The economy may be weak, but the need to address plastics is as strong as ever

The economy may be weak, but the need to address plastics is as strong as ever
29th May 2020 Felix Gummer
Felix Gummer
In Blog

The Covid-19 outbreak has caused the largest disruption to business in the UK since the Second World War.  All companies, even those doing well, have had to pivot, adapt, and change the way they have had to operate to protect their employees, their customers, and even their businesses.  In these unprecedented times it is tempting to think that when it comes to pre-Covid priorities, all bets are off.  But that would be a mistake, particularly on plastics.  The looming spectres of a Plastics Tax, Extended Producer Responsibility (EPR), and a Deposit Return Scheme (DRS), may feel like they are now distant challenges, but they remain present and critical.

If we look carefully at how we got here, the drivers for change in government policies and business commitments have far from gone away.  There are some with vested interests who will be making the case for a dilution of the current government policies, and that is their prerogative.  However, any business that assumes this will be ultimately successful at their peril.

The environmental imperatives and their graphic depiction that led us to this point have not gone away.  Indeed, the current crisis has made the world much more conscious of humanity’s impact on the environment.  That is why climate change, loss of biodiversity, and other damage to the planet is often second only to Covid updates in the news.  Our current lockdown and consequent relative inactivity are already seen to have a stark effect on nature.

This does not simply maintain the reputational imperative of acting, but one that has now cemented itself with investors.  ESG has never been higher on investors’ agenda, as this is now often the main lens through which resilience, adaptability, and the ability to seize opportunity is measured.  Never have these qualities proved more important than now.  Along with climate change, cyber security, and supply chain resilience, plastics and packaging is still one of the top subjects on which investors are focusing.

Government too will continue to feel the heat as it will still be on the hook to deliver on these issues.  Firstly, they still have the same looming deadlines and targets, particularly on plastics, set by the EU and translated into British law.  They, having promised to maintain these standards, and even exceed them, will be determined not to incur the inevitable reputational damage of falling behind the EU.

Secondly, the clock also continues to tick on the deadline of the current PRN system.  The Government does not have the choice of kicking the can down the road.

However, perhaps the most important reason the Government is unlikely to change course, is money.  If cash were sorely needed before the crisis, it will be desperately needed now.  The plastics tax will be a nice little earner and a green tax to boot.  Whatever the percentage of recycled content they set initially, once the tax is implemented, there will be an almost irresistible temptation to increase it to raise more money.

EPR is the next piece in the economic jigsaw.  The higher the recycling rates, the more industry will pay, and the less waste will end up in our black bins.  Have no doubt that the money that industry will pay to local authorities to perform recycling services will soon be taken out of councils’ grants by the Treasury.  Unusually, this means that both local and national government have an interest in maximising the contribution of industry.

Yet, not all will be exactly the same.  There are two areas where the current crisis may cause some change in attitudes.

The first is plastic reduction.  Last year, businesses were being asked to sign up to plastic reduction targets and, frankly, many signed without knowing how they would meet them, knowing that not to do so would undermine their reputation.  Today’s huge focus on plastic PPE, and the safe handling and preservation of food, will change the debate so that more recognise the true value of plastic, if handled in the appropriate manner throughout its lifecycle.  But this will increase demands for the removal of unnecessary material and an insistence on the necessity of recycling.

The second area is DRS.  It would be foolish for businesses not to engage with and plan for DRS, probably first in Scotland – as they are pressing on with their consultations and reform – and then across the UK.  However, the minimum £1bn start-up cost and similar annual running cost may well give the UK Government pause for thought.  This Conservative Administration may, in the end, baulk at this cost to industry, not least because a DRS system would not benefit the Exchequer in any way.

In short, it has been necessary for all of us to think tactically over the last few weeks, trying to do everything we can in a constantly changing landscape.  But as we begin to define our modified business models, we cannot afford to forget the key issues that will come to define us.

 

If you would like to find out more about how plastics and packaging consultations and reform are set to affect your business, please get in touch with me at felix.gummer@sancroft.com.