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Retail Trends 2021: The circular economy

10 February 2021
Concern about plastics, waste and the environment are not new for the retail sector, however 2021 will see us take steps both forwards and backwards in the march for sustainability. In this article we will discuss two key areas where we are seeing development and risk this year including single-use plastics and responsible advertising and green claims. 

Single-use plastics – net zero, deposit return schemes and taxes 

Despite the pandemic, public concern about single use plastics continues and is impacting the supply chain.  With COP26 being hosted in Glasgow in November 2021 the eyes are on the UK and how it will regulate outside the 'constraints' of the EU.

Whilst some progress has been made it is clear that the pandemic has resulted in a temporary increase in the use of single use plastics as part of the immediate response. In addition, we have seen heavier reliance on online retailing and road deliveries. The focus on net zero is never far away and the climate challenge is faced by all.  

Despite a commitment to net zero by 2050, the UK Government is yet to take major strides towards a introducing a carbon tax. Will this be part of Rishi Sunak's armoury in his Budget in March 2021?  Alternatively, we may see further incentives introduced to accelerate the development and move to clean technology introduced.

In the drive towards promoting a truly circular economy and tackling single use plastics, the UK government issued draft legislation towards the end of 2020, outlining a new plastic packaging tax which will apply to plastic packaging produced in, or imported into, the UK. The tax will apply with effect from 1 April 2022 at a rate of £200 per metric tonne in a bid to provide an economic incentive for businesses to use recycled material in the production of plastic packaging and in turn create greater demand for recycled material.

The Scottish Government is forging ahead with its Deposit Return Scheme with regulations passed by the Scottish Parliament during the pandemic in the summer of 2020. The scheme which applies a 20 pence deposit per container for recycling drinks containers will commence in Scotland on 1 July 2022 with DEFRA consulting on introducing its scheme to England, Wales and Northern Ireland from 2023.

Many businesses are already shifting to use more recycled plastic or alternatives to plastic in their packaging. It is presenting opportunities for design and innovation in the packaging of goods and a proactive approach to managing these taxes may give businesses a leading ESG (Environmental, Social, and Corporate Governance) edge. In order to minimise the effect of the new taxes on your business it will be necessary to consider the composition of the plastics and containers used in and by your business as well as sold by your business. Businesses should review their supply chain and establish who is liable for these new taxes and how this will be managed.

If you have any questions about your circular economy strategy and the tax rules impacting you, please contact Caroline Colliston, Partner. 

Responsible advertising and green claims 

The circular economy is the new buzz word for responsible commerce, a "make do and mend" for the 21st century. Whilst the 2021 business version of darning your own socks can involve considerably more innovation, there are still plenty of old fashioned ways to trip up with advertising claims. When seeking to promote green credentials its vital not to exaggerate what's being done. Being overly enthusiastic in marketing can undermine the valuable efforts of the business as a whole. 

If you're working towards a goal then the adverts should not imply that this has already been reached. It's fine to report on progress and to accept and be honest that there's still a way to go. It's key that marketers make sure they are clear on terminology. If using new terms or buzz words, consider the possible interpretations. What does "the circular economy" mean to the person reading the ad? Are you clear on the difference between "carbon neutral", "zero carbon" and "net zero"? In 2019 the Carbon Trust described "net zero" as an "ambition in need of a definition", if the ad isn't clear on what the phrase means then beware of there being a more exacting standard out there which the claim could be held up against.

Consumers are sensitive to "green-washing" and will challenge where products look too green to be true. You may know what is meant by the claim, but does the consumer interpret the claims the same way? How does the Advertising Standards Authority think the average consumer will understand the term? In fact these days with the virility of social media the reputational damage can be done by social media discourse without the time and effort of making a complaint to the regulator. 

You'll need to hold evidence for all claims and the claim needs to match the evidence. The stronger the claims the more robust the evidence needs to be. If environmental claims don't refer to the full life cycle of the advertised product, they must make clear the limits of the life cycle. If a component is now recyclable or made from recycled materials, the ad shouldn't imply the whole product is. Appropriate qualification and explanation can help frame the claim clearly.

If you have any questions about advertising claims please contact Katharine Mason, Senior Associate. 


Find out more about the other big trends impacting the retail industry this year

Further Reading