Beyond Recycling: Why Fixing Waste Requires System-Level Change

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SAIF: The total carbon footprint of a product is mostly in what's inside of it, not actually in its packaging. So if you can reduce the total carbon emissions of shipping things around without any system change, this has actually been quite a success.

Welcome to another episode of the State of Sustainability. I'm your host Saif Hameed. In this episode, we speak with Shannon Baton, CEO of Delterra. Delterra works at the frontier of system change with a particular focus on waste, threading the needle through the life cycle of products from design to disposal and beyond. I've known Shannon a long time and I'm excited to dig into a diverse range of topics around packaging, waste, plastic, and the end of life of our products. Shannon, thank you so much for joining us. Super excited to have you on the show.

SHANNON: My pleasure. It's really lovely to be here.

SAIF: So where do we find you today, Shannon?

SHANNON: I am in snowy Michigan. We actually have a little bit of snow in southeastern Michigan today.

SAIF: Oh, nice. Well, I hope it's a warm and toasty sort of indoors winter in Michigan for you.

SHANNON: Yes, we have a nice fireplace — or a wood burning stove, I should say — it keeps us warm in the winter. [laughter]

SAIF: I'm super jealous. Well, super excited to have you with us to talk about waste, Shannon. This is a topic which you and I have sparred on for a few years, off and on. I'm coming at it from one angle, and I think you're coming at it from a slightly different angle, and that's what makes this interesting. For our listeners, I'm just going to summarize what I see as the two vantage points here. On the Altruistiq side, we deal much more in the emissions space and the climate space than we do in the waste space — waste is starting to get interesting for us as well — but we typically view waste through the prism of emissions contributions. Obviously prior to Altruistiq, I've worked on waste in different contexts. From your side, as I understand it — though I'd love to dig in deeper on the Delterra front — you're looking at systems change to stop waste becoming an environmental hazard altogether. I know this started in Southeast Asia, and I've been seeing some amazing work you guys are doing in LATAM as well. For you it's much more about waste as an environmental problem itself, and the climate side is almost like a byproduct of that. Would you say that's a fair summary, or would you put it differently? I'd love to hear the two-minute version of Delterra's work.

SHANNON: Well, to your first question about whether I would separate waste and climate change — there's a huge impact of waste on climate change. Methane emissions have been responsible for about 30% of the increase in global temperatures to date, including wastewater, and landfills are responsible for nearly 20% of global methane emissions — though that's largely from organics. It's hard to extract these environmental issues from one another. You're right that we are working towards system change and reducing environmental impact and increasing circularity. But you can't separate all of these different things that get lumped under "environmental" or "sustainability," because the planet is an interconnected organism essentially, and otherwise you end up oversimplifying.

SAIF: I fully agree. One of the things I always disliked about ESG metrics, ratings, and rankings is that they try to equate different problems that might be completely different and not really comparable. It would be tempting to create a hierarchy of issues, but I think that's going to be difficult from an environmental perspective. What I would say is that from a corporate perspective, waste actually makes its way to one of the top few initiatives that our customers focus on in the food space, because it's quite closely correlated with cost and quite visible to consumers. But in some other industries, waste never makes it onto the radar at all. Do you think waste is having a bit of a comeback over the last several years?

SHANNON: Yeah, I like that phrasing — "comeback." But in many ways I think it's just becoming more and more visible in the environment, and so it's creating more consumer concern but also more company concern. We see a lot of companies deeply concerned about their personal impact on the environment, and companies are made up of human beings. There are a lot of people out there who really care about where the packaging their company is selling ends up, whether there's a second life to it, and what its total environmental footprint is.

SAIF: One of the things I've noticed, Shannon — particularly in the US — is that waste seems to sidestep a lot of the ESG backlash we're seeing on other issues. EPR schemes, for instance, seem to be treated mostly as a municipal topic, something to do with city government and proper administration, rather than something politically charged across the left or right end of the spectrum. Would you say that's true?

SHANNON: Thank goodness. Yes. [laughter] I think there's been a conscious effort to keep the packaging and plastics conversation separate from the climate action conversation, just because of how politicised it's become in the United States. So yes, I think that's absolutely true.

