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3Contents 3 Preface 4 Foreword 5 In Support of the New Plastics Economy5 Project MainStream 5 Disclaimer6 Executive Summary10 1 The Case for Rethinking Plastics, Starting with Packaging10 1.1 Plastics and Plastic Packaging Are an Integral and Important Part of the Global Economy12 1.2 Today™s Plastics Economy Has Important Drawbacks16 2 The New Plastics Economy: Capturing the Opportunity16 2.1 The New Plastics Economy Proposes a New Way of Thinking 20 2.2 The New Plastics Economy Could Bring Substantial Bene˜ts21 2.3 Now Is an Opportune Moment to Act22 2.4 Where to Start 23 3 The New Plastics Economy Demands a New Approach 28 For further information28 List of Figures 28 Endnotes31 AcknowledgementsThe circular economy is gaining growing attention as a potential way for our society to increase prosperity, while reducing demands on ˜nite raw materials and minimizing negative externalities. Such a transition requires a systemic approach, which entails moving beyond incremental improvements to the existing model as well as developing new collaboration mechanisms.The report explores the intersection of these two themes, for plastics and plastic packaging in particular: how can collaboration along the extended global plastic packaging production and after-use value chain, as well as with governments and NGOs, achieve systemic change to overcome stalemates in today™s plastics economy in order to move to a more circular model? The New Plastics Economy aims to set an initial direction and contribute to the evidence base by synthesizing information from across many dispersed sources. It assesses the bene˜ts and drawbacks of plastic packaging today, and makes the case for rethinking the current plastics economy. It lays out the ambitions and bene˜ts of the New Plastics Economy Œ a system aiming to achieve drastically better economic and environmental outcomes. It proposes a new approach and action plan to get there. The report™s objective is not to provide ˜nal answers or recommendations. Rather, it aims to bring together for the ˜rst time a comprehensive global perspective of the broader plastic packaging economy, present a vision and propose a roadmap as well as a vehicle for progressing this roadmap, and providing a much-needed global focal point to carry this agenda forward. This report also identi˜es a number of signi˜cant knowledge gaps and open questions that need to be further explored. This report is the product of Project MainStream, an initiative that leverages the convening power of the World Economic Forum, the circular economy innovation capabilities of the Ellen MacArthur Foundation, and the analytical capabilities of McKinsey & Company. We are grateful to our numerous partners and advisors for their insights and support throughout this project, and the Project MainStream Steering Board for their continued collaboration on the transition towards a circular economy. For the three institutions that have launched the MainStream initiative, this report is an encouragement to continue to foster cross-industry collaboration as a major avenue to accelerate the transition to the much-needed circular economy. We hope you ˜nd this report informative and useful. We invite you to engage with us on this timely opportunity.Dame Ellen MacArthurFounder Ellen MacArthur Foundation Dominic Waughray Head of Public Private Partnership World Economic Forum Martin R. Stuchtey Director of the McKinsey Center for Business and Environment Preface
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4We live in a de˜ning moment in history Œ a moment where the international community has come together to agree on an ambitious framework to resolve some of the world™s most daunting challenges.Anchored in a set of universally applicable Sustainable Development Goals, the 2030 Agenda for Sustainable Development, adopted by all 193 members of the United Nations in September 2015, underlined a common determination to take bold and transformative steps towards a better future for all. Now is the time for implementation. We must now begin to practice what we have preached Œ changing our production and consumption patterns in order to create virtuous cycles rather than depletive ones and harnessing the global interconnectedness, communications technology and breakthroughs in materials science. All sectors of the economy must respond to these global agreements, and due to their sheer pervasiveness and scale, some sectors are facing questions as to the direction they should take. This is