NEWS COMMENTARY

Nestlé launches CHF 2 billion fund to move toward recycled plastics while committing CHF 1.5 billion to pay a premium until 2025

Published:
January 17, 2020
Coverage:
Accelerating Materials Innovation More...
Activities:
Other financial More...
by Gihan Hewage
Very important

While the fund to help develop food-grade recycled plastics will help grow technologies, Nestlé's willingness to pay a premium for new sources of packaging is critical to achieving its 2025 sustainability goals. As it stands today, advanced plastic recycling technologies that result in food-grade plastics are less profitable than incumbent mechanical recycling technologies, resulting in higher-cost recyclates. Although we expect the cost of these technologies to decrease with economies of scale, developers will not reach commercial scales without customers willing to pay premiums at smaller scales. By setting aside CHF 1.5 billion, Nestlé will lead widespread adoption of recycled plastics, as it will be able to tolerate high initial costs.

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