SAIF: And within the waste spectrum, I've often wondered about the hierarchy of waste types. When you and I were working on the ocean plastic topic years ago at McKinsey together, I came in with this idea that plastic bottles are part of the enemy — all these plastic bottles winding up on beaches. And actually what I found through working in the space was that PET is often one of the good guys in the waste stream. PET is easy to pick up, easy to sell, easy to monetize, easy to recycle. I sort of think of soda bottles as pretty good, and shampoo sachets as the spawn of Satan — and lollipop wrappers and all those little crispy things. Am I right, or would you classify it differently?

SHANNON: Well, one of the things I love about this space is how intellectually nuanced so much of it is. Yes — the little tiny pieces of packaging are the most "leaky" of the materials. You see them in the environment the most, and they are incredibly hard to recycle, often because they're made up of multiple layers of different materials, which makes them almost impossible to recycle in many cases. But plastic overall, if you look at it, has lightweighted so many different systems — from automotive to clothing to consumer goods and single-use materials — and that has actually led to reduced carbon emissions. When you transport soda bottles in PET versus glass, for example, you have more longevity, you have lighter product, and it's less likely to break so you lose less. And the total carbon footprint of a product is mostly in what's inside of it, not actually in its packaging. So if you can reduce the total carbon emissions of shipping things around — assuming we are continuing to ship things around without any system change — this has actually been quite a success. Plastic is a huge market success. But you're right that sachets are very hard to collect, very hard to recycle, and very uneconomic to recycle — so those are the things that get dumped in the street or burned informally. PET, which has a value, is then recollected and reused more often than other plastics.

SAIF: I want to come back to a few of these points, Shannon, but first I want to pick up on the word "leaky" that you used — meaning waste leaking out of the system. What does a well-running waste system with no leakage look like, and what does a leaky system look like?

SHANNON: A well-run system would be one that doesn't allow waste to leak into the environment, and one that figures out how to manage each stream of waste. That's one of the reasons waste is such a complex challenge — every stream has a different destination, a different way of being processed. Making sure those are economic, and that the material stays separated and maintains its highest value — that is a good system. A leaky system is one where that material doesn't all get collected, which is the case for about 60% of waste in the world today. About 2.3 billion people don't have waste collection, so many of them are left to either dump waste into canals and rivers or burn it in their backyard, which is quite common. That's a definite leak into the environment. And then even when you do collect waste and try to manage it, often it's not being managed appropriately. There's a difference between a landfill and a dump — many times dumps, or even landfills not being managed correctly, allow material to flow right back into the environment. Wind picks it up and blows it out. So the goal of waste collection is to make sure that is not happening.

SAIF: Are there any rules of thumb we can go with? For instance, do certain types of waste typically make it into riverways and oceans, and others don't? We touched a little on sachets and thin films. Is plastic always the bad guy in this equation — is it really a plastic waste problem — or do we need to worry about other packaging materials, or organics as well? What are the big ticket items you're focused on?

SHANNON: In systems where you don't have collection, everything ends up in the environment, and you're looking at different types of impact from different waste streams. From organics, you're going to see leachate — land and water contamination — as that material biodegrades, which causes major issues. You've got aquifers contaminated by dumps and landfills, and of course methane emissions from organic waste. So organic waste is by no means easy to deal with. Plastic is the most visible — it's the longest-lived in the system and has a tendency to float, so if it gets into waterways it sits on the surface. Overall though, we also have to think about the economic value of materials. Bottles end up in the environment less often in places where they have value, and they only have value where the transportation cost to the nearest recycler doesn't offset the cost of collection. That's what EPR is trying to solve for — it's not so much an environmental mechanism as it is a way to balance the business case for harder-to-recycle materials so that they can actually make sense economically in a circular system. PET is very recyclable and easily cleaned to food-grade standards. But there's also a practical reason — a waste picker out collecting kilos of material is going to choose the bigger pieces of packaging because ten bottles weigh the same as thousands of small sachets. To make a living, they'll collect the heavier things. Paper and scrap metal have been collected for decades for the same reason. Plastic is a relatively new material, and waste pickers — who are entrepreneurs doing the best they can with limited time — will always collect the heavier, higher-value materials first.

