Compass Report Provides Direction

AMERIPEN and PMMI Outline Growth Opportunities

Compass Report Provides Direction

A growing number of states are crafting extended producer responsibility (EPR) laws that shift more of the cost for local recycling onto consumer brands. The laws pose challenges for brands and the packaging companies that serve them. But they also create opportunities to rethink the recycling system and better position it for the future, industry experts say.

A report published earlier this year aims to help companies make the most of those opportunities. Prepared by AMERIPEN—American Institute for Packaging and the Environment and the Association for Packaging and Processing Technologies (PMMI), the report plumbs trends in packaging design and identifies materials that are expected to grow the most over the next decade or so. Recyclers could use the data to plan ahead.

“If you look at recycling facilities right now, they’re set up predominantly for traditional materials like paper and glass and metals,” says Kyla Fisher, a program manager at AMERIPEN, a materials-neutral trade group for the packaging industry. 

However, the report found that the fastest-growing packaging materials are flexible plastics, and there is strong interest in compostables, Fisher says. Called “Packaging Compass: Evaluating Trends in U.S. Packaging Design,” the report also noted the growing demand for packaging made with post-consumer recycled (PCR) content.

“We need to start having an honest conversation about how we work with flexibles and compostables,” Fisher says, noting that recyclers are not blind to the gap between what’s being produced and what they can recycle. 

Before embarking on its research about two years ago, AMERIPEN held a series of conversations with the recycling community, Fisher says. Recyclers said they would like a better understanding of where packaging is headed to guide their investments in future capacity.

Growth Potential

AMERIPEN and PMMI drew from various sources, including research on consumer trends regarding sustainability and sustainable packaging. The two organizations also interviewed executives representing brands, retailers, and manufacturers, with questions tailored for each group.

“We collected quite a bit of data,” says Rebecca Marquez, director of custom research for PMMI and lead researcher for “Packaging Compass.”

Key findings include the strong interest in compostable packaging among consumer packaged good (CPG) companies, the continued growth in flexible packaging, and the growing demand for PCR content, Marquez says.

The report also found a desire among industry executives to improve consumer awareness of recycling options, Marquez says. “Consumers don’t know sometimes what they’re supposed to be doing given the differences from town to town, county to county.”

The interest among end users in compostables was something of a surprise, she says. “It ranked very, very high in terms of what’s coming up in the next three, five, or 10 years.”

Marquez attributed the interest to a belief that compostable packaging requires less attention after it’s been used. However, composters still need infrastructure to accept and manage compostable packaging, and the infrastructure currently is minimal, Marquez says.

Another surprise was the industry’s growing acceptance of EPR laws, Marquez says. The laws generally require consumer brands to take greater financial responsibility for the costs of recycling the materials they use in packaging. “They don’t love it. It’s going to be an expense for them,” Marquez says. “But they realize that this is coming. They know that something needs to be done.” 

If we start to look at the investment opportunities created by EPR laws with an eye to the future and an eye to where the gaps are, I think we can better target where our money is directed.

—Kyla Fisher,  AMERIPEN program manager

The realization is driven by other findings in the report: the growth in flexibles and the demand for PCR content. “The one thing in this report that we can all agree on is that flexible packaging and plastic packaging are not going anywhere,” says Alison Keane, president and CEO of the Flexible Packaging Association.

She says she believes the interest in compostables is coming from one or two major brands that are interested in it. “While compostability is a solution that some brand owners are looking for, converters are focused on recycle-ready products and the use of PCR content for all their customers,” Keane says.

Regardless of the materials, however, the challenge lies in designing and building a recycling system that can handle them, Keane says. “Without the infrastructure, it doesn’t matter that we make it compostable. It doesn’t matter that we make it recyclable.”

EPR Laws Vary

In many places, some funding for new systems may come from EPR laws. The laws generally levy fees on packaging to pay for the expansion and improvement of recycling systems. So far, California, Colorado, Maine, and Oregon have passed packaging EPR laws. Others are considering them.

