In 2018, more than 80 consumer companies committed to making a significant leap forward in sustainability by including 26% post-consumer recycled (PCR) materials in their products by 2025. From a base of only 5% in 2018, the goal was aggressive. Despite lofty ambitions and good intent, this cohort achieved only a meager 9% by 2024. At that rate, the 2025 goal is well out of reach, forcing a shift to 2030. 

Both buyers and suppliers of recycled plastic have answers for why PCR transaction volume remains surprisingly low. Buyers claim there isn’t enough supply of affordable, quality materials. Suppliers claim that there isn’t enough demand to consume their supply. Something doesn’t add up. How can there be both a lack of demand and insufficient supply? 

The troubling answer is that neither group is right. There is, in fact, ample demand. Ellen MacArthur Foundation (EMF) signatories alone constitute 3.5 million metric tons (mt) of PCR demand. However, only 1.2 million mt are actually purchased annually. That low number isn’t because of a lack of supply. 

The issue is a lack of transparency in the PCR market. What our industry is missing isn’t demand or supply; it’s reliable and accessible data about who supplies which materials, at what specification and at what price. 

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Eliminating PCR Pain Points

It is hard to buy sustainable materials. These alternative, nascent markets are inaccessible, opaque and unpredictable. With highly fragmented supply and very little available information about what materials are available from whom, buyers typically end up buying materials from their virgin plastic suppliers at a significant premium. 

Further, buyers have almost no reliable information about how much to pay for these materials. When we compare publicly available price indices for comparable materials in the same geography, we see price spreads as high as 110%. And, lastly, in our ever-changing economic environment, uncertainty about tariffs and logistics costs is enough to kill any deal.

These underlying problems create what we call a hydra of blockers. When buyers talk about the challenges they face in reaching their sustainability goals, they commonly refer to many factors: price, access and quality. If they can solve for access, they find the price is too high for their budget. If they solve for price, quality suffers. And, to complete the PCR death spiral, high-quality materials are difficult to find.  

That’s why we call it a hydra: set out to solve one only to get blocked by others. It’s a vicious cycle that kills most PCR deals.

Inaccurate Data Stymies Sustainable Sourcing

Let’s put ourselves in a buyer’s shoes to see how this plays out within a company. Imagine a company committed to reaching 25% PCR inclusion in their packaging. The goal is defined by a sustainability team, publicized by the Chief Sustainability Officer or the CEO and then shared with a brand owner — who is then tasked with figuring out how to meet the goal. 

Take the example below of a high-density polyethylene (HDPE) price chart from a recent project with Walmart. If lucky, our brand owner might be able to cobble together the below information from publicly available price indices. Immediately, two takeaways become apparent. First, the virgin plastic price is relatively stable and predictable over time. Second, the recycled plastic price is both volatile and at a ~25% premium to the virgin price. 

Few brand owners would make the choice to shift to recycled plastic based on this information. But what if the data they are using to make their decision isn’t accurate?

In fact, when Circular requested a quote for recycled HDPE (rHDPE) in the U.S., we found prices in line or below virgin. This uncovered a massive differential between price indices and prices suppliers were actually willing to accept. This insight dramatically accelerated Walmart’s decision-making and flipped the decision from “how much money are we willing to lose” to a financial imperative to shift to recycled plastic. 

The bad news is that these misperceptions have stymied our industry despite massive demand. The good news is that the problem is tractable. The answer lies in data and transparency.

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AI Opens the Door for Market Transparency

Circular’s AI-powered platform solves this problem. Only the latest technology advances have allowed us to acquire, codify and normalize data in previously inaccessible formats. With data on thousands of suppliers around the world, buyers can find materials at the exact specifications they need in an instant, cutting months, if not years, off the timeline to identify relevant and viable suppliers. Buyers can not only access publicly available price indices but also transaction prices directly from suppliers to inform price negotiations and build realistic business cases to inform decision-making. 

The need for transparency has never been more important than it is in today’s volatile economic environment. As companies seek onshore supply options, evaluate cost implications of evolving tariffs and remove risk from their supply chains, they will need to move quickly to identify new sources of supply. AI and data-powered tools like Circular make that possible.

Once we remove the barriers of price, access and quality, we can solve the demand/ supply contradiction that so many brands and manufacturers struggle with. As recycled plastic becomes an efficient market and, someday, even behaves like a commodity, transaction volume will flow, unlocking latent demand to the existing supply. This creates a financially viable business for thousands of suppliers struggling to make ends meet. 

It all starts with transparency and making the choice to shift from an analog and opaque market to a digital, data-driven efficient market. It’s an opportunity that neither buyer nor supplier can afford to miss. 

Interested in seeing what our solution can do for your organization? Book a demo today.

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