The coronavirus pandemic threw almost every market into a tailspin, including the notoriously sensitive oil market. And when crude oil prices fell into negative territory in April, the recycled plastic industry experienced a reckoning. Would corporations still invest in relatively expensive circular plastic commitments if virgin plastic prices, closely tied to the petroleum industry, nosedived?
So far, most big companies seem to be standing by their pledges. "Our strategy hasn’t changed," Yolanda Malone, vice president of global foods packaging at PepsiCo, told a digital crowd at GreenBiz’s Circularity 20 event this week. "We aren’t letting the oil prices and the fluctuations in the market sway us from our long-term vision. Our strategy needs to be strong enough to weather it."
Shifting the focus away from everyday volatility and instead emphasizing the long-term benefits of an overarching and durable circular packaging plan can help brands avoid reacting to oil price dynamics and enable them to ignore the small short-term benefits — such as lower virgin plastic prices — in favor of long-lasting ones, according to Malone and other speakers who addressed the topic during the online event.
We aren’t letting the oil prices and the fluctuations in the market sway us from our long-term vision.
"One thing we did was to remind our associates and merchants that you can’t claim something is recyclable if it doesn't actually get [turned into] recycled content," Ashley Hall, lead for sustainable packaging at Walmart, said during the session. "That was a really important ah-ha moment for our clients and reaffirmed their commitment to get past these low prices and reassess moving forward."
But like good businesswomen, Malone and Hall are ready to adapt to a changing landscape, and the market volatility that occurred during the early days of the pandemic has prompted some soul-searching.
According to Malone, her team is working on ways that ensuring Pepsi’s tactics can support a circular plastic initiative even amidst dropping oil prices — even if that means some tactics might need to change, such as shifting conversations away from cost savings associated with circular initiatives and instead turning the focus to consumer purchasing trends, the value of having a qualitative lifecycle assessment and the potential for refillable containers.
Taylor Price, global manager of sustainability at packaging company Aptar, suggested that shifting to refillables rather than focusing almost exclusively on recycled content could be one way for companies to combat the effect of sinking oil prices on their packaging strategy.
"What we’ve seen as a packaging company is it’s not really an either/or," she said. "Refillable solutions, for us, are really a co-strategy."
Hall agreed that strategy diversification is important: "One solution won’t solve our issues. We need to work on all of them."
The consensus among the panelists was that a sustainable, circular packaging plan that includes a variety of levers to pull and different types of projects would be best suited to survive changing oil prices and other shifting market dynamics.
"Don’t reinvent the wheel," Hall said. "Pull from existing resources. And on the other side, share not only what works but where you’ve had troubles. And by doing that you can help other people avoid making some mistakes that you [have] made along the way so we can all move forward."