particularly the case for plastics, which have tangible and substantial bene˜ts, but whose drawbacks are signi˜cant, long-term and too obvious to ignore. It is therefore encouraging to see an initiative like the New Plastics Economy take shape, supported by a diverse group of participants from the industry striving for innovative solutions grounded in systems thinking. Concrete and game-changing steps have to be taken for us to achieve the future we want anchored in the SDGs. I therefore welcome wholeheartedly the bold ideas, ambitious objectives and comprehensive action plan presented in this report. If implemented, it could make an important contribution to transforming this important sector of the global economy. Mogens Lykketoft President of the UN General Assembly for the 70th sessionForeword
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5In Support of the New Plastics Economy fiAs the Consumer Goods Forum, we welcome this groundbreaking report on the New Plastics Economy. Packaging is integral to the delivery of safe, high-quality consumer products, but we recognise the need to rethink radically how we use plastics, creating new circular systems that conserve resources, reduce pollution and promote ef˜ciency. This report improves substantially our understanding of the solutions we need.flMike Barry and Jeff Seabright, co-chairs of the Consumer Goods Forum Sustainability PillarfiThe Global Ocean Commission has been working with the Prince of Wales™ International Sustainability Unit to raise political and business awareness of the urgent need to address plastic waste entering the ocean, and transition to a more circular model for plastics. I am very pleased to see that the Ellen MacArthur Foundation and its partners have responded to this call to action, through the New Plastics Economy report, and have developed an ambitious yet realistic plan to address the issue at its root. I strongly encourage nations and business leaders to consider the contents of this report and develop corresponding strategies.fl David Miliband, Co-chair, Global Ocean Commission fiIt is high time to implement the circular economy principles in the plastic sector. Increasing plastic recycling would capture signi˜cant material value and help reduce greenhouse gas emissions. As pointed out in this report, plastic production has increased from 15 million tonnes in the sixties to 311 million tonnes in 2014 and is expected to triple by 2050, when it would account for 20% of global annual oil consumption. These are exactly the reasons why Veolia, which is already actively engaged in promoting circular solutions, welcomes and supports the New Plastics Economy.flAntoine Frérot, CEO, Veolia fiThe New Plastics Economy takes a detailed look into one of the world™s most pervasive modern materials. The report lays out a foun -dation for a more sustainable system of making and using plastics and plastic packaging, taking into account the unique challenges and opportunities on the use, re-use, and collection of the material. It is a call to action for an ambitious redesign with a longer term view of the value at stake and intensive collaboration among various players.flDominic Barton, Global Managing Director, McKinsey & CompanyfiLondon is already actively taking steps towards a more circular model for plastics and plastic packaging. However more can and needs to be done, and I therefore welcome, support and thank the Ellen MacArthur Foundation, the World Economic Forum and McKinsey for their effort in identifying and promoting the global innovations required if we are going to continue to enjoy the bene˜ts that plastics bring to our lives.flMatthew Pencharz, Deputy Mayor for Environment and Energy, Greater London Authority fiThe New Plastics Economy is an exciting opportunity to inspire a generation of designers to profoundly rethink plastic packaging and its role in a system that works.flTim Brown, CEO, IDEO fiIn the Global Ocean Commission™s report ‚From Decline to Recov -ery: A Rescue Package for the Global Ocean™, we identi˜ed keeping plastics out of the ocean as one of our key proposals for action to advance ocean recovery. This report is an excellent next step, offer -ing a root-cause solution to the problem of ocean plastics as part of a broader rethink and new approach to capture value in the New Plastics Economy. The economic and environmental case is now clear – I therefore call on governments and businesses alike to take urgent action to capture the opportunity.fl Trevor Manuel, Co-chair, Global Ocean Commission fiSUEZ was