Coca Cola and the battle of the bottle

We spoke to Swire Coca-Cola which produces around 27 billion primary packaging’s a year, to learn what the company is doing to reduce waste and build awareness of recycling.

Jean:

Good afternoon, Will. Thank you so much for joining us today in a conversation which I think is very central to everyone’s mind, which can we drink with zero waste?

Will:

In one year we would produce about 27 billion primary packagings.

Jean:

Billion?

Will:

Billion, yes. As to the breakdown of categories of primary packagings, it’s predominantly kind of 50% PET, and probably about 30% – 35% aluminum can, with glass and aseptic fibre packs being the smallest portions.

Jean:

If we produce 27 billion bottles, and only a certain amount of the glass bottles can be reused, how do we ever get to drink without waste?

Will:

Good question. So we as a business I guess are in a predicament that of that 27 billion, the vast majority is what people would class as single-use.

So that package has been designed to safely get that drink to the consumer.

Once that consumer has consumed that drink, it then goes into a space that is controlled by a myriad of stakeholders depending on, you know, municipality or government, etc. of how they manage their municipal solid waste.

And we would need to work with those stakeholders. And on top of that, those collected materials are then sent to professional recyclers, so there is a whole chain of custody that can see where those bottles go.

Now, kind of being transparent, we are not in that position yet.

So in a sense, as we know here in Hong Kong the vast majority of the bottles today go to landfill.

In Taiwan, the collection systems are pretty good. So actually, probably about 90% of those primary packagings would be collected. In China, it’s difficult to answer.

But probably in the tier-one cities, the collection is probably quite high.

Jean:

A few years ago you organised with a group of NGOs as well as different corporations to start a campaign of Drink Without Waste and also the elimination of single-use plastic.

Can you tell us a little bit about that journey and what are some of the successes that you had, and what do you think can be done better?

Will:

So as you already said, the kind of genesis of Drink Without Waste was that we as a company knew that we couldn’t tackle this issue on our own.

And therefore we reached out to – as you said – a number of NGOs, a couple of think tanks in Hong Kong, including ADM, Capital Foundation and Civic Exchange, as well as some of the other soft drink manufacturers and retailers.

And we kind of branded ourselves as Drink Without Waste to really try and conduct some independent research, and with that independent research, start to discuss with the environmental protection department the environment side of the Hong Kong government, to implement policy or regulation in and around the collection of these single-use primary packagings.

And the coalition has worked together very successfully. It has now been in existence for kind of over two years. And we expect in a sense to be able to make sure there are a number of solutions that the government go out to the public with for their external consultation on the so-called plastic bottle PRS, which we think will be held later on this year.

Jean:

So by doing the research and putting the good together you are hoping that the government will be able to disseminate and create the awareness with the public. So with some of the solutions that hopefully the public will be able to adapt.

Jean:

Can you name one example out of the study that somebody like me would say “OK. I can do this. This is easy. I can adapt it in my kind of everyday life.”

Will:

So in a sense of here in Hong Kong, we have got the so-called three-colour bins where, in a sense, they have a marcation for plastics and one marcation for metals. On the metals, if all individuals could place their aluminium cans in there, that in a sense would be a viable pathway to get those cans back to an aluminium smelter.

Jean"

Can you cite maybe a couple of other jurisdictions that are possibly doing this with success?

Jean:

So I will name two systems. One is called “Return-It”. They, as I say, runs a very successful, very transparent deposit system across single-use soft drinks as well as other packagings. Another system would be called “Infinitum”, which is Norway’s deposit system. Again, very transparent and has very, very high collection rates.

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Recognizing responsibility

In one year, the company produces around 27 billion primary packaging’s – making it the six largest bottler when looking at volumes in the world. It’s no wonder then that the company has recognized the responsibility it has towards the environment.

As the Asia-Pacific and west-coast U.S. producers of the iconic Coca-Cola bottle, along with a number of other soft drinks, teas, waters and juices, the operations of Swire can have a significant impact on the amount of plastic that circulates across the globe.

William Davies, General Manager of Sustainability, and two years ago he brought together a group of companies with NGOs to start the “#Drink Without Waste” campaign.

“The genesis was that we as a company knew that we couldn’t tackle this issue on our own,” says Davies.

The Civic Exchange think tank, ADM Capital Foundation, as well as a number of other soft drink manufacturers, retailers, associations, waste companies and a number of influential high foot fall companies (MTR and HKIA) joined the initiative, which started by funding research into the flow of single-use soft drink packaging waste within Hong Kong.

The goal was to start a conversation with the Environmental Protection Department (EPD) of the Hong Kong government, and urge for the right legal and regulatory ordinance to be implemented, so an efficient and successful PET Producer Responsibility Scheme (PRS) could be implemented.

“We’re focused specifically on the environmental pillars of sustainability,” says Davies.

“For us that really comes down to climate, water and packaging. So my role is to effectively set our strategy and then work with our markets to help them implement, but very much in a partnership type relationship as often the local context is key to implementation success.”

Indeed, the quality of recycling regimes depends on the ability and willingness of local governments.

It may surprise (and sadden) you to know that the vast majority of bottles used in Hong Kong go to landfill.

“Once that consumer has consumed that drink, it then goes into a space that is controlled by a myriad of stakeholders,” says Davies.

These include workplaces, professional recyclers and multiple layers of government.

While Hong Kong has recycling bins scattered right across the city, Davies suggests that the system suffers from a lack of credibility.

“We need to drive that level of transparency through the system so that people know that if they place their glass bottles here or their aluminium cans there, a chain of custody exists.”

So what needs to happen to create change?

By establishing the “#Drink Without Waste” initiative, the group will work with government to disseminate information about how plastic waste is processed, and what needs to happen to increase the proportion of materials being recycled.

For Will Davies, another answer lies in looking at the example of specific jurisdictions.

“Taiwan is a beacon of hope for collection,” he says, pointing out that an estimated 90% of plastic PET is being collected.

Taiwan has a mandated government system that targets households and workplaces across the island. It is a government-led and imposed system that works on the basis of ‘extended producer responsibility (EPR).’

Effectively, if consumers do not choose the correct bin for their waste, it will not be collected.

So who else can we be looking to for inspiration?

Davies points to ‘Return-It’ - an initiative run by a company called Encorp, which is in British Columbia, Canada. He also sees merit in ‘Infinitum”, Norway’s deposit system.

“These are very transparent systems and have very, very high collection rates. Organisations such as these are also building recycling infrastucture – usually through partners, so they can establish these chains of custody and clearly show that the post-consumer waste has not only been collected, but also re-purposed (recycled) into a secondary use – which in the case of PET, is processing to food grade ready flake or pellet, which then goes back into making preforms, which are then blown into bottles,” he says.

In Hong Kong, Swire Coca-Cola has partnered Baguio and ALBA to build a PET and HDPE plastics recycling facility in the EcoPark, Tuen Mun. Davies believes that this is clear and tangible proof of EPR. New Life Plastics Ltd will be open late this year subject SARS-CoV-19, and will have space for tours, so encouraging more to learn how post-consumer waste can be collected and recycled.

This material should not be regarded as investment recommendation, research or a J.P. Morgan investment research report.