The Missing Piece in Recycling Isn’t Collection, It’s Demand

Transcript created by AI, there may be transcription errors.

Anne Marie:

Hello, this is Anne Marie Mohan, senior editor of Packaging World, and I'm here with Cody Marshall, Chief Programs Officer at the Recycling Partnership. We are here to talk about the partnership's 2026 State of Recycling Report. TRP is releasing the reported installments and the first two are out. Part one sets the stage on where the US residential recycling system stands today. Part two called the evolving ton digs into what American households are actually generating. Since 2020, the picture has shifted significantly. Packaging is lighter, more varied, and moving through homes faster while the systems built to recover it haven't changed at the same pace. So Cody, thanks for joining us.

Cody Marshall:

Thank you for having me.

Anne Marie:

I'd like to get into what this all means for brand owners. So to start, the report says that packaging is evolving faster than the systems that were built to recover it. How would you describe that gap to a brand owner?

Cody Marshall:

I think I would say that to sum it all up is we need to invest and innovate more in in-market development to keep pace with the innovation and investment that goes on in packaging design.

Anne Marie:

Okay, so it's really the end markets that are the issue rather than perhaps the systems that are handling the materials?

Cody Marshall:

Well, it's a little bit of all. There's just been incredible investment and innovation in package design and how we're able to purchase products. And I think there's strong innovation and investment on the other side of the house. So when we're purchasing, then where it goes from there, but we just need much more to keep pace with how packaging is changing. But demand in the end market is the first thing that we need to really focus on to ensure that material can make it all the way through. But yeah, we definitely need investment in collection and processing and engaging the residents in their homes as well. That whole system needs a lot of innovation, a lot more innovation, a lot more investment.

Anne Marie:

Okay. So you talked about households. Households grew by 8.5 million, but tonnage dropped 8% and per household generation fell 12%. So what's the single most important thing a CPG should take from that?

Cody Marshall:

Yeah, I think that the CPGs probably know how the packaging stream is evolving with how households are changing, but there is a disconnect with the recycling supply chain, and the start of that supply chain starts at the home in the public entity that runs the program. So what's designed and produced upstream ultimately shapes what residents discard and collect in their collection programs and in how material recovery facilities process the material and how end markets are able to manage that material. So for example, in the 2000s, we built facilities to manage newspaper, that newspaper's virtually going away. And so the recovery system is trying to catch up, but we ultimately don't have a system that allows for us to ever catch up, the MRF equipment and how cities can engage with their residents about this material. It always seems like we're playing catch up trying to react to how packaging is changing and how it needs to get recycled rather than a proactive understanding of how to engage the system.

Anne Marie:

So you seem confident when you said that you believe that brands understand how this mix is changing, but yet the mix is changing to the point where it's difficult to recover. So if they understand this, where's that disconnect?

Cody Marshall:

Well, I think their focus is on their company and their brand and the products that they make. They're not necessarily charged with getting it back out of the home. That responsibility is on the local government. But today, what EPR has done and some other changes in our industry, the brands are much more involved, which I think is a great thing. There's been more collaboration across the supply chain. So I think they're monitoring how their products go into the home, and we're trying to highlight in this report that there is this highly dependent system, but it's loosely connected because they ultimately want that material back into their products as a feedstock as well. So we're trying to highlight that the changes in their packaging do result in the recycling system trying to keep up with it, and the recycling system isn't always able to do that easily.

Anne Marie:

Okay. Okay. So you mentioned how systems were developed to handle newsprint, one of the materials they were designed to handle. So according to the report, cardboard is up 32%, carton 61, polypropylene 47%, while mixed paper dropped 34%. Mixed paper holds both printed paper and paperboard packaging in your report. So how much of that decline is newsprint and direct mail going away versus anything that brands did?

Cody Marshall:

Yeah, I don't know if I'm able to quantify that. I think many things have occurred that have resulted in a changing packaging stream. How we consume media has drastically changed. The pandemic has fundamentally changed how we interact and consume products. So it's definitely a lot of things that would go into that calculation. I think the goal of this report is to share what we are seeing come out of the home. We're trying to quantify that for the industry to help make informed decisions. I think it's generally known that the packaging stream changes, the recycling stream is changing and evolves over time, and we're trying to go a level deeper. So brands, local programs, in markets, haulers, MRFs, policymakers, all those important actors in the system can make informed decisions when we're able to share what we are seeing in the waste and recycling stream over the last six to 10 years.