pleased to contribute to the New Plastics Economy report, a collaborative case for rethinking the current plastics economy. As this report shows, a radical and joint rethink of both design and after-use processes will be required, in addition to other measures such as stimulating demand for secondary raw materials. We look forward to continued collaboration to enable better economic and environmental results in the plastic packaging value chain and to accelerate the transition towards the circular economy.flJean-Louis Chaussade, Chief Executive Of˜cer, SUEZ fiSystems thinking and integrated approaches are needed if we are to sustainably use and manage our global resources in a manner that enables the achievement of the Paris climate change agreement while advancing a circular economy. In my work with the G7 Alliance on Resource Ef˜ciency, there™s ongoing discussion about the need to disrupt fibusiness as usualfl. fiThe New Plastics Economy Œ Rethinking the future of plastics’ continues in that vein.fl continues in that vein.fl Mathy Stanislaus, USEPA Assistant Administrator for the Of˜ce of Land and Emergency Management fiThis is an important report highlighting some of the key issues related to plastics and their leakage into the marine environment. It is also an exciting report that proposes new approaches within a circular economy framework that could re-orientate society™s use of plastics and start to address the problems that our current use is creating.fl Professor Stephen de Mora, Chief Executive, Plymouth Marine LaboratoryProject MainStream This report was written under the umbrella of Project MainStream, a multi-industry, global initiative launched in 2014 by the World Economic Forum and the Ellen MacArthur Foundation, with McKinsey & Company as knowledge partner. MainStream is led by the chief executive of˜cers of nine global companies: Averda, BT, Desso BV (a Tarkett company), Royal DSM, Ecolab, Indorama, Philips, SUEZ and Veolia. MainStream aims to accelerate business-driven innovations and help scale the circular economy. It focuses on systemic stalemates in global material ˚ows that are too big or too complex for an individual business, city or government to overcome alone, as well as on enablers of the circular economy such as digital technologies.Disclaimer This report has been produced by a team from the Ellen MacArthur Foundation, which takes full responsibility for the report™s contents and conclusions. McKinsey & Company provided analytical support. While the project participants, members of the advisory panel and experts consulted acknowledged on the following pages have provided signi˜cant input to the development of this report, their participation does not necessarily imply endorsement of the report™s contents or conclusions.
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6Executive Summary Plastics have become the ubiquitous workhorse material of the modern economy Œ combining unrivalled functional properties with low cost. Their use has increased twenty- fold in the past half-century and is expected to double again in the next 20 years. Today nearly everyone, everywhere, every day comes into contact with plastics Œ especially plastic packaging, the focus of this report. While delivering many bene˜ts, the current plastics economy has drawbacks that are becoming more apparent by the day. After a short ˜rst-use cycle, 95% of plastic packaging material value, or $80Œ120 billion annually, is lost to the economy. A staggering 32% of plastic packaging escapes collection systems, generating signi˜cant economic costs by reducing the productivity of vital natural systems such as the ocean and clogging urban infrastructure. The cost of such after-use externalities for plastic packaging, plus the cost associated with greenhouse gas emissions from its production, is conservatively estimated at $40 billion annually Œ exceeding the plastic packaging industry™s pro˜t pool. In future, these costs will have to be covered. In overcoming these drawbacks, an opportunity beckons: enhancing system effectiveness to achieve better economic and environmental outcomes while continuing to harness the many bene˜ts of plastic packaging. The fiNew Plastics Economyfl offers a new vision, aligned with the principles of the circular economy, to capture these opportunities. With an explicitly systemic and collaborative approach, the New Plastics Economy aims to overcome the limitations of today™s incremental improvements and fragmented initiatives, to create a shared sense of direction, to spark a wave of innovation