Rethinking Plastic Credits as a Catalyst for Inclusive Impact

As the global plastic waste crisis deepens, the need for inclusive and long-term solutions has never been more urgent. Each year, over 400 million tonnes¹  of plastic are produced, yet only 9% is recycled,² leaving the rest to pollute ecosystems and strain waste management systems. With plastic production projected to rise by 70% by 2040,³ the crisis is accelerating at an alarming pace. Addressing this challenge requires more than just environmental cleanup. It calls for coordinated, need-based solutions that create lasting impact across the plastics recycling value chain, especially for the often-overlooked informal actors who play a critical role. 

Plastic credits have emerged as one of the tools that can not only address plastic pollution but also drive economic, social, and environmental benefits – when designed thoughtfully. By integrating responsible sourcing, traceability, and equitable value distribution, plastic credits can support the livelihoods of informal waste workers, strengthen community-based recycling infrastructure, and foster greater accountability across the plastics value chain.

What are plastic credits?

The concept of plastic credits is a results-based mechanism that connects public and private sector finance with targeted activities to address plastic pollution. As per a World Bank report, “a plastic credit is a transferable unit representing a specific quantity of plastic that is avoided from use, collected and managed or recycled.”⁴ Similar to carbon credits, plastic credits offer businesses a way to offset their plastic footprint by purchasing credits, providing a tangible means for companies to contribute and take responsibility for the plastics they produce or consume.

Plastic credits are issued by third-party crediting standard bodies or plastic recovery projects where verifiable quantities of plastic waste are reduced and managed. These are categorized into two types: collection credits (for the retrieval of plastic waste) and recycling credits (for its processing into reusable material). They are sold to buyers such as brands, packaging companies, and plastic producers. Compared to carbon credits, the market for plastic credits is still nascent, with just 160⁵ projects listed in plastic credit registries. 

Plastic credits: key value propositions

While plastic credits remain a topic of debate – with valid arguments regarding both their risks and benefits – I believe they hold strong potential as a complementary solution for reducing and managing plastic waste as more systemic, long-term strategies are developed and implemented. When thoughtfully designed, plastic credits can deliver meaningful impact, offering a triple advantage of social, environmental, and economic benefits.

Empowering local communities and creating livelihoods: Plastic credit projects have demonstrated the potential to foster collective action and multi-stakeholder partnerships by actively engaging communities and grassroots organizations to tackle plastic pollution at the local level. Additionally, the expansion of recycling and waste management activities can generate new economic opportunities, create jobs, and promote cleaner, healthier environments. 

Restoring and protecting the environment: Plastic credits provide financial support for initiatives that collect and recycle plastic waste, helping to prevent it from entering waterways and ecosystems. Through robust verification mechanisms and traceability, credits are issued only for additional plastic waste – particularly low-value plastics that have limited recycling options. 

Driving investments in emerging economies: It is estimated that an investment of US$ 1 trillion⁶ will be needed per year to meet 2040 targets for reducing mismanaged plastics. Plastic credits play a crucial role in directing resources to build and strengthen local waste collection and recycling systems in regions where infrastructure and funding gaps are most severe. Small and medium enterprises can leverage plastic credits as a mechanism to scale their operations using revenue from credit sales. 

How can plastic credits support the informal sector and a just transition?

In many developing economies where waste collection systems are inadequate, informal waste workers form the backbone of local waste management systems by driving waste collection and recycling. Plastic credits can provide funding to support fair wages and improve working conditions. Enhanced collection and recycling infrastructure also helps create more secure jobs within the informal sector.  

In Brazil, a project by BVRio supported the purchase of certificates – also known as circular credits – with a verified chain of custody. This initiative resulted in a 30%⁷ increase in income for waste collectors who are members of cooperatives. In India, Green Worms empowers women entrepreneurs in rural areas by enabling them to collect waste and secure employment at local sorting facilities. Supported by plastic credits, the initiative ensures fair income, dignity, and safe working conditions for women within their communities.

These examples demonstrate that as the plastic crediting mechanism continues to evolve, there is a unique opportunity to shape it to prioritize the integration and upliftment of informal waste workers. By embedding strong social safeguards, setting robust standards, and mandating third-party verification, the inclusion of the informal sector and improvements in wages and working conditions for waste pickers can become a core requirement of all plastic credit projects. This approach not only ensures fair and dignified livelihoods but also strengthens the overall impact of the plastic credit ecosystem in managing plastic waste. However, achieving this will require strong governance and transparency in existing plastic crediting mechanisms. To drive true systemic change, plastic credits will need to evolve from transactional tools into strategic levers that incentivize responsible business practices and amplify impact where it is needed most.

References:

1. United Nations Environment Programme (UNEP). (2021). Drowning in plastics – marine litter and plastic waste: vital graphs [online]. Available from: https://www.unep.org/resources/report/drowning-plastics-marine-litter-and-plastic-waste-vital-graphics [accessed July 25, 2024] 
2. Organisation for Economic Co-operation and Development (OECD). (2022). Plastic pollution is growing relentlessly as waste management and recycling fall short, says OECD [online]. Available from: https://www.oecd.org/en/about/news/press-releases/2022/02/plastic-pollution-is-growing-relentlessly-as-waste-management-and-recycling-fall-short.html [accessed April 8, 2025].
3. Organisation for Economic Co-operation and Development (OECD). (2024). Policy scenarios for eliminating plastic pollution by 2040 [online]. Available from: https://doi.org/10.1787/76400890-en [accessed July 25, 2024].
4. World Bank. (2024). Unlocking financing to combat the plastics crisis: opportunities, risks, and recommendations for plastic credits [online]. Available from: https://www.worldbank.org/en/programs/problue/publication/unlocking-financing-to-combat-the-plastics-crisis [accessed April 14, 2025].
5. World Bank. (2024). Plastic credits at a glance: product overview series for financial instruments [online]. Available from: https://thedocs.worldbank.org/en/doc/411ebaec936068e4bb62a0e40ebce522-0320072024/original/Product-Overview-Plastic-Credits-FINAL.pdf [accessed April 10, 2025].
6. Nordic Council of Ministers. (2023). Towards Ending Plastic Pollution by 2040 – 15 Global Policy Interventions for Systems Change [online]. Available from: https://www.norden.org/en/publication/towards-ending-plastic-pollution
7. Thomas, J.A. (2024). Fishing for litter: the fight to lift wages for plastic waste pickers in Brazil [online]. Reuters. Available from: https://www.reuters.com/sustainability/society-equity/fishing-litter-fight-lift-wages-plastic-waste-pickers-brazil-2024-05-30/ [accessed April 10, 2025].