McKinsey says most consumer packaging still going unrecycled

Bolstering the circular economy represents a way to confront climate change while also presenting a more than $1 trillion opportunity, according to global consulting firm McKinsey & Co.

A June report by the firm, whose current and former consultants advise executives and board rooms around the world, says some $2.6 trillion worth of material in fast-moving consumer goods (FMCG)—80 percent of the material value—is thrown away and never recovered annually.

Replacing the “linear model of mass consumption” can break a pattern that has contributed to the changes in our climate that, if left unaddressed, threaten to make life much more difficult in coming decades, McKinsey writes.

While building a circular economy designed to counter the linear model, the consulting firm says packaging designers and users should aspire to optimize resource yields by circulating products, components and materials in use at the highest possible levels at all times.

“A circular economy is a worthy goal in itself, but it also presents an opportunity for organizations to gain a competitive edge," McKinsey says. "One McKinsey study estimates that a circular economy could represent a revenue opportunity of more than $1 trillion in Europe alone in 2050.”

The consulting firm finds a productivity tie-in to circularity and recycling.

“To reduce the massive waste our societies are currently producing, we must drastically slow emissions-heavy productive activity," it says.

“The clear business potential of circular consumer goods can help answer that question. Consumer goods companies should see circularity as an opportunity, not a threat. Circular business models can create a valuable link between business logic and sustainability.”

In the FMCG sector, McKinsey predicts the market for circular nonfood FMCGs will be shaped by players’ ability to package goods in 100 percent recycled or biodegradable material.

It also sees textile recycling gaining momentum.

“The main driver of circular fashion and luxury in 2030 will be an up to tenfold increase in recycled, sustainably produced products, which will contain a high share of sustainable fibers,” McKinsey says.

Countering a multidecade trend, McKinsey also predicts a bigger market for refurbished smartphones, laptops and tablets as emerging and as “already growing fast.”

The company identifies plastics, lithium-ion batteries and cement and concrete as three sectors will pollution- and emissions-related challenges that will attract circular investments in the years ahead.

“For circular plastics to meet global demand, investment is needed," McKinsey says. "For example, as much as $100 billion of investment will be required for plastic packaging to achieve the goal of containing 20 to 30 percent recycled materials.”

The full McKinsey report on the state of the circular economy can be found here.