Consumer demand for sustainable packaging leading to premium pricing, redesigns – Dow CEO

Author: Joseph Chang

2021/07/23

NEW YORK (ICIS)--Growing consumer demand for sustainable packaging is leading to premiums for recycled plastics, along with packaging redesigns to enable recycling, said the CEO of Dow.

“We are seeing a real demand pull from consumers and brand owners that want more post-consumer recycled material in there or they want more material that’s made from either a bio-source to ethylene or something that is made from advanced (chemical) recycling to get back to feedstock and back to a product,” said Jim Fitterling, CEO of Dow, on the company’s Q2 earnings conference call.

“When it comes to post-consumer recycled materials into packaging… we are starting to see premiums. You've got brand owners who are announcing that they’re allocating premiums for recycled materials to address circularity [and] I think that’s a sign that their customers want it,” he added.

The additional cost on a per package basis would be very small, where it might add $0.01 to the retail cost of the product. However, there is a significant cost through the value chain to produce the materials, the CEO noted.

More than 80% of Dow’s packaging portfolio is fully recyclable or reusable today, and the company’s goal is to get it to 100%.

In the US, investments in both mechanical and chemical recycling are picking up, and more states are approving chemical recycling projects, noted Fitterling.

STATES MOVE TOWARDS CHEMICAL RECYCLING

A dozen US states have passed legislation in favour of chemical recycling, according to New Jersey Assemblyman John McKeon, who recently introduced a bill to classify chemical recycling facilities as end-receivers of plastic waste rather than as solid waste facilities.

This would exempt plastic material processed at chemical recycling processing facilities from state laws regulating solid waste disposal and recycling.

Such pro-chemical recycling legislation is opposed by some environmental groups who cite safety, emissions and energy intensity as major concerns, as noted in a 22 June article by NJ Spotlight News.

“And I think our next big impact is going to be on infrastructure at the state and local level to allow more collection of curbside recycling of more products. And that will be the next drive north,” said Fitterling.

“In the US, we’ve a long way to go, to get to that 35% of recycling [in Europe],” he added.

Dow has a target to enable the collection, reuse or recycling of 1m tonnes of plastic by 2030 through its direct actions as well as partnerships.

PACKAGING REDESIGN MOVEMENT

There’s also a movement among consumer brand companies to make packaging simpler and thus easier to recycle. Multi-layer plastics packaging, while effective in function as each layer serves a purpose, is incredibly difficult to recycle.

“I think the drivers that are going to help on the virgin side of things are obviously redesign of packaging types on flexible packaging. Many packages are complicated and hard to recycle,” said Fitterling.

“All the brand owners are working on redesigns right now of different packages to move away from complex structures into simpler structures… This is going on across the value chain,” he added.

Dow worked with Kellogg to design a recyclable flexible stand-up pouch for the latter’s Bear Naked granola with the performance of multi-layered packaging by using Dow’s RecycleReady Technology which uses a combination of resins, adhesives and compatibilisers.

Bear Naked introduced the new flexible packaging to its product line in August 2019.

RECYCLING PLASTICS INTO LONGER-LIVED PRODUCTS

Along with recycling plastics waste into packaging, there are more durable end uses for such material.

“I think we're seeing real demand in taking recycled packaging products into some things that are more durable and longer lived - building materials, using recycled plastics in aggregate for roadways, architectural decking, all kinds of things that are upgrading the use of end-of-life plastics. So I think over time, it's going to be a real positive,” said Fitterling.

While consumers, brand owners and plastic producers and converters are all on the same page when it comes to lower carbon and more recyclable products, government policies must support the transition, he pointed out.

“We want to make investments in that area, but we want those investments to be value accretive… The policies are not there right now. And what we are trying to work through are the right set of policies that we need to make value creating investments going forward,” said Fitterling.

Focus article by Joseph Chang