[Sponsor break – Altruistiq]

SAIF: I'd love to come back to EPR as well, Shannon, but before I do — when I think about the different components to solve this problem, meaning minimising waste leakage out of the system, I think about what we can do on the producer side: how to get producers to produce the right kinds of packaging, design for sustainability, and so on. And then at the other end there's system design to ensure things don't leak out, and also that end-of-life products get sent to the right destination to facilitate a more reusable or recyclable system. Is there one of these that is more important, or one that is easier to get going? Which is the harder nut to crack versus the bigger nut to crack?

SHANNON: I think it's always going to be easier to design for the system, and that is going to be critical. For example, sachets — there are already many companies working on designing sachets out of the system, making them simpler so that they're one material only and therefore recyclable, thinking about collection systems for them, moving away from them entirely. Paperisation is a solution in some cases — at least if it does leak into the environment, it doesn't stick. There's also the compostability conversation, where compostable plastic is being developed. It's always going to be easier not to change the system, because changing the way people behave and consume is always a harder lift. Encouraging communities and countries to leapfrog the mistakes made in the global north is really tough too. We talk about, for example, waste-to-energy being perceived as a silver bullet for many countries because it looks like the waste just disappears. But of course it's not that simple. You do get benefits from waste-to-energy if you can produce energy and recover metals and get some value that way. But historically, countries have a tendency to overbuild this infrastructure and then lock themselves into long-term public-private commitments where they have to keep producing waste in order to produce that electricity, and then they're committed to buying off that electricity at a certain price — which then counteracts recycling. In every case, in every system, it's always about making sure you're not coming up with solutions that are individually correct and collectively wrong — not building a system you then have to break out of again later.

SAIF: At the same time, I want to go a little deeper on the waste-to-energy question, because I do think there's an argument to be made for how it can solve the problem at scale quite cheaply. I remember when I was last working on this topic, we were looking at China as a big contributor to ocean plastic, and one of the initiatives on the horizon was a massive programme to set up incineration capacity. I remember thinking that if this incineration capacity had proper controls to prevent emissions leaking out, it actually looks pretty elegant. Throw in things like gasification, maybe a bit of pyrolysis, and you get a pretty nice spectrum of dealing with the waste. Obviously you have very limited capacity to split things out of that system — and in fact, the more you split plastics out, the less energy you get, since plastic is one of the higher calorific-value components. Is it just a case of being locked in once you get started? Why would you not want that kind of system, especially in the global south?

SHANNON: So yes, there are a number of countries that have gone wholesale in that direction, including countries in the Middle East and China. Sweden is the classic case example, and Denmark is in the same situation. But it's not as simple as "burn it and it's gone." You're left with toxic ash that you then have to figure out what to do with. Singapore is a perfect example — they've got an entire island that is essentially a pile of toxic ash. You're trading one contamination problem for another and condensing everything down into a more concentrated space. And you can't burn all of your waste — there's only a fraction that can be burned. It's not as simple as collecting all the waste and sticking it into a waste-to-energy plant. It has to be pre-processed often to remove water, and depending on how much organics you have, you may need to remove a lot of those. The feedstock going in has to have an exact calorific value. So like you said, you do end up burning things that might be recyclable. And as I mentioned, countries have historically locked themselves into a perverse incentive to generate more waste in order to feed these systems. You have to right-size the infrastructure so you're not overbuilding and then having to import waste to make the whole system work. You do see countries make that conscious decision — in the Middle East, some countries have decided to overbuild because they're going to import waste from their neighbours. But that has to be done very consciously. We know a huge amount now since Sweden started building out this technology, and we need to take all of that into account.

SAIF: And China famously closed its doors to importing Europe's waste some years ago. So that strategy does backfire.

