Plastics – from hero to zero and back again

Everything looked and felt disparate six months ago, and the plastics industry was no different. Sustainability was on everyone’s lips, governments and large blue-chip corporates were forming unlikely alliances and we seemed to be moving in the right direction to a more circular future. And then it happened. Since the pandemic began, billions have been wiped off company balance sheets and sustainability has had to take a back seat with plastics now thrown into the limelight, saving lives.

Following my attendance at one of the world’s largest plastics and chemicals events (Kfair) in Germany in late last year I wrote an article discussing the major take homes from this event. The plastics industry was being driven to realign and refocus activities following heavy scrutiny, largely prompted by Sir David Attenborough’s rallying cry against plastics on the Blue Planet in late 2017. Consumer activism was swift to follow and within a year, all plastics and chemicals manufacturers were embracing sustainability and looking forward to a future that was circular. This involved large scale Capex and Opex investments, hiring new staff, more JVs and asset swaps to allow for this. FMCG companies have rushed to make commitments to source recycled plastic. Danone pledged its Evian water bottles would be made of 100% recycled content. PepsiCo, Coca-Cola and L’Oreal all promised to increase recycled plastic in their packaging.

But now it seems, such promises come at a large price. One side effect of the global oil price collapse is that the cost of virgin (or new) plastic (which is made from fossil fuels) has plummeted as well. This means it has suddenly become much cheaper to damage the environment. Momentum seems to be swinging back to single-use plastic, and price is not the only factor driving this. Concerns about hygiene and food safety in the context of the pandemic are a higher priority than the sustainability performance of different packaging substrates — at least for the short term. An example, Starbucks is temporarily banning reusable cups amid the outbreak. Against the backdrop of concern about virus contaminated surfaces, numerous cities and retailers around the world are pausing the bring-your-own-bag measures and suspending recycling services for both residential and commercial customers.

Perhaps in our drive to recycle, we seem to have forgotten about what made plastics so popular in the first place. Plastic is a convenience factor, but it’s also a safety factor. Throwaway syringes were a historical godsend to medicine, not to mention the plastic surgical masks that we’re all wearing today. Single-serve alone works against cross-contamination: fewer people are handling a package and then disposing of it. Take-out containers and plastic bags are being used now in an effort to supply consumers and slow the spread of the virus. Although, it should also be noted that the results of an experiment recently published in The New England Journal of Medicine indicates that the coronavirus might actually persist longer on plastics than on other materials.

In the US, concern about safety has caused state-wide, municipal, and corporate repeals of single-use plastic bags, and this has translated into a heightened demand for bottled water, PPE, plastic bags and packaging. Since the start of the coronavirus pandemic, many grocery stores have forbidden shoppers from bringing their own reusable bags and are handing out single-use plastic bags instead. Similar moves are under way in Britain, where the Environment Secretary, George Eustice, has waived the 5p charge on plastic bags for supermarket shoppers online. The EU plans to further reduce single-use plastic, under the environment bill, have also been put on hold due to Covid-19.

Once vilified only six months ago, and in the midst of being banned across most European countries, single use plastics are now having a massive resurgence. The oil and plastics industry has become increasingly integrated to compensate for the increasing oil losses since early 2018 (for example Saudi Aramco’s recent acquisition of a majority share in Sabic). These investments have amounted to billions of dollars in recent years. It seems some of the major chemicals and plastics manufacturers are weathering the storm better than other industries, and Big Oil may have bought itself (a small amount of) breathing space against the current historic record low oil prices and oil supply glut.

However, in speaking to our clients in the plastics industry, sustainability is still very much at the forefront of their agenda. As they start to refocus their post Covid strategy with a slashed Capex budget and a slightly reduced appetite for large investments and acquisitions to drive a more sustainable future, it seems that survival is the primary concern. Sustainability is still very high on the agenda and the current pandemic will not halt this movement……merely slow it down!


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