and to move the plastics value chain into a positive spiral of value capture, stronger economics, and better environmental outcomes. This report outlines a fundamental rethink for plastic packaging and plastics in general; it offers a new approach with the potential to transform global plastic packaging material ˚ows and thereby usher in the New Plastics Economy. Background to this work This report presents a compelling opportunity to increase the system effectiveness of the plastics economy, illustrated by examples from the plastic packaging value chain. The vision of a New Plastics Economy offers a new way of thinking about plastics as an effective global material ˚ow, aligned with the principles of the circular economy. The New Plastics Economy initiative is, to our knowledge, the ˜rst to have developed a comprehensive overview of global plastic packaging material ˚ows, assessed the value and bene˜ts of shifting this archetypally linear sector to a circular economic model, and identi˜ed a practical approach to enabling this shift. This report bases its ˜ndings on interviews with over 180 experts and on analysis of over 200 reports. This report is the result of a three-year effort led by the Ellen MacArthur Foundation, in partnership with the World Economic Forum and supported by McKinsey & Company. Initial interest in the topic of packaging was stimulated by the second Towards the Circular Economy report developed by the Ellen MacArthur Foundation and published in 2013. That report quanti˜ed the economic value of shifting to a circular economic approach in the global, fast-moving consumer goods sector, highlighting the linear consumption pattern of that sector, which sends goods worth over $2.6 trillion annually to the world™s land˜lls and incineration plants. The report showed that shifting to a circular model could generate a $706 billion economic opportunity, of which a signi˜cant proportion attributable to packaging. The subsequent Towards the Circular Economy volume 3, published by the Ellen MacArthur Foundation and the World Economic Forum in 2014, also supported by McKinsey, explored the opportunities and challenges for the circular economy across global supply chains, focusing on several sectors Œ including plastic packaging. This study triggered the creation of Project MainStream, which formed material- speci˜c working groups, including a plastics working group; this group in turn quickly narrowed its scope of investigation to plastic packaging due to its omnipresence in daily life all over the globe. The resulting initiative was the ˜rst of its type and included participants from across the global plastic packaging value chain. It sought to develop a deep understanding of global plastic packaging material ˚ows and to identify speci˜c ways of promoting the emergence of a new, circular economic model. It was led by a steering board of nine CEOs and included among its participants polymer manufacturers; packaging producers; global brands; representatives of major cities focused on after-use collection; collection, sorting and reprocessing/ recycling companies; and a variety of industry experts and academics. In the course of the MainStream work, an additional key theme presented itself: plastics fileakingfl (escaping) from after-use collection systems and the resulting degradation of natural systems, particularly the ocean. Although not the focal point initially, evidence of the looming degradation of marine ecosystems by plastics waste, particularly plastic packaging, has made plastics leakage a priority topic for MainStream. The economic impact of marine ecosystem degradation is only just being established through scienti˜c and socio-economic research and analysis. However, initial ˜ndings indicate that the presence of hundreds of millions of tonnes of plastics (of which estimates suggest that packaging represents the majority) in the ocean, whether as microscopic particles or surviving in a recognizable form for hundreds of years, will have profoundly negative effects on marine ecosystems and the economic activities that depend on them.This report is designed to initiate Œ not conclude Œ a deeper exploration of the New Plastics Economy. It provides an initial fact base, shared language, a sense of the opportunities derived from the application of circular principles, and a plan for concerted action for the next three years and beyond. It also identi˜es critical questions that could not be answered suf˜ciently within the scope of this work, but need to be in order to trigger aligned action.
