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Management in Practice

Your Packaging Is the Problem

What happens after you throw a bottle in the recycling bin? The answer may not be what you hope or expect. The recycling system is byzantine, confusing, and full of inconsistencies. Caroline James ’22, director of sustainability at Atlantic Packaging, says that the current plastics recycling system is broken. She explains how new efforts by businesses and governments could move us toward a more sustainable and circular economy.

Bundles of crushed plastic containers

Q: What is the state of plastics recycling right now?

The plastics recycling system is very broken.

Despite decades of recycling campaigns, we’ve done a terrible job educating consumers about what items can go in blue bins. Contributing to that, different municipalities accept different types of materials in their recycling programs. And making matters even worse, many municipalities have narrowed or completely discontinued their curbside recycling programs over the last few years due to budgetary constraints.

Ironically, the demand for recycled plastic is really, really high. But recycling facilities can’t meet demand because the contamination rates of the plastic they receive from the public is too high.

In addition, plastics recycling is confusing to consumers because what’s going on behind the scenes is confusing; it’s decentralized, messy, and complicated. When recycling is collected, it typically goes to what’s called a material recovery facility (MRF), which we say as “merf.” At a MRF the recycling is sorted into like materials to be resold to a reprocessor to be melted down and turned into something new.

Part of what is confusing is that there are so many different types of plastics. We can distinguish plastics in two ways: the types of resin used to make it, and whether the plastic is rigid versus flexible. In terms of type of resin, some plastic numbers—the resin identification codes on the bottom of a piece of packaging—are easier to recycle than others. Rigid plastics with numbers one (PET), two (HDPE), and five (PP) are easier to recycle and have strong end markets. But threes (PVC), sixes (PS), and sevens (other) have very little demand from re-processors, so the MRFs don’t prioritize sorting and baling them.

Then there are the flexible plastics—plastic bags, sacks, and wraps. Flexibles can’t go to MRFs at all because they get wound around machinery and disrupt the sortation process. These tend to be number fours (LDPE) and sometimes twos (HDPE). They need to be taken back to retail stores for recycling through a different channel. To drive the point home: don’t put flexible plastics in your recycling bins!

Q: China stopped accepting recyclables from the U.S. in 2018. How much did that change things?

That is a major reason municipalities have cut back on their recycling programs, but it probably hasn’t significantly changed total recycling rates. Sending material to China was cheap, but it absolutely was not an effective way to recycle. There’s reason to think a lot of the plastics exported to China were burned, not recycled, in part because the material we were sending there was low-value and often contaminated. Ultimately, when China stopped accepting recyclables, it just shone a light on how broken the recycling system already was and why we need a new approach.

Q: What’s the scale of the issue?

Global production of plastic has reached more than 450 million metric tons annually. That’s projected to triple by 2050. As we move away from fossil fuels for energy and transportation, producing petrochemicals for plastic is the Plan B of the fossil fuel industry. But when consumers are done with all of that plastic, there are only so many places for it to go if it doesn’t make it into a recycling bin: landfills, incinerators, or into the environment.

In landfills, plastic will sit there for hundreds, sometimes thousands, of years. That disrupts ecosystems, and it takes up valuable land. Burning plastic releases myriad toxic chemicals tied to cancer and asthma, and incinerators are disproportionately located in poor areas and communities of color, so, it’s an environmental justice issue as well. In the environment, plastic harms wildlife and often breaks down into microplastics that wind up in our waters and food chain.

Recycling is the alternative. Beyond avoiding those downsides, recycling just makes sense economically. Why throw away materials when we could generate further economic value by turning them into something else? Displacing virgin plastic production with recycled plastic can also reduce the environmental impacts associated with fossil fuel extraction as well as the greenhouse gas emissions and water required to create plastic.

Q: Is there a key hurdle to doing more effective recycling?

There are so many hurdles it’s hard to even know where to begin. But to be clear, it’s not that we don’t have the technological ability: it’s that the incentives, policy, and infrastructure to collect and process plastics are all broken. This is not to say recycling is unfixable; far from it—but there are many levers of change we need to pull to make recycling work.

In terms of incentives, making new virgin plastic is very cheap, artificially cheap, both because of subsidies to fossil fuel companies and because we don’t take into account the environmental externalities that come from the plastic going into landfills, incinerators, and the environment. We need to change the incentives for the fossil fuel companies and for the companies using plastics. Right now, the producer of a package, both the manufacturer of the package as well as the brand that packages their product in it, are not responsible for the end-of-life of that package once the consumer is done with it. That’s a huge externality.

Q: How do we change that?

For several decades there’s been discussion of a policy approach called extended producer responsibility (EPR). With EPR, the producer must take financial and/or operational responsibility for the end-of-life of the product; in this example, the product in question is packaging.

In practice, producers pay fees based on the amount of packaging that they sell into a given economy that has an EPR law. The fees fund the proper end-of-life management of packaging through effective collection and recycling systems. It can also mean environmental mitigation to keep packaging out of ecosystems.

An intelligent EPR law includes what we call eco-modulated fees. That is, fees are lower for easy-to-recycle materials and higher for difficult-to-recycle materials. The aim is to create upstream incentives for companies to use recyclable packaging.

EPR laws represent a pretty radical shift in who the financial and operational burden of dealing with packaging waste falls on. They say, “Hey, Proctor & Gamble. Hey, Unilever. Hey, Coke and Pepsi, your responsibility for this bottle or container doesn’t end once you sell it to a consumer. You have to deal with it once it’s disposed of, or at least pay fees to ensure it’s responsibly disposed of.”