Anne Marie:

Okay. So the report describes three forces that are making the recycling stream more complex even as it gets lighter. So those are volume, variety, and velocity. So of those three, brands control variety most directly. What does format proliferation actually cost the system?

Cody Marshall:

Yeah, I think it's helpful to frame what the recycling system needs, and it really thrives on large volumes of consistent quality material. And when there is consistent material at large volumes and those materials are easily put into categories, communities can educate about that material better, MRFs can sort it and commoditize it, markets can break it down and make it into new material a little bit easier. When a new unique package comes into the market, and so when it's introduced, the local program needs to learn how to communicate about it. Does it fit into an existing stream? Is that a new stream? The MRF might need new equipment if there's enough volume. The MRF or the end-market might just say there's not enough volume, it's too unique or complex and we don't accept it. So that material might not be able to be accepted in the program.

So all of that together is a consideration and results in costs for either the brand or somewhere along that supply chain, that recycling supply chain that I just outlined.

Anne Marie:

Okay. So you talked about consistency of materials and volume. So PET is one of those that has become a success story or was a success story because it was highly recyclable. I mean, for the most part, clear bottles, so a consistent stream. Consumers understand that it's recyclable for the most part, and it was accepted at most MRFs. However, prices collapsed, MRFs lost outlets. So why is that a warning signal? It says in your report it's a warning signal rather than a bad year. Can you explain that?

Cody Marshall:

Yeah, what we're trying to say is it's a warning sign that domestic supply chain and recycled content is still volatile and fragile. To build a stronger, more resilient system, we need consistent demand for recycled feedstock across the traditionally recycled materials. I think we could sit back and say, "Oh, it's PET. Everyone knows about PET," especially in our industry of an echo chamber when we're all talking with each other. It's just like, "Oh, we're good. PET's solid. Let's work on some other materials." Well, we need to build up the whole system for a stronger, more resilient domestic supply chain. And so the first thing that needs to happen is demand for all of that material. We need consistent demand. And so that means bringing that same level of innovation and investment that we see in package design to those end markets and processing and collection.

Anne Marie:

Okay. So do you think EPR is going to pull that demand for the recycled material?

Cody Marshall:

Well, I think some of the EPR legislation has components that work on end markets to make sure there's in-market demand investment that might go into end markets, but really EPR really builds up supply. It's trying to put resources and funding into that collection and processing system to build up the supply. And so that's a great thing. I think we've made progress there and it's the funding that has been on the backs of local governments to date. The thing we need to be aware of is let's say we really knock it out of the park with these new EPR systems and supply increases. We need demand for it. It needs to go somewhere. Stuff needs to get made into new stuff for recycling to work. So the EPR legislation doesn't necessarily in all seven states have the mechanisms that do the demand pool. That really, we need to rely on these brands to demand that material for their products.

Anne Marie:

Okay. So before EPR or any of these states were requiring PCR content in packaging, there were voluntary commitments by CPGs, and the year was 2025 that they were going to try to meet these goals, some pushed to 2030. In the report, it talks about how these CPGs retreated from those recycled content targets, and the report talks about how that was destabilizing for the system. What do you say to a company that pulled back on its PCR goals?

Cody Marshall:

I think the common theme in this conversation that we're having is demand, and I'm going to probably just keep saying it, but I think I want to focus on the issues where we're aligned. We consistently hear from all of our partners and interest holders from across the supply chain that we want a resilient domestic supply chain. And in order to do that, we need strong demand pull and that pulls material through the system, and we need to work on that together. And I think we're making a lot of progress there, but whether it's a commitment or an investment here or there, we really need to come together in a much bigger way to ensure that we're demanding this material. Because like I said earlier, recycling doesn't work if that stuff isn't made into new stuff. And so that demand is really critical.