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8Given plastic packaging™s many bene˜ts, both the likelihood and desirability of an across-the-board drastic reduction in the volume of plastic packaging used is clearly low. Nevertheless, reduction should be pursued where possible and bene˜cial, by dematerializing, moving away from single- use as the default, and substituting by other materials. Create an effective after-use plastics economy. Creating an effective after-use plastics economy is the cornerstone of the New Plastics Economy and its ˜rst priority. Not only is it crucial to capture more material value and increase resource productivity, it also provides a direct economic incentive to avoid leakage into natural systems and will help enable the transition to renewably sourced feedstock by reducing the scale of the transition. ŒRadically increase the economics, quality and up -take of recycling. Establish a cross-value chain dialogue mechanism and develop a Global Plastics Protocol to set direction on the re-design and convergence of materials, formats, and after-use systems to substantially improve collection, sorting and reprocessing yields, quality and economics, while allowing for regional differences and continued innovation. Enable secondary markets for re -cycled materials through the introduction and scale-up of matchmaking mechanisms, industry commitments and/or policy interventions. Focus on key innovation opportu-nities that have the potential to scale up, such as invest-ments in new or improved materials and reprocessing technologies. Explore the overall enabling role of policy. ŒScale up the adoption of reusable packaging within business-to-business applications as a priority, but also in targeted business-to-consumer applications such as plastic bags. ŒScale up the adoption of industrially compostable plastic packaging for targeted applications such as garbage bags for organic waste and food packaging for events, fast food enterprises, canteens and other closed systems, where there is low risk of mixing with the recycling stream and where the pairing of a compostable package with organic contents helps return nutrients in the contents to the soil.Drastically reduce the leakage of plastics into natural systems and other negative externalities.Achieving a drastic reduction in leakage would require joint efforts along three axes: improving after-use infrastructure in high-leakage countries, increasing the economic attractiveness of keeping materials in the system and reducing the negative impact of plastic packaging when it does escape collection and reprocessing systems. In addition, efforts related to substances of concern could be scaled up and accelerated. ŒImprove after-use collection, storage and reprocessing infrastructure in high-leakage countries. This is a critical ˜rst step, but likely not suf˜cient in isolation. As discussed in the Ocean Conservancy™s 2015 report Stemming the Tide , even under the very best current scenarios for improving infrastructure, leakage would only be stabilized, not eliminated, implying that the cumulative total volume of plastics in the ocean would continue to increase strongly. Therefore, the current report focuses not on the urgently needed short-term improvements in after-use infrastructure in high-leakage countries but rather on the complementary actions required. ŒIncrease the economic attractiveness of keeping materials in the system. Creating an effective after- use plastics economy as described above contributes to a root-cause solution to leakage. Improved economics make the build-up of after-use collection and reprocessing infrastructure more attractive. Increasing the value of after-use plastic packaging reduces the likelihood that it escapes the collection system, especially in countries with an informal waste sector. ŒSteer innovation investment towards creating materials and formats that reduce the negative environmental impact of plastic packaging leakage. Current plastic packaging offers great functional bene˜ts, but it has an inherent design failure: its intended useful life is typically less than one year; however, the material persists for centuries, which is particularly damaging if it leaks outside collection systems, as happens today with 32% of plastic packaging. The efforts described above will reduce leakage, but it is doubtful that leakage can ever be fully eliminated Œ and even at a leakage rate of just 1%, about 1 million tonnes of plastic packaging would escape collection systems and accumulate in natural systems each year. The ambitious objective would be to develop ‚bio-benign™ plastic packaging that would reduce the negative impacts on natural systems when leaked, while also being recyclable and competitive in terms of functionality and costs. Today™s biodegradable plastics rarely measure up to that ambition, as they are typically compostable only under controlled conditions (e.g. in industrial composters). Further research and game-changing innovation are needed. ŒScale up existing efforts to understand the potential impact of substances raising concerns and accelerate development and application of safe alternatives. Decouple plastics from fossil feedstocks.Decoupling plastics from fossil feedstocks would allow the plastic packaging industry to complement its contributions to resource productivity during use with a low-carbon production process, enabling it to effectively participate in the low-carbon world that is inevitably drawing closer. Creating an effective after-use economy is key to decoupling because it would, along with dematerialization levers, reduce the need for virgin feedstock. Another central part of this effort would be the development of renewably sourced materials to provide the virgin feedstock that would still be required to compensate for remaining cycle losses, despite the increased recycling and reuse.
