What impact recycling has on the value of a company
According to the latest figures from the Federal Environment Agency (UBA), every German generated a record amount of packaging waste in 2019 with an average weight of 227.5 kilograms – 50 kilograms more than the European average and 18% higher than the figure from 2010. Packaging waste is generated by households as well as by industry and commerce and can consist of different materials such as plastic, metal, paper, wood, etc.
Generally, all kinds of waste are disposed of in some way: often landfilled or incinerated, and at best recycled. Recycling is when waste products are reused or their raw materials are converted into secondary raw materials and reused as recyclates. In 2020, the goals of the Packaging Act and the EU Packaging Directive were achieved: 60% of plastic packaging was recycled.
Finite nature of raw materials
The main reason for recycling is simple: the world’s raw materials are limited – in contrast to the constantly growing demand. To illustrate this, the Global Footprint Network calculates the Earth Overshoot Day every year. This is the day in a year when mankind has used up all the natural resources that the earth can provide within a year, and thus the point in time when more is consumed than is naturally available. Whereas Earth Overshoot Day fell in December when it was first calculated in the early 1970s, this year it took place on 29 July. In other words, humanity currently needs 1.7 Earths to cover its demand for raw materials. In addition to reducing consumption, recycling is therefore the means of choice to prevent new raw materials from always having to be extracted for new products.
Recycling can be divided into the so-called high-quality recycling process, in which the recyclate is reused for the same purpose (e.g. paper), downcycling, in which recycling takes place at a lower quality level, and upcycling, in which higher-quality starting materials are created from lower-quality starting materials. Plastic packaging is an example of downcycling: recycled plastic food packaging is often not suitable for reuse as food packaging due to its raw materials and impurities, which is why the recyclates are used for other products, e.g. as films or in fleece fabrics. Although a high-quality recycling process would also be possible, it is uneconomical for companies compared to the costs of new production.
Recycling and the carbon footprint
Recycling not only saves and protects valuable natural resources, but is also climate-friendly. Although the reprocessing of materials also produces greenhouse gases through the use of machines and energy, these are usually many times lower than when raw materials are mined, cleaned and refined. According to a study by the Swedish environmental scientist Karl Hillmann, around one third of the emissions from the production of plastic packaging, paper or glass can be saved through recycling compared to new production. In the case of aluminum, the new production of a kilogram causes around 11 kilograms of CO2 equivalent due to the extraction of the raw material alumina and the energy-intensive processing in aluminum smelters, whereas the figure for recovery through recycling is only 0.4 kilograms.
Sustainability has long since developed into a central economic success factor. Through a clear commitment to the environment and society as well as active sustainability management, companies meet the requirements of politics and the public and make their contribution to achieving global climate goals. In addition to building a competitive advantage, the reduction of CO2 emissions can also have monetary effects – at the latest since the introduction of CO2 pricing and the resulting perspective increase in the costs of energy-intensive goods. To return to the example of plastic packaging: Since petroleum is the raw material for plastic, the ratio of costs for the use of newly produced compare with recycled material is likely to shift in the future.
The use of recycled raw materials can therefore have a direct effect on the ecological footprint of a company, its climate footprint and thus its corporate value at the same time. Particularly when calculating Scope 3 emissions, there is sometimes enormous savings potential here, so that it is often worth taking a detailed look. On the one hand, the raw and auxiliary materials used by the company itself should be examined more closely, where a company has a direct influence on purchasing and origin. In addition, the quality and origin of purchased materials and goods can also be influenced within the framework of active supplier management, for example by specifying and ensuring compliance with recycling regulations within the supply chain.