But not all EPR laws and proposals are created equal, according to Dan Felton, executive director of AMERIPEN. He evaluates them on several factors that assess their friendliness to CPG and packaging companies.

One factor is the level of influence given to what the laws typically refer to as “producers,” Felton says. The term usually means the companies whose products go into the packaging. “If producers are going to fund a system for recovery and recycling of their own materials, then they want some level of control over how the system operates,” he says.

The four existing laws vary widely on that score, he says. At one end of the scale is Maine, which gives producers very little involvement. As a result, the state’s EPR program could simply wind up funding the existing municipal recycling system rather than helping it prepare for the future of packaging as outlined in the AMERIPEN/PMMI report.

Colorado went in the opposite direction. The state gives full control to producers, though there are other flaws in its EPR law, Felton says. Producers could still end up paying for the existing recycling system, given the relative scarcity of recycling in general outside the state’s major cities. “We’re a little nervous about how that program will shake out,” he says.

In Oregon, producers are paying for an expansion of the existing system. However, the state also spent more than two years studying its needs and decided EPR could help fund a more modern system, Felton says. “One could argue that’s better for producers,” he adds.

A second criteria covers the extent to which an EPR law creates a path for harder-to-recycle materials, a key issue for flexible packaging. In general, the more flexible the law, the better it could be for CPG and packaging firms, Felton says.

Ideally, laws would set flexible goals for increasing recycling and reducing packaging waste to account for the more difficult materials, Felton says. States and producers can adjust the goals as materials and technologies improve.

California, however, sets relatively fixed goals on recycling performance that could lead to some products being banned, a step most companies do not favor, he says.

A third factor revolves around the definition of producer in the phrase “extended producer responsibility.” The producer is generally the brand owner, the company that fills the package and delivers it to store shelves, Felton says.

The existing laws generally include acceptable definitions of producer, Felton says. However, proposals circulating in some states define it more broadly, creating potential problems for packaging companies, Felton says. Indeed, the definition could be interpreted to include packaging manufacturers.

That’s problematic because packaging companies don’t often know where their packages end up, Felton says. “A poorly designed law would put packaging manufacturers into the system,” he says.

The risk is not theoretical. In Illinois, for example, retailers are pushing for an EPR law that would define producers to include packaging companies, Keane says.

Other states weighing EPR laws include Connecticut, Hawaii, Maryland, New Jersey, New York, Vermont, and Washington, she says. A key element for converters is that the laws fund the modernization of the recycling infrastructure. “We need to work on that last piece—collection, processing, reprocessing, and getting materials into a circular system,” Keane says.

What’s Next?

The AMERIPEN-PMMI report helps to demonstrate the need for recyclers and manufacturers to think ahead and work together, Fisher says. The report’s findings also could guide entrepreneurs looking for opportunities to innovate. “If we start to look at the investment opportunities created by EPR laws with an eye to the future and an eye to where the gaps are, I think we can better target where our money is directed,” she says.

There could be pilot tests, for example, of programs to collect films curbside and bring them into the recycling system, particularly given the report’s findings on the growth of flexible packaging.

Marquez also hopes to see advances in composting, which may require more infrastructure than people assume. “It would be great if policymakers and compost-ing facilities could see there are opportunities here to not only make our existing infrastructure better but also to introduce new kinds of packaging recovery,” Marquez says. “It’s not going to be one solution for everything.”

As the findings of the new report sink in, meanwhile, Fisher envisions follow-up reports every five years or so to stay on top of the evolving landscape for packaging and recycling but also to add more long-term projections on volume. It’s tough for brands to generate 10-year forecasts, for example, of their materials usage, Fisher says. “But we need that 10-year projection if we are really going to help the municipal recycling facilities with what they need,” she says.

Joel Berg is a freelance editor and reporter based in York, Pennsylvania.