Four states have passed packaging EPR laws in the last two years: Maine, Oregon, Colorado, and California. California is a big deal because it’s the fifth-largest—perhaps now the fourth-largest—economy in the world. Companies wanting to sell goods into that market must use packaging that is recyclable or compostable by 2032. This is going to cause massive shifts in the market for packaging.

Q: What are the strengths and weaknesses of California’s packaging EPR law?

California’s EPR law requires both financial and operational responsibility for packaging. Not only do the companies pay fees, but they also have to work with waste haulers and MRFs to improve the actual operational experience of recycling.

The operational responsibility piece of the law will bring about much-needed collaboration among packaging producers, brands, waste haulers, MRFs, and reprocessors.

One area of concern with the EPR laws in all four states is that the fee structures—the cost of each pound of paper, each pound of polyethylene film, etc.—haven’t yet been set. The level of the fees determines the incentives and their strength. The success of these laws depends in large part on getting the fee structures right.

Q: What would success look like?

I’m the director of sustainability for Atlantic Packaging, the largest privately owned packaging company in North America. We’ve used “Recycling 2.0” as a shorthand for what a well designed and properly funded recycling system could look like.

In a Recycling 2.0 future, a few things are true. Demand for all types of packaging waste is strong because the EPR fee structures provide financial incentive to use more recycled material.

Packaging is designed for recyclability. This means, for example, fewer multi-material pieces, where you have a layer of plastic that can’t be removed from a layer of paper, which renders both materials virtually impossible to recycle. Those essentially disappear in Recycling 2.0.

All citizens have access to curbside recycling, which is far from the truth now. They’re better informed about how to recycle properly. For example, they understand that plastic containers that had food in them need to be washed before recycling. And recycling systems accept a common set of materials everywhere.

And finally, higher-tech MRFs have optical sorters which use robotics and AI to recognize the many types of plastic (not to mention other materials) and bale them with less contamination. People may not realize that, right now, sorting recyclables at MRFs is mostly done by hand. Magnets move out some of the metal and air blows some of the paper into its own area, but it’s often a very manual process. It’s difficult, dangerous work. Using technology could make our recycling system safer and more efficient.

Q: What other policy changes would you like to see?

Extending EPR for packaging nationwide would obviously help, but there should be EPR policies for all kinds of products—paint, batteries, mattresses, electronics. Many of these laws exist in specific states now and should be extended to be nationwide.

Electronics are a great example. They should be built to be disassembled so that each material— the plastic, the precious metals, etc.—can be collected for re-manufacturing.

Designing products to be disassembled is a hurdle that would come with EPR policies, but it’s a chance for innovation, too. What would it look like to design a mattress that needs to last for 10 years but can then be disassembled so that the constituent materials could be turned into something new?

“I truly think that our descendants are going to look back on the way that we use resources today and be genuinely confused.”

I truly think that our descendants are going to look back on the way that we use resources today and be genuinely confused about why we engaged in a linear economy, where almost everything is made from the extraction of virgin materials, used, and then discarded. It’s take, make, waste. I picture a system in which every product is designed for a second and third life and almost nothing is sent to landfills or incinerators.

The linear economy is clearly unsustainable from an environmental point of view. But as I mentioned, it’s illogical from an economic point of view too. Why throw away valuable materials? I see a circular economy as a way to create economic as well as environmental sustainability.

Q: How did packaging become the thing you work on?

It’s a way to have an impact. Packaging is the largest contributor to plastic waste. Because packaging has such a short use phase for us as consumers, we throw away a lot of it. And 46% of the plastic that’s produced is packaging, so fixing our broken system is important.

My original childhood interest in the environment started with a video about landfills that I saw in science class when I was nine. I was appalled. I knew I wanted to help do things differently; I didn’t know what that would look like.

When I was in college, if you had told me that I was going to get an MBA someday, I would’ve thought you were crazy. I thought it was business that got us into the mess we’re in. When I got past the naïve assumption that studying something meant you were doomed to perpetuating the status quo, I realized studying business as a way to bring about change within business made a lot of sense.

But I needed to find someplace where I wasn’t going to get laughed out of the room for suggesting that going from the linear economy to a circular economy might be a grand challenge, but it could also make capitalism better, make the world better. At Yale SOM, not only did I not get laughed out of the room, but I was embraced for saying it.

The ability to take classes anywhere in the university was important. I don’t think sustainability can live in a vacuum. It has to interact with business, with economics, with policy and law, with every discipline. Only Yale SOM was going to let me study it in that way. In addition to learning the business skills, I was able to take classes in industrial ecology and life cycle assessment at the Yale School of the Environment.

Q: What do you do as the director of sustainability for Atlantic Packaging?

Coming out of SOM, I was looking for a packaging company that takes sustainability seriously and is interested in changing the face of packaging with the vision of a circular economy. I was lucky to find Atlantic Packaging. I get to have a job where 100% of my day is sustainability. I focus on the circularity of different packaging products. I work with big and small customers to figure out the most sustainable option that accomplishes what they need packaging to accomplish, which is protection, transportation, and beautification of a product.

“How do you make packaging part of the value proposition of your product? Brands are finding that making packaging more sustainable is one way that they can do that.”

To do this work, I’m drawing on my sustainability background and my business background because I have to think about not only the sustainability profile of any given package but also answer the questions, Does this packaging serve the business need? Can a business move to more sustainable packaging economically? Does it help their bottom line? Does it help attract customers? Does it help differentiate them from their competition? How do you make packaging part of the value proposition of your product? These are questions brands pay attention to, and they’re finding that making packaging more sustainable is one way that they can do that.