SHANNON: Well, they weren't importing it to burn — they were importing it to recycle. And what they were finding was that there wasn't a huge incentive for countries like the United States to sort their waste well. They were sending highly contaminated material to China — you'd open up a bale of PET and find a whole bunch of diapers in the middle of it. And then you're in a country that isn't necessarily set up to manage that waste as well. So you're handing your challenge off to another country that has to deal with it economically and environmentally. What China actually did wasn't that they completely closed their doors — they set a standard for the level of contamination they would accept.

SAIF: And when US and European material recovery facilities couldn't manage that level of contamination, they got rejected. Interesting — that part of the story often gets dropped.

SHANNON: Yeah. And you can't really blame China for having done what they did. And then of course the bad actors started sending their waste to Malaysia or Indonesia or wherever else would take it, and then those countries started rebelling. The challenge is we have to manage our waste locally. It's not a good idea to be shipping waste all over the world — it's not a good use of our resources.

SAIF: No, it's surprising that it could even make economic sense.

SHANNON: Well, I think it was that big shipping containers were coming across into the US from China and then going back empty, so they were putting waste in them on the way back.

SAIF: Oh my god.

SHANNON: Yeah.

[Sponsor break]

SAIF: Moving on to the material design side — we've talked a little about system design. My sort of basic principles are that you want to reduce, reuse, and recycle, somewhat in that order. On the brand or producer side, when optimising for waste minimisation: is that the right rule of thumb? Lightweight and minimise the amount of packaging first, then if possible switch to a reuse model — getting bottles back and refilling them rather than making new ones — and if you can't, then use more recycled content. Are these the three right pillars, and did I list them in the right order?

SHANNON: Yes. We absolutely want to reduce and reuse before we start thinking about recycling. From the days you and I worked on things like energy efficiency, the same principle applies — you insulate your house before you try putting in renewable energy. You want to make sure that hierarchy is there. But none of those individually is going to solve the problem — we have to use all the tools in the toolbox, and that's why it's important we get all of them right. I would also add a couple of extra Rs: there's a "redesign" R being thrown around a lot now, and a "rethink" R — which is not just reduce, but do you really need this product? And if we do need it, in what form? Recycling should probably be the last resort. I do want to come back to lightweighting though, because it's a difficult one. If you lightweight everything, when you get to the recycling part of the lifecycle, you change the business case. You see a lot of PET bottles getting lightweighted — water bottles that are essentially a thimble's worth of plastic.

SAIF: Yeah. A thimble full of plastic.

SHANNON: And in developing or emerging economies, those get left behind because they don't have enough weight to them. So there's a perverse incentive created by reducing the amount of plastic — you may actually be creating a worse business case for recycling those items than if they had more material.

SAIF: One of the things I find, Shannon, is that people think of recycling and recyclability as the same thing, but actually they're quite different. What you're describing with lightweighting is a recyclability problem. Similarly, if you layer different plastics onto each other — take a soda bottle where the film is grafted on and very hard to remove versus one where it simply slips off — one is much easier to recycle at the end of the day, and that's independent of how much recycled content you used coming in. Do you find that these two topics — how much recycled content am I using, and how do I optimise this product for someone else to recycle it later — are being taken equally seriously in industry?

SHANNON: Yes, I think there is definitely a growing recognition of that. Companies that are converters — those that turn raw material into packaging — are spending a great deal of time on R&D around material composition. For example, there used to be a major problem where some brands were putting PVC around PET bottles. You have to remove the label before you can recycle because PVC contaminates PET recycling and you can't separate them in the recycling system. But those companies are actively working on redesigning and changing that. There's a lot of thought going into what type of label goes on a bottle and what material it is. Companies are transitioning to more recyclable materials, and in some cases making conscious decisions to remove colour from their materials and just use clear — because then everything can be reused in the same system without having to separate it, since you can't get dyes out of plastic afterwards. But you're right that the demand side — who is going to reuse that material afterwards — is a critical challenge. One of the things that a lot of the big companies in this space are clamoring for is minimum recycled content regulation, because unless you create that, you can't create the pull for that material. It's all a market balance — if there's no demand for it, no one's going to buy it and no one's going to bother to recycle it. There's a lot of material that is technically recyclable but has no business case for it, so it doesn't get recycled. A perfect example on the organics side: we've been working with organisations like the Global Methane Hub to figure out the business case for products from organics. If you can compost it — aerobically digesting it instead of anaerobically digesting it in a landfill — you don't get as many bad side effects. But selling compost is a tough market, because getting post-municipal waste to the quality needed for the biggest sinks like agriculture is really hard due to contamination in municipal waste. Our very first project in the United States is looking at which products that are currently not using recycled material could be encouraged to experiment with it. We're going to be running pilots to test the use of post-municipal plastics in products like construction materials and films, and trying to figure out how to increase those sinks for recycled material.

