How Traceability Can Shape the Future of Recycled Plastics Markets

Through early adoption of traceability in their supply chains, brands can gain a competitive advantage as tightening regulations such as the PPWR begin to take effect.

At the Sustainability in Packaging Asia conference held in Singapore in June, representatives from across the packaging industry came together to explore the latest packaging innovations, regulatory initiatives, and trends shaping the future of the industry. One of the more significant regulatory developments referenced in several presentations was the EU’s Packaging and Packaging Waste Regulation (PPWR) — legislation that sets mandatory recycled content targets for plastic packaging and has ripple effects across global recycled plastics markets. While it came into force on February 11, 2025, there is a transition period and most provisions will be applied from mid-2026 onwards.

The PPWR signals a turning point for the packaging industry, marking a shift from voluntary commitments to mandatory targets.  Yet, even as demand for recycled plastics is expected to grow, supply remains inconsistent. The recycling industry is facing a particularly challenging economic environment characterized by volatile pricing, rising operational costs, and limited long-term commitments from buyers of recycled plastics.

Meeting the anticipated surge in demand will require both scaling up the quantity of recycled plastics and placing greater emphasis on how the material is sourced. Who is involved in collecting the material? Are stakeholders along the supply chain paid fairly? Are social risks being monitored? These questions are fundamental to ensuring that the procurement of recycled plastics upholds responsible sourcing practices.

Traceability plays a central role in responsible sourcing. Without traceability, companies are unable to credibly verify the origins of recycled content, which is necessary to demonstrate compliance with growing corporate commitments to social compliance, and regulatory requirements like the PPWR and other frameworks. As investors and regulators demand greater transparency and accountability, traceability has become essential to businesses — not just as a reporting tool, but as a foundation for responsible business practices. 

Traceability benefits stakeholders across the recycled plastics supply chains

For brands, traceability helps identify and manage risks across their supply chains. It provides the data needed to ensure that the recycled materials procured meet environmental standards, while allowing companies to assess and address potential human rights risks such as child labor or unsafe working conditions. These risks are especially prevalent in informal waste management systems. Since most brands currently only have visibility up to their Tier 1 suppliers — those who directly supply recycled materials to brands — there are significant blind spots regarding what happens further down the value chain. Brands that improve traceability can take informed action to safeguard their reputation and build trust. 

Recyclers and aggregators benefit from traceability as a means to strengthen regulatory and quality control (including audits), to improve their operational efficiency and enable risk identification, and also monitor the progress of remediation efforts in their supply chains. When these stakeholders have access to data that demonstrates how their materials are procured and handled from the point of collection in line with environmental and social standards, it allows for more trust and partnerships with buyers of recycled plastics, such as brands seeking to meet recycled content targets. More transparency also unlocks more investment in the supply chains. For example, some countries such as South Africa have EPR laws that require informal waste workers to be paid for their services. Traceability is able to provide evidence that informal waste workers are indeed receiving increased prices, elevating the roles of recyclers and aggregators from merely supplying materials to becoming key enablers of responsible sourcing practices — and could potentially open doors to longer-term contracts and better pricing. 

Finally, traceability can facilitate the inclusion of informal waste workers — an often overlooked yet essential workforce on the frontlines of recovering recyclables in emerging markets. By making their contributions visible, traceability can help drive fairer compensation, promote safer working environments, and support the recognition of these workers within formal waste management systems and policy frameworks. 

Spotlight on CleanHub’s tracking system

Through our Responsible Sourcing Initiative, we have been introduced to several traceability platforms, including CleanHub’s plastic tracking software. CleanHub has developed a track-and-trace technology that tracks plastic waste from the point of collection through to sorting and processing. Designed to be accessible, the system uses a mobile app to create digital records at various points along the supply chain, enabling actors in remote or informal settings to participate in digital traceability efforts. Features such as QR codes, geotagging, photo verification, and basic weight measurements help establish a transparent chain of custody from collection to processing. This approach builds confidence and assurance among brands and investors by providing visibility across the procurement process and the documentation needed to demonstrate responsible sourcing. 

While traceability may seem ideal in theory, the informal and fragmented nature of the recycled plastics supply chain poses significant challenges to implementation. The number of actors increases further down the tiers, with each operating at various levels of informality. Adding to this complexity, the willingness and feasibility to adopt digital tools also varies — many stakeholders still rely on physical documentation, while others may not document their activities at all. This makes it difficult to establish a consistent and reliable data trail.

Despite these hurdles, traceability remains essential to meeting tightening regulatory and sustainability requirements. Over time, as digital solutions become more accessible, and with active training and capacity-building efforts, a shift toward more formalization is likely, and early adopters who invest in traceability now can gain a competitive edge.

Financing traceability has the potential to unlock even more capital

Yet technology alone isn’t enough to scale these efforts — there remains a critical financing gap. More funding is needed to scale technologies such as CleanHub’s, which enable companies to verify recycled content, meet regulatory requirements, and build consumer trust. From 2018 to 2024, our Plastics Circularity Investment Tracker found that less than 0.2% of private capital in plastics circularity was directed toward digital tools, including traceability technologies. 

Today, financing mechanisms are increasingly seeking projects underpinned by robust traceability systems to ensure measurable and verifiable impact. With improved traceability, capital can flow to the right places and support the actors who are truly advancing responsible sourcing.

The PPWR serves as a catalyst for shaping the future procurement of recycled plastics. As the landscape for traceability remains relatively nascent, brands that move quickly to embed traceability and responsible sourcing into their supply chains can gain a first-mover advantage as the regulatory environment becomes increasingly stringent in the coming years. By doing so, they not only help establish industry standards, influence consumer expectations, and shape policy development toward more responsible practices, but also unlock greater opportunities to trade by ensuring they are already compliant where others may fall short.

Embedding traceability across recycled plastics supply chains transforms regulatory requirements from a compliance burden into a driver of long-term progress toward creating shared value for people, the planet, and businesses.