Circular Economy: Recycling Capacity Constraints

You mentioned that 100% of plastic is, technically, recyclable, but there needs to be demand for recycling. Is that from the consumer, who has to demand recycled packaging goods, or from the recycler?

The recyclers. We need to develop the demand for the recyclers. We had some experiences, for example, for cardboard, not plastic, but it’s just to give you an example. I have a partner, a supplier, that I purchase cardboard from, the boxes to transport my products. I buy these big boxes of cardboard from them. I put in the contract that I want them to be 100% recycled. Then I develop the chain, the cooperatives, the recycling allocation that the company could buy the recycled paper from. This was the way that we could develop a full, closed model of cardboard, paper, from the supplier, to the consumer, for the entire cycle.

For plastics, for example, we also need to help them to develop the markets. For example, we can approach a chair company, to produce a chair with some kind of plastics that we have in our portfolio. Then we put it all together and we leave the dots with the cooperative, with the recycling model, with logistics, to put it all together.

You’re cooperating with different companies or brands that are producing products, to encourage them to use recyclable plastics, so you can create demand for the recyclers?

Exactly.

What’s the position of the recyclers, in countries like Brazil? I assume that they are independently run and some of them are going to be fairly small, so the economics are not great? But how do you encourage them? Is it purely on a profitability basis that these recyclers get involved in recycled plastic?

It all depends on the demand. It’s a good discussion to have. We have this cycle of problems that we must work out, to get over them. For example, the recyclers can, in one way, recycle a plastic that is very complex. They have developed a solution, but they will only do it if they have a demand from the brand owners. For example, for milk bottles that are made of plastic, here in Brazil, we want to put a percentage of the volume recycled, in our bottle, but the recycler doesn’t have the solution. He will only invest in new machines and capex, to develop innovations on the manufacturing, if there is demand.

If they don’t have demand, they will not increment their manufacturing, in the same way that the big brands that I have mentioned, in terms of sustainability. If it’s a big company, they can have the space to risk it, in some new lines, by offering a recycled product. They need to take the risk, but they need to have capex and to have some budget for this and it’s risky. They need to offer and to develop this new market, or they will wait for the demand. It is mainly the brand owners who must create this demand. There are a lot of companies that don’t have this kind of understanding of the importance of doing the recycling, because it’s more expensive.