating real impact today is not.

‘Polluters pay,’ not ‘Paying to pollute’

Don’t get me wrong — while I am certainly a big believer in innovative environmental-finance instruments and producer responsibility schemes such as EPR, plastic neutrality and crediting, I recognize that these concepts are still very much nascent — perhaps a bit tunnel-visioned — and can cause unintended, adverse consequences on our efforts to tackle plastic pollution globally.

There remain many unanswered questions. How do we help align voluntary producer responsibility schemes with government-led ones so that they can complement each other? How do we ensure that plastic crediting stays aligned with ‘Polluters Pay’ instead of devolving into greenwashing territory? And most importantly, how should the producer responsibility ecosystem evolve from here to minimize its potential downsides and maximize its benefits for our world?

I will be honest with you — when Adi, Svanika and I first moved to Mumbai in 2018 in pursuit of our dream to start a social enterprise, none of these questions had crossed our minds. At that point, we felt privileged to have been given $100,000 from our university to pursue rePurpose and gave ourselves three months to learn as much as we can about the informal waste sector.

Our one objective that we committed to, before we started: Even if we fail, make sure that the $100,000 was well spent and actually did some good in the world. From the very beginning, perhaps without us even consciously registering it, our singular intention for rePurpose was for it to bring resources to folks on the ground who needed them the most.

During that time, we tried to understand the pains and dreams of the millions of waste workers and entrepreneurs in a city like Mumbai and a country like India; witnessed the impacts of severe underfunding in the sector; and saw plastic neutrality & crediting as an opportunity to help revive and empower this community. We knew it wasn’t a panacea; but it was better than nothing.

From there, we and the rest of our team successfully brought the idea to the global market. We helped turn plastic crediting from mere white paper concepts into a flourishing ecosystem that’s catalyzing millions of dollars every year to empower informal waste workers, inspire corporate accountability, and create much-needed waste-prevention infrastructure across the world. In doing so, we’ve put a real dent in the global plastic pollution crisis.

But in the process of growing and scaling, we realized that the ecosystem we helped create can be misused and abused by potentially bad actors, despite its best intentions. So, with that in mind, and backed by the same fervor and determination from our genesis five years ago, we at rePurpose Global are committed to taking an industry leadership role in helping improve plastic crediting and safeguard it for the betterment of everyone involved.

Producer responsibility is by no means perfect; but we at rePurpose are up for the task and ready to walk our talk. Coca Cola and Unilever — are you?

Peter Wang Hjemdahl

Co-founder
rePurpose Global

Peter Wang Hjemdahl is a Chinese-Norwegian social entrepreneur, and co-founder & Chief Advocacy Officer at rePurpose Global — the world’s leading plastic action platform dedicated to reducing waste, reviving lives and restoring nature’s balance. Prior to his entrepreneurial journey, he strategized on business growth for social enterprises across 4 continents and advised on impact financing for development institutions such as the World Bank and USAID. Peter is a graduate of the University of Pennsylvania's Wharton School, and has been awarded membership in several notable cohorts, such as Forbes 30 Under 30, Unreasonable Fellowship, Halcyon Fellowship, President’s Engagement Prize, BMW Foundation Responsible Leaders Network, and the St. Gallen Symposium Leaders of Tomorrow.

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