SAIF: Are there initiatives you're really excited about? Any new technologies or products that you think have real potential at scale?

SHANNON: That's a tough question because there's a lot of promising stuff going on in the recycling space. We at Delterra are somewhat agnostic at the moment about things like chemical recycling, dissolution, and so on — what they call "advanced recycling" — because we don't operate in places where those are available, and they're not commercially viable at this point in time. But that could be a game-changer if we can get it right and get the environmental balance right. I'm not sure I'd say I'm excited about it, but I'm tentatively optimistic and watching closely. Back to organics — there's a lot of interesting use of something called black soldier fly to process organic material, which turns it into larvae. The insects eat the waste, and because they're insects, prion diseases like mad cow disease don't transfer through them. That then produces a high-protein powder that can be used in animal feed and fish feed. It's really interesting as a potential solution — it's not a technology as such, it's biology. It's really hard to get right at scale; we've been struggling with that in Indonesia. But in Europe, it's being done in huge warehouses and working well. But there's never going to be a silver bullet. Even chemical recycling is "trash in, trash out" — you're only going to get the quality out that you put in. You still have to sort your waste, reduce contamination, and get the material back into the system. That's always one of the hardest parts.

SAIF: Shannon, we're approaching the end, but I wanted to ask — our audience is composed of sustainability professionals working in large consumer goods companies and consumer goods value chains. If you had to give them one piece of advice — they'll care about meeting their targets to minimise waste, getting consumers on board, playing into consumer narratives around packaging or waste — what advice would you give them? Are there things you've seen work, things you think they should look at?

SHANNON: There's not one silver bullet, but I do think simplification is the key. We've all held a piece of packaging and tried to figure out if it's recyclable. The simpler you can make it for the consumer, the more appreciative they will be and the more recycling we'll get. The departments that design packaging are often part of the marketing group and often not thinking about sustainability — they're worried about colours and what will appeal to consumers. But figuring out how to design packaging so that material can be easily separated for recycling, whether it's a box or a bottle or whatever, and making sure everything communicates clearly to the consumer how to recycle — that empowers them to do the right thing. Sometimes there will be an additional cost, but I would say that's the responsibility of businesses today: to make sure the packaging they're putting into the environment for consumption is as recyclable as possible and as understandable by the consumer as possible.

SAIF: Maybe just before we close off, Shannon — when we talk about business value, most businesses are appreciating that there's a cost element, but are there areas of business value you're also noticing? There's probably something around reducing packaging costs — are there others that you think are interesting?

SHANNON: I think there are companies starting to differentiate themselves based on their packaging. Apple, for example, has moved towards making as much of their packaging paper as possible. One of the things I remember just being in awe of — Lisa Jackson, their sustainability director — was that to get sustainable paper into the system, they would have had to drain everything that was currently available. So they actually went out and bought forests, managed them correctly, and produced their own paper so that their effort was additive into the system. Those are amazing efforts. I hope their consumers are appreciative of it. But they should be doing that type of thing, because they're selling luxury items — a premium product.

SAIF: Shannon, thank you so much. I've really enjoyed this. Really appreciate you joining us — so much to digest here.

SHANNON: You're very welcome. It's been lovely to chat with you.

SAIF: Thanks for listening to this edition of the State of Sustainability podcast. Follow the podcast so you never miss an episode. And if you like the show, please leave us a review or a rating wherever you listen to your podcasts. There's more info in the show notes and we'll be back in a couple of weeks.

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