TerraCycle CEO: Cost-of-living crisis presents new challenges for UK’s recycling and reuse movements

TerraCycle's two main business models involve packaging recycling and refillable goods

Rewind in your mind to early 2018 – the heyday of the so-called ‘Blue Planet Effect’. Businesses were scrambling to update packaging sustainability commitments as news outlets covered ‘mass unwraps’ at store checkouts.

But, with net-zero skyrocketing up the sustainability agenda by early 2019, tackling waste arguably took something of a back seat in sustainability conversations. By mid-2020, it had been firmly shut away in the boot of the metaphorical vehicle, with all hands on deck dealing with the pandemic. We were all buying more disposable PPE, more hand sanitisers and more disinfectant wipes, with single-use plastic use a small price to pay for avoiding infection.

edie has not caught up with TerraCycle’s chief executive Tom Szaky for more than two years. For Recycle Week, he recounts the challenges and breakthroughs for the business amid lockdown restrictions.

During lockdowns, he explained, many of the public collection points listed for TerraCycle schemes were unable to operate – either because their host facilities were closed or implementing new restrictions for shoppers.

“But, what was interesting was that we found that consumers kept collecting,” he explains. “When things started reopening… the waste started to be brought in in these big lumps.”

Some brands, however, operated schemes whereby shoppers would post back their waste. Szaky explains that whether businesses choose this option relies on factors such as their budget and the type of products and packaging they use. These brands, he says, “maintained collection rates relatively steadily”.

Now, Szaky believes, there is a new and potentially greater challenge for recycling– skyrocketing energy and commodity costs.

“I think, unfortunately, that what we’ll likely see in the short-term is a reduction in these investments,” he tells edie. “We’re seeing this already, with the Government delaying the Resources and Waste Strategy.”

The Strategy was first published at the end of 2018 and faced a string of delays during Covid-19, with consultations starting and closing later than planned on key components such as Extended Producer Responsibility (EPR) requirement changes, the UK-wide Deposit Return Scheme (DRS) for drinks packaging and universal standards for what is and is not collected from homes for recycling.

Szaky now has concerns that, because “many” hard-to-recycle waste streams are deemed such because they are more expensive to process, investment may well slow in the UK market from the public and private sectors alike. For crisp packets and other flexibles, as an example, which require chemical recycling, moving to a national kerbside recycling system is “really a question of money” for Szaky.

He does praise UK supermarkets for quickly scaling up efforts to provide flexible packaging take-back schemes at large stores. There are now more than 3,500 of these collection points. However, questions persist about the seeming lack of measures in place to ensure collected waste is properly processed – and about the missed chance to reach shoppers who don’t want to save up flexible plastics for their weekly trip for groceries.

Refill challenges

An oft-quoted statistic is that only 9% of the plastics ever produced in human history have been successfully recycled. This is often stated by proponents of the reuse and refill movements, with the argument that the only way to close the loop on plastics is to dramatically decrease their use in single-use applications.

TerraCycle first became involved in the refill economy in 2019 with the launch of Loop. Loop uses a ‘prefill’ model – shoppers are able to purchase branded products in refillable packaging that comes already filled, either online or in-store. They can then send or bring empty packaging back for professional cleaning, and pick up another pre-filled package of their chosen product. This setup requires TerraCycle to work in partnership with logistics providers, consumer goods brands and retailers.

There were some challenges for Loop during the pandemic, including a delay to launch in the UK. But, Szaky explains, it witnessed less disruption than consumer-led refill models like the use of reusable coffee cups in to-go coffee outlets. He acknowledges that the overall reuse movement did “really suffer” in 2020 and 2021.

This does not mean that prefill is without challenges. Earlier this year, the first major retailer participating in Loop, Tesco, pulled the products and stated that it was assessing its next move. Representatives from Tesco have stated that there are challenges in driving behaviour change at scale because this requires “cultural shifts”.

Speaking to edie about Tesco’s decision, Szaky says: “Tesco is, at this time, pausing the next steps and evaluating what will come next. I think a part of that involves making sure they can navigate this extremely pronounced cost-of-living crisis in the UK. We’re hopeful that, once everyone’s hands are around that, we can pick up the ambitious plans we’ve been working with them on.”

He argues that, in the UK and its other markets, Loop has seen “incredibly strong results” – particularly with its online offering. Its top market is currently Japan. The French and North American markets for Loop are also growing; Carrefour is expanding Loop to dozens more stores this year and, in the US, Walmart has begun offering Loop in two urban areas in Arkansas (namely Bentonville and Rogers) through Walmart this month. This builds on Loop’s successful partnership with Kroger.

The UK, Szaky argues, is facing something of a unique challenge in terms of cost squeezes on retailers and shoppers alike. While wholesale energy prices are up globally, the steepest rise has been in Europe. And, Szaky adds: “Brexit, I hear from British business leaders, is something having just as big a negative input on the cost of living as the war in Ukraine and its impact on energy prices.”

He has his fingers crossed that the cost-of-living crisis is “hopefully not long” for the UK, but acknowledges that concerns are “deep”. A survey of 1,325 chief executives around the world, published this month by KPMG, found that 86% believe a recession will occur within 12 months and three-quarters expect disruption to their growth plans for at least three years.