Sean Riley:
So with all the fancy introductions out of the way, welcome to the podcast, Zach.
Zach Muscato:
Well, thanks for having me, Sean.
Sean Riley:
We have covered sustainability a ton particularly at the last, geez, 7, 8, 9 podcasts. We've really been hitting on a lot of sustainability because it's such an issue right now. And something I've been curious about is what your view is on circularity.
Zach Muscato:
Yeah, I love that question and how circularity ties in with the overall aspects of sustainability. So maybe we'll start there. I bet if you asked 10 different sustainability professionals this question, you'd get 10 different answers.
Sean Riley:
Exactly.
Zach Muscato:
I prefer to reference the U.N. definition of sustainability, and then we could talk about how circularity plays into that. So the U.N. defines sustainability as meeting the needs of today without compromising the ability of future generations to meet their own needs. The reason why I love that definition is because it's people-centric, and to me, if you dive deeper into that, really it's about balance. It's about balancing our needs today, being responsible stewards of the resources that we have, being responsible stewards of our environment so that our kids and grandkids and generations to come don't have these undue burdens passed upon them. So circularity is one lever that we can pull. Circularity is critical from a packaging standpoint. So what circularity means to us is keeping the materials and the resources that we utilize, keeping them in use through multiple cycles so that we're optimizing the efficiency, we're optimizing the use of those resources so that we're not consuming them in an irresponsible manner. So circularity is one aspect of sustainability, but it's an important one.
Sean Riley:
Right, totally. And the thing that I'm curious about is how this is going to tie in with thermoforms, which is sort of your guys' wheelhouse. So I guess if you could... I know what thermoforms are, you know what thermoforms are, but if you could just give a elevator description of thermoforms for the people listening and tie in if they are and how they're recycled today.
Zach Muscato:
Sure. Yeah. So thermoforms are ubiquitous in packaging. So thermoforming is basically a process where we take plastic roll stock, we feed into our thermoforming machine where we heat it up to pliable state. We then form it into its designed shape and basically cut and trim those parts from the sheet, stack them up, send them to our customers for use, however that may be. And there is some scrap in that process, but we regrind that scrap up and reuse it so that essentially we have as close to zero waste as we can. So thermoforms are used for a variety of things, from food trays that are used to preserve the food we serve families at night to medical device and pharmaceutical trays that protect the devices and medicines that are trusted to save lives.
So when you think back to that U.N. definition of sustainability, they really do play a critical role in meeting our needs today. Now the question about recycling, that's one of the bigger opportunities we face with thermoforms. So yeah, thermoforms do get recycled today. According to NAPCOR, in 2021, which is the latest year we have data, about 142 million pounds of PET thermoforms were recycled, which sounds like a lot. It is a lot, but unfortunately it's only about seven to 8% of the overall PET thermoforms that are generated on an annual basis. So there's an opportunity there to do better, and it's an area that we're acutely focused here at PI.
Sean Riley:
Okay. So with that in mind, how can they contribute to sustainability? What can we do to up that number a little bit?
Zach Muscato:
Yeah, fantastic question. So when I think about how we're optimizing the use of our resources, that's where thermoforms really play a critical role. So when you compare thermoforms to other packaging formats, even other types of plastic packaging. The material usage is very, very efficient because we can draw material down into a very thin wall. It's also feasible to add property enhancers like barriers which help extend the useful life of foods. So from that standpoint, thermoforms can be a part of a sustainable solution because they provide critical performance criteria or critical performance to applications that need it in an efficient way. But back to recycling, thermoforms have demonstrated an ability to be recycled along with bottles and PET streams, but typically at lower percentages. Typically, a PET bale may be five to 20% thermoforms. So we're investing in different methods to A, option one would be to increase the amount of thermoforms in bales or B, develop bales that primarily comprised of thermoforms so that we can bring those back and utilize them back into our thermoforms packaging in a truly circular fashion.
Sean Riley:
And that's an interesting, as you were explaining that it separates a lot of people assume sustainability means recycling, and that's not necessarily the hundred percent case because as you explained, it's a sustainable package from the sense that you are able to get way more out of lesser material than you might with other packages. Would that be fair to say?
