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RPC exposed to war on plastic

Investors will be taking a second look at the FTSE 350 packaging group in light of looming regulatory change
February 7, 2018

Later this month, representatives of RPC Group (RPC) will be extolling the virtues of plastics at the Packaging Innovations show at Birmingham NEC. It’s the UK’s biggest annual event for the packaging supply chain, providing access to buyers in major brands and retailers, while giving the packaging industry a chance to showcase the latest product developments.

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The RPC delegation will be attempting to press the case for plastic packaging at a time when the environmental consequences stemming from its use have moved centre-stage politically. The UK government’s 25-year environment plan was launched last month, committing the UK to eliminating "all avoidable plastic waste" by 2042. The term “avoidable” is suitably ill-defined, and governments have a habit of pitching long-term policy initiatives that lead nowhere in terms of legislative reform.

But this time promises to be different, not least because the European Commission (EC) has made explicit commitments to make all plastic packaging in Europe recyclable or reusable by 2030 and to phase out single-use plastic items such as drinking straws (presumably syringes and blood bags will receive dispensation on that score). Separate to the strategy paper, the European Parliament has agreed on an extended waste directive, setting recycling rates for packaging at 65 per cent by 2025, and 70 per cent by 2030. Currently, less than 30 per cent of the 25m tonnes of plastic waste generated each year in Europe is recycled.

The imperative to implement alternative waste-management solutions has been given impetus by China’s decision to ban imports of plastic waste for reprocessing. China has been a major destination for European plastic waste, accounting for more than half of all the waste plastic exported globally in 2016. It seems scandalous that developed economies have been able to effectively export a major environmental problem, not least because it removed the incentive to develop recycling capacity locally.

Now, councils up and down the UK will be forced to send the bulk of their waste for incineration or landfill unless alternative markets are found. Environmental campaigners reckon the problem is best solved by either banning the use of most single-use plastic products, or introducing substantive financial disincentives to curb their use. The success of recent high-profile campaigns linked to supermarket plastic bags and microbeads would seem to support this view.