Anne Marie:

Okay. At our packaging recycling summit, one of the MRF said, "If I can't sell it, it's not recyclable." So I guess that's exactly what you're saying. Yeah. So going back to EPR, so one in five Americans live in an EPR state. If I'm a national brand, how should I think about designing for those seven states fee structures while four out of five consumers are still sitting outside of them?

Cody Marshall:

Anne, this is a really great question, and this is a challenge we're really focused on at the partnership. We don't want two different systems in the US. In order to build a more resilient supply chain, the in-markets need material from both EPR states and non-EPR states. And the way it works is there are so many in markets, they're going to pull material from the whole country and import. So we got to work together to weave these systems together and invest in the whole country system. That's easier said than done. I wish I had a really clear, pithy answer for you, but this is a challenge. This is a large undertaking for national brands, but also local governments have been charged with managing these systems and they've been under-resourced. So it's a net positive that we're moving in this direction, but we are getting the whole system engaged, which is fantastic.

Now we just need to lean in and work together on all the parts of the system, and it's certainly challenging.

Anne Marie:

Okay. So you argue, or the report argues, that the overall recycling rate masks what's really happening and that the individual material rates are the real signal. So what metrics should a packaging sustainability lead be tracking instead?

Cody Marshall:

Maybe it's not instead, but I think we can... Because it's a volume and weight-based industry, it's still a key performance indicator, but we need to look at the broader story of the full performance of the system. So I think sustainability lead needs to know their company's sale base by material and format for tracking that over time, and then the generation of that material format and how it changes in the household over time. So that's stuff they're probably tracking. And then we need to look at the other indicators in the system, so the percentage of their product that might be lost to disposal because of non-access, so monitoring access in the country, monitoring acceptance, so programs that do exist, making sure that those programs, monitoring that those programs can accept their material, and also looking at participation rates. So when recycling exists, making sure that the people that have access to recycling, they're actually using that system so they can know how to help support and making sure people in these local government programs have the resources they need to help residents engage in the system.

MRF capture rates would be next, and monitoring that, and then yield loss as it moves through the system into the end markets.

I don't think that should just... What we're finding and how the system is evolving and how all these actors in the system are working together, that has typically been something that maybe a local government is monitoring some of, and markets are monitoring some of, but it's really important for the sustainability lead, if they are to focus on the performance of their material in the system to have a sustainable material, it would be important for them to track all elements of that.

Anne Marie:

Okay. Okay. So the full supply chain as it were, the full circularity of a material. Yeah. So installment three, I understand looks at engagement and participation. So what should our audience be watching for in that third installment?

Cody Marshall:

Yeah, hopefully we can leave you with a big cliffhanger and everybody will be hungry for more information. But the next installment's going to come in 2027. We're building that out right now. We're going to discuss the quality of access that a home has to recycle and the gaps with the variety of access that exists, and then a data-backed recipe that improves capture and participation. So until then, we encourage CPGs to consider getting involved with our recycling participation fund, which aims to remove these everyday barriers that prevent residents from engaging in the system. We are investing all over the country to try to hone that recipe on what works, what doesn't, so we can improve capture and improve participation.

Anne Marie:

As I know, the Recycling Partnership has done so much work around boosting consumer engagement and creating greater access for communities for recycling. But yeah, I understand it's quite a challenge, so we appreciate all the work that the Recycling Partnership has done and continues to do in that area.

Cody Marshall:

Well, thank you for saying that. We're still looking for that silver bullet, as I know many of your listeners are. We just haven't found it, and it's pretty complex. Like I said earlier, it's a loosely connected, highly dependent system, and I'm really encouraged by how much collaboration we're seeing today. The evolving ton is certainly occurring, but also the industry is evolving in a really strong way. It can be stressful and clunky, but we're certainly making progress.

Anne Marie:

That's great to hear, really great to hear on this very complex and sometimes Titanic problem. So thank you again, and I encourage everyone to go online to the Recycling Partnership's website and take a look at those two reports. They're really fascinating if you want to understand the challenges and opportunities in recycling right now. So thank you again.

Cody Marshall:

Thank you so much.