Insights for What’s Ahead

• There are currently no policies or regulations that directly govern raw materials for bioplastics. However, production may be indirectly impacted through directives and policies aiming to increase the amount of recycled plastic, decrease dependence on fossil fuels, and reduce greenhouse gas emissions from extraction and production. For example, in January 2022, the European Commission launched a public consultation on bioplastics as part of the EU Plastics Strategy, which aims to clarify the role of bio-based, biodegradable, and compostable plastics in delivering on the Commission’s commitments to a carbon neutral and circular economy. China, which produces a large proportion of global bioplastics, is developing a new national standard for the definition, classification, labeling, and degradability of bioplastics.
• To safeguard against reputational risks, company claims relating to the biodegradability of bioplastics need to be specific, accurate, relevant, and truthful, especially in the context of imminent regulatory intervention to standardize definitions of bioplastics. Companies need to understand that bioplastics may not necessarily have a lower lifecycle or environmental footprint compared to conventional plastics. (The environmental footprint of bioplastics can vary significantly depending on the feedstock used to produce it, geographical region, energy source used in refineries, and the end-of-life management of the final product.) The science is complex and conducting due diligence before substituting bioplastics for conventional plastics is a critical step before making any environmental claims or investments in bioplastics.
• The production and use of bioplastics entails a significant commitment of resources from companies. Companies need to assess supply chain dynamics and examine use of plastics across the entire value chain of their products. This calls for detailed contractual arrangements with suppliers and vendors to avoid disruption and ensure a smooth transition from traditional plastics to bioplastics. An effective plastic reduction strategy begins with following established waste hierarchy principles: avoid disruption and ensure a smooth transition from traditional plastics to bioplastics. An effective plastic reduction strategy begins with following established waste hierarchy principles: avoid, reduce, substitute, and move toward circular business models in which supply chains recover or recycle the resources used to create products. Any strategy that calls for greater use of bioplastics means factoring in the opportunity costs involved in making the shift from traditional raw materials to bioplastics. Engaging the R&D, products, strategy, and risk management teams and the board in a collective effort will help build robust policies at the company level. Bioplastics may remain a false solution to a real problem if no efforts are taken to adequately consider and address questions arising from its use, including:
  • Its impact on food security and sustainability;
  • Its production, supply and distribution; and eventually,
  • Its disposal and recycling.
• There is greater awareness globally about the environmental hazards arising from the use of single use plastic as well as nonrecyclable plastics. Regulators, environmental experts, and consumers have become better informed about the risks posed by plastics; many consumers are seeking brands that match their objectives for environmental responsibility when it comes to the use of plastics. Bioplastics currently constitute a very small share (1 percent) of the plastics in circulation, but the demand for bioplastics is likely to rise in the coming decade. Getting out in front of this growing demand can create a competitive advantage and be a safeguard from potential reputation risks.