Mounting pressure for plastics circularity: Understanding prevailing attitudes and engaging regional businesses (Part 1 of 2)

This two-part blog series is part of The Circulate Initiative’s efforts to identify areas of support to spur action amongst regional businesses in addressing plastics circularity. This first part of the blog explores their current levels of engagement and factors affecting their attitudes towards plastics circularity.

A confluence of consumer awareness, upcoming regulations, and the potential ramifications of an international legally binding instrument on plastic pollution is placing mounting pressure on businesses to address plastic waste issues. Given their pivotal role in local economies and regional supply chains, it is critical to involve local and regional businesses in South and Southeast Asia (hereinafter referred to as “SSEA businesses”) in efforts to tackle the plastic pollution challenge. The role and efforts undertaken by global corporations in this matter are typically more well known and clearly communicated. However, less is known about how plastic waste issues feature on the agenda of SSEA businesses and the strategies they are utilizing to act on the issue.

The Circulate Initiative has had several conversations with local businesses, ranging from SMEs to conglomerates, across the plastic packaging supply chain, to understand their experiences and challenges in tackling the plastic waste crisis. The main aim of these engagements was to identify areas of support to spur action amongst SSEA businesses. Our conversations build on existing studies (highlighted below) that explored businesses’ insights and attitudes towards plastic waste issues.

• Perceptions on Plastic Waste 2.0: Insights from businesses and consumers in South-East Asia;
• The path to 2030: Delivering a sustainable future;
• Policy brief: Readiness of small and medium enterprises (SMEs) in the plastics industry in implementation of Extended Producer Responsibility (EPR) in Viet Nam.

This two-part blog series explores SSEA businesses’ current levels of engagement and how they can be more actively involved in accelerating solutions that address the plastic waste crisis. This first blog looks at how plastics circularity is viewed by these SSEA businesses and the factors affecting their prevailing attitudes towards addressing plastic waste. Our engagements and review of existing research revealed the following key takeaways.

Local country contexts and the size of businesses are important considerations for determining business engagement levels

When assessing SSEA businesses’ plastic waste actions, it is important to consider the differences in challenges faced by businesses of differing scale, industry sectors, and markets in the various countries. Country contexts, including local regulatory requirements, impact a business’ ability to commit to immediate-term action. These factors include the country’s political and policy stability, the nature of relations between the private and public sectors, commercial culture, and the existence or absence of solution providers operating in local areas. For recycling, for example, the scale of available solutions, from source segregation to collection infrastructure and beyond, and the capacity of packaging converters and plastic manufacturers to source and use recycled material in their products varies significantly by market. In addition, the size of the organization and their points of connection into wider supply chains affect a business’ capability in terms of resources and finances available to take action on plastic waste management. For example, smaller businesses with low production capital and a high level of competition may be more susceptible to any increase in costs tied to EPR compliance.¹

Compliance requirements as the primary driver for action

Emerging national regulations on waste management broadly and regulations on plastic waste management specifically are forcing SSEA businesses to pay more attention to the plastic they use and the waste they generate as a result of their operations. Historically, local and global firms based in the region have not faced stringent compliance requirements in Asia when compared to, for example, the European Union. However, this is changing amidst the implementation of EPR obligations, national pledges to tackle plastic waste, recycling targets, and single-use plastic bans. In the early stages of local activation, compliance will provide the main impetus for firms to act.

Consumer pressure another driver forcing local businesses to act

Plastic waste is featured as one of the environmental priorities for Asian consumers, albeit lower in priority than other more immediate issues, such as water pollution, extreme weather events, air pollution, and greenhouse gas emissions.² Nonetheless, an average of 88% of consumers across five countries in Southeast Asia (SEA) agreed or strongly agreed that they are extremely concerned about the extent of plastic waste issues in their countries.³ Consumers expect businesses and governments to address plastic waste issues but are reportedly less optimistic about how businesses are tackling plastic waste issues. This perception is likely a result of the lack of visibility and external communication around plastic waste initiatives by businesses.

High level of awareness on sustainability issues amongst businesses but ambiguities remain

Many SSEA businesses consider themselves engaged on the issue of sustainability, with 85% of food and beverage businesses in five countries in SEA being concerned about plastic waste issues.⁴ However, with only 53% considering their actions to be sufficient, ambiguities remain around expectations from regulatory changes and impacts of initiatives.

Businesses have concerns about the expectations of current and upcoming policies, and the potential impact these have on production costs and competitiveness. For example, a review of the readiness of SMEs in Vietnam for the implementation of EPR regulations revealed that the smaller businesses are generally less prepared and more concerned about the feasibility of EPR implementation in the country.⁵ Governments and regulatory bodies will need to provide clear guidelines and provisions in terms of exemption conditions and exclusion threshold values to ensure feasibility for SMEs and address their concerns on managing compliance costs.

Businesses also face ambiguities around the outcomes of planned sustainability-linked initiatives and the risk of failure. For many local businesses, there is risk aversion due to concerns over the consequence of negative internal responses to any initiative that fails to deliver on impact and does not offer a clear benefit to the bottom line. The risk of failure is accentuated further for small- and medium-sized SSEA businesses without the same financial and resource capabilities when compared to their multinational counterparts. This reduces the likelihood of small- and medium-sized SSEA businesses proactively adopting new plastics circularity initiatives where the outcomes remain largely anecdotal. This highlights a critical area of support needed by these businesses: data-driven market forecasting on the impact and financial return of the initiatives.

Empowering SSEA businesses to take action towards plastics circularity

The insights reveal that SSEA businesses are concerned about plastic waste but guidance is needed to drive businesses towards ramping up action on plastics circularity. The guidance that these businesses seek includes understanding compliance requirements and the impacts of regulations, and having a clear line of sight of the impact and positive commercial benefits of tackling plastic waste issues. Shifting the businesses’ mindset to addressing plastic waste as a revenue-generating opportunity, rather than merely for regulatory compliance or avoiding reputational risk, can further empower these businesses to take action. The second part of the blog will share some action points and resources that businesses can consider to kickstart their plastics circularity journey.

References

¹ WWF-Asia. (2021). Readiness of small and medium enterprises (SMEs) in the plastics industry in implementation of extended producer responsibility (EPR) in Viet Nam [online]. Available from: https://wwfasia.awsassets.panda.org/downloads/policy_brief_eng_v3_12_11_pages.pdf

² Kantar. (2021). Sustainability: The Asia Story – Exploring what sustainability means to consumers and how brands can navigate their journey [online]. Available from: https://www.kantar.com/campaigns/apac-foundational-study

³ Food Industry Asia. (2022). Perceptions on Plastic Waste 2.0: Insights from businesses and consumers in South-East Asia [online]. Available from: https://accesspartnership.com/perceptions-on-plastic-waste-2-0-insights-from-businesses-and-consumers-in-south-east-asia/

⁴ Ibid.

⁵ WWF-Asia. (2021). Readiness of small and medium enterprises (SMEs) in the plastics industry in implementation of extended producer responsibility (EPR) in Viet Nam [online]. Available from: https://wwfasia.awsassets.panda.org/downloads/policy_brief_eng_v3_12_11_pages.pdf