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9The new plastics economy demands a new approach To move beyond small-scale and incremental improvements and achieve a systemic shift towards the New Plastics Economy, existing improvement initiatives would need to be complemented and guided by a concerted, global, systemic and collaborative initiative that matches the scale of the challenge and the opportunity. An independent coordinating vehicle would be needed to drive this initiative. It would need to be set up in a way that recognizes that the innovations required for the transition to the New Plastics Economy are driven collaboratively across industry, cities, governments and NGOs. In this initiative, consumer goods companies, plastic packaging producers and plastics manufacturers would play a critical role, because they determine what products and materials are put on the market. Cities control the after-use infrastructure in many places and are often hubs for innovation. Businesses involved in collection, sorting and reprocessing are an equally critical part of the puzzle. Policymakers can play an important role in enabling the transition by realigning incentives, facilitating secondary markets, de˜ning standards and stimulating innovation. NGOs can help ensure that broader social and environmental considerations are taken into account. Collaboration would be required to overcome fragmentation, the chronic lack of alignment between innovation in design and after-use, and lack of standards, all challenges that must be resolved in order to unlock the New Plastics Economy. The coordinating vehicle would need to bring together the different actors in a cross-value chain dialogue mechanism and drive change by focusing on efforts with compounding effects that together would have the potential to shift the global market. Analysis to date indicates that the initial areas of focus could be: ŒEstablish a Global Plastics Protocol and coordinate large-scale pilots and demonstration projects . Re-design and converge materials, formats and after-use systems, starting by investigating questions such as: To what extent could plastic packaging be designed with a signi˜cantly smaller set of material/additive combinations, and what would be the economic bene˜ts if this were done? What would be the potential to design out small-format/low-value plastic packaging such as tear-offs, with challenging after-use economics and especially likely to leak? What would be the economic bene˜ts if all plastic packaging had common labelling and chemical marking, and these were well aligned with standardized separation and sorting systems? What if after-use systems, currently shaped by fragmented decisions at municipal or regional level, were rethought and redesigned to achieve optimal scale and economics? What would be the best levers to stimulate the market for recycled plastics? Set global direction by answering such questions, demonstrate solutions at scale with large-scale pilots and demonstration projects, and drive global convergence (allowing for continued innovation and regional variations) towards the identi˜ed designs and systems with proven economics in order to overcome the existing fragmentation and to fundamentally shift after-use collection and reprocessing economics and market effectiveness. ŒMobilize large-scale fimoon shotfl innovations. The world™s leading businesses, academics and innovators would be invited to come together and de˜ne fimoon shotfl innovations: focused, practical initiatives with a high potential for signi˜cant impact at scale. Areas to look at for such innovations could include the development of bio-benign materials; the development of materials designed to facilitate multilayer reprocessing, such as the use of reversible adhesives based on biomimicry principles; the search for a fisuper-polymerfl with the functionality of today™s polymers and with superior recyclability; chemical marking technologies; and chemical recycling technologies that would overcome some of the environmental and economic issues facing current technologies. ŒDevelop insights and build an economic and scienti˜c evidence base. Many of the core aspects of plastic material ˚ows and their economics are still poorly understood. While this report, together with a number of other recent efforts, aims to provide initial answers, more research is required. Initial studies could include: investigating in further detail the economic and environmental bene˜ts of solutions discussed in this report; conducting meta-analyses and research targeted to assess the socio-economic impact of ocean plastics waste and substances of concern (including risks and externalities); determining the scale-up potential for greenhouse gas-based plastics (renewably sourced plastics produced using greenhouse gases as feedstock); investigating the potential role of (and boundary conditions for) energy recovery in a transition period; and managing and disseminating a repository of global data and best practices. ŒEngage policy-makers in the development of a common vision of a more effective system, and provide them with relevant tools, data and insights related to plastics and plastic packaging. One speci˜c deliverable could be a plastics toolkit for policy-makers, giving them a structured methodology for assessing opportunities, barriers and policy options to overcome these barriers in transitioning towards the New Plastics Economy. ŒCoordinate and drive communication of the nature of today™s situation, the vision of the New Plastics Economy, best practices and insights, as well as speci˜c opportunities and recommendations, to stakeholders acting along the global plastic packaging value chain.
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