Enlightened Buyers – Plastic, China, and How to Drive Your Brand into the Circular Economy

2500995231_9d5dfdb99e_bAs our oceans get overfished, with a growing global population that is consuming many more products and plastic, we are facing a waste challenge, which may lead to an ocean with more plastic than fish by 2050. Part of me believes this tragic result will come much earlier than 2050, due to the vast underestimation of the amount of illegal fishing going on in the world today, and the lack of global capacity for recycling and waste management. The other part of me believes that we will never reach this outcome, because we are moving into an era of greater corporate and community enlightenment which will propel technological solutions into existence in a way that we have not seen in the past. This complements the fact that we are finally starting to understand the vast importance of the ocean and need for proper fisheries management.

You may have read reports in the past year about which countries are adding the most plastic pollution to the ocean, many of which are in Asia. We all have a waste issue, and simply because a country has a lot of land and buries their waste, or they have ways to incinerate it, does not mean that they are efficient in “removing” those resource assets from the community. Many countries know they don’t have the full capacity to handle humanity’s consumption, and it is estimated that over 40% of the world’s trash is burned, most in open-pit scenarios, where toxins then get into the air and back into our environment.

So let’s fast forward to a slowing economy in China, but one that is rapidly modernizing its methods of production, building new sectors that are leading in innovation, and even becoming robotic. Its resources are stretched, but now oil prices are low and are likely to stay that way for some time due to the decentralized oil pricing that fracking has brought to the equation, as well as the economies of scale that are now unfolding in the space of renewables, batteries, electric cars and the movement of smart money away from carbon-focused entities. This also poses a challenge for the recovery and re-use of plastic (versus the cheaper virgin material that follows low oil prices) and for those hoping to reduce the waste impact.

Some of China’s provinces and companies, however, are now moving into business operations that foster the growth of the circular economy, which means designing products that can be taken apart, re-blended, or recycled, so that waste is not an end result. This is complemented by the fact that the China Petroleum and Chemical Industry Federation (CPCIF) recently signed on to the World Plastics Council, which also has a goal of reducing plastic waste in the environment. The issue is that many companies do not yet know how to obtain good quality recycled content for their supply chains, nor do the municipalities necessarily have the systems in place to provide it. Wharton’s new exposure in China hopefully will bring with it some creative thinking and entrepreneurial solutions to this topic.

Now enter Western buyers into this equation – the brands from afar who have moved much of their sourcing to China and Asia, often trying to sell to those growing populations. These new countries and markets, however, have not had the capacity to recycle or handle the waste that is created along the way. Even Hong Kong, one of the wealthiest cities in the world, has not figured out how to efficiently recover its resources. A win-win situation can now be created, however, as Western brands begin to face greater challenges and demands of sustainability in their own markets, and want to move up the value chain of brand reputation while giving back to the communities and populations they serve.

Enlightened buyers can make an enormous impact in the world today, because they can now cater to the demands, regulations, and desires of their home markets. They can do this while greatly benefiting their sourcing countries if they start asking for materials and products that fit within the circular economy. An increasing number of suppliers in Asia and elsewhere want to be at the cutting edge of technology, recycled content, and material management, but it is the enlightened buyers from abroad who can really expedite the tipping point for the circular economy. Their demand for high percentages of recycled content, for example, coupled with economies of scale for resource recovery, would mean that the circular economy can kick into gear, creating jobs, reducing waste, improving brand value and reputation, and helping to stop the flow of material reaching our waters, which today is a high percentage of plastic. The supply is there, but the demand needs to be stepped up a notch or 10, and this is where enlightened buyers can make a big impact, for themselves, the communities they serve, and in the nations they source from. If this can happen, we have a much greater chance of always having more fish in the ocean than plastic.

On this topic, the 5th annual Plasticity Forum will be held in Shanghai on April 27th and 28th, focusing on the future of plastic, where leaders are going with design, innovation, materials, recycling, and solutions for a world without the waste footprint.

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