Zach Muscato:
That's absolutely fair to say, and I'm really encouraged to hear the conversation go beyond recycling and talk about things like carbon footprint and perhaps how packaging can contribute to a world where we're reducing food loss or food waste, which has a huge environmental impact. So that ReFED and some other organizations like the Sustainable Packaging Coalition are doing an excellent job of raising awareness to food waste or food lost. And it's always staggering to me, depending on what you look at, about a third of the food we grow globally goes to waste before it can be consumed, and that equates to roughly 8% of global greenhouse gas emissions. So it's a huge, huge impact.
But that's where packaging like thermoforms can have a major positive impact. And you're correct. When we think sustainability, especially with plastic packaging, we automatically go to recycling. But at the end of the day, a package has a job to do and that's to protect and preserve the product. So the package doesn't do that job. It's not sustainable, no matter what happens to it at the end of life. So that's where we try to focus and look at things holistically.
Sean Riley:
Interesting, and I'm jumping around a bit and I apologize for that, but I'm going where my brain's going. So what I'm thinking by that is how do you guys incorporate, and if not you in general, what role is the design of that package playing in this sustainable journey in terms of what things are we doing? I'm not even getting into recycling yet. I'm just talking about keeping things sustainable because you were mentioning food waste, and I have to think, you were talking about thermoforms being used for food packaging and stuff like that, and I would think just extending shelf life, things like that is another opportunity to be more sustainable.
Zach Muscato:
Absolutely. So again, we look at things holistically. When it comes to the carbon footprint of a product, the product itself tends to vastly exceed the carbon footprint of the packaging. So I just mentioned that because we are very mindful of any change that we may make that we're not taking a step backwards in terms of protection and preservation, because if you have a slight percentage increase in waste or a slight percentage increase in damage to a product, you're going to offset all of those gains that you had from a packaging standpoint more than likely. So we always try to keep that in mind.
First of all, we need to protect the product and preserve the product, but we need to do that in a responsible fashion. So I think too often, and this is especially prevalent in some of the industries we serve, like healthcare. The industry has jumped to these tried and true solutions rather than really trying to push the envelope or to find where that failure point is. So we're trying to challenge ourselves to really find where that failure point is and then build in a minimum factor of safety so that we're making sure that we are preserving and protecting the product, but we're truly optimizing and minimizing, say, the material that we can consume to do so. So I really think it's important to find where your failure point is so that you can design in the minimum amount of safety factor that you need.
Sean Riley:
Interesting. And you mentioned healthcare, and I have to think that it's not an industry built towards sustainability for obvious reasons that a lot of times things can only be used once, and thus the packaging is only used once. So there's a lot more packaging that contributes to waste than maybe in some other industries. And I'm not taking a shot at healthcare. We all need healthcare and it's-
Zach Muscato:
Absolutely.
Sean Riley:
It's vitally important, but we see when we go in and they open a new needle or they open a new medical device that has to be sterile, that has to be something that is for one use. So as it rises in importance within the healthcare industry, what advice can you give for healthcare organizations that they want to be sustainable? Their life job is around helping people, and I'm sure they're not super psyched about contributing to having more waste and stuff like that. So what kind of things can you give them as a path to sustainability?
Zach Muscato:
And you hit the nail on the head. The fact is modern healthcare is not possible without plastic. From the devices that we use to everything that's used in the procedure, plastic is everywhere in healthcare. But again, we have to be mindful of the impact that that has on our environment. So yeah, I'm going to take a step back and I go back to designing to failure and making sure that we're using the minimum amount of material possible. That's something that we're incorporating into our design and development process, and it's something that we're engaging with our customers to approach these things a little bit differently than maybe we have in the past. So there's that. Then there's also a big area of focus, more so in healthcare than other industries, is materials of concern. So that definitely is super, super critical for the industry to make sure that we're not introducing materials that could compromise or harm patient outcomes.
So that's obviously a very, very important aspect of sustainability that is more prevalent in healthcare than other industries. But then there is some really exciting things happening in terms of circularity and recycling. The fact is we're starting from ground zero with recycling in healthcare settings because the infrastructure just doesn't exist today. A majority of the plastic packaging and products that get consumed in clinical settings, unfortunately either goes to a landfill or gets incinerated. But through the efforts of the Healthcare Plastics Recycling Council and other groups that are focused on improving recycling in healthcare facilities, we are starting to see some exciting progress. So I think we're going to continue to see that as the healthcare facilities themselves have waste goals that are implemented, potentially legislation that could impact those sorts of things. And then just the influence of the group purchasing organizations and investors and everything, that effect that has downstream.
Sean Riley:
Right. Now, again, I apologize as I jump around a bit. I'm just as