Dr Pepper Snapple invests $6 million to close the loop on plastic

Dr Pepper soda plastic bottles
Dr Pepper Snapple Group
Soda giant Dr Pepper is working to cut waste in both its own manufacturing process and the public market.

The company behind well known beverage brands such as Dr Pepper, 7 Up, Snapple, A&W root beer and Hawaiian Punch is the latest consumer goods giant to jump into efforts aiming to improve naggingly low recycling rates.

As part of a new goal to increase overall drink container recycling rates to 60 percent by 2030, Dr Pepper Snapple Group has announced new investments in two groups: A $5 million, 10-year contribution to the Closed Loop Fund and a $1 million, three-year commitment to public recycling bin provider Keep America Beautiful.

The capital infusion into sustainability causes comes as other companies that sell large quantities of disposable goods realize that large-scale recycling efforts — particularly those that target less resource-intensive "closed loop" or "circular economy" models — are often hindered by lacking recycling infrastructure entrenched behavioral challenges.

The Closed Loop Fund is among those looking to bridge the gap between private companies looking to increase the rate at which consumers recycle their products and municipalities that often lack capital or regulatory incentives to build out better recycling programs.

"Closed loop looked like a fantastic way to approach the issue," said Kelly Smith, director of government affairs and sustainability for Dr Pepper Snapple Group. "Whether that’s on the private side or the government side, we’ll kind of talk that through."

With the investment in the Closed Loop Fund, Dr Pepper Snapple joins the likes of Walmart, Coca-Cola, Goldman Sachs, Johnson & Johnson and Keurig, among others, that have invested $5 million to $10 million each to provide municipalities with zero-interest loans and private firms engaged in public-private partnerships with below-market interest rates to catalyze investment in recycling infrastructure.

Activist groups are also putting pressure on large companies to do more to curb waste. Oakland-based shareholder advocacy group As You Sow, for instance, has urged Dr Pepper Snapple Group to match the commitments made by others in their industry.

After facing similar activist pressure, Coca-Cola is now aiming to recycle 50 percent of its own beverage volume by 2015, while PepsiCo is shootingto recycle 50 percent of all beverage containers by 2018.

"They finally announced a goal,  but it’s disappointingly weak in the context of peer commitments," Conrad MacKerron, senior vice president of As You Sow, said in a statement. "It seems to really lower the bar to shoot for 60 percent by 2030."

The uncertain ROI of recycling

For many consumer companies, including Dr Pepper Snapple, plastic recycling in particular can be challenging. In addition to the wide variation of highly specified plastics out in the market, creating potential headaches for processors, there are economics to keep in mind.

As the New York Times reported late last week, the recent plummet in oil prices also drastically has dropped the value that plastic recyclers can recoup from reused material. The large municipal waste services provider Waste Management, for instance, told the Times that a bale of processed used plastic could have sold for $230 a year ago, compared to about $112 currently.

"Recycling is in a crisis," David Steiner, chief executive of Waste Management, told the newspaper. "It used to be that all players in the recycling ecosystem were able to make a profit. That’s not the case anymore."

Although many environmental advocates argue that the oil clump is another reason to accelerate long-term investments in green infrastructure — mostly renewable energy, but also related areas such as more efficient buildings and manufacturing processes — few argue that the short term is likely to bring clashes over financials.

Merging the internal and the external

Dr Pepper is a well known entity for most grocery store shoppers, but the soda brand has been part of its own namesake company only since 2008.

Dr Pepper Snapple Group, the Texas-based soft drink company currently valued at some $17 billion, was spun out from British confectionery company Cadbury Schweppes in 2008. 

"We’ve only been sort of in the world as a company for eight years, so our sustainability efforts are rather new as well," Smith said.

Getting involved with groups such as the Closed Loop Fund is a nod that the company doesn't plan to go it alone on recycling.

"It would be an industry approach," Smith said. "We have been working with Coke and Pepsi for a while, and we would continue to do that, as well as governments."

Still, Dr Pepper Snapple does have internal experience to draw on. The company has a goal of recycling 90 percent of manufacturing waste, and already has hit 85 percent. Smith attributes that largely to better relationships with local recycling providers.

The question now: Can the company help its entire industry translate internal progress to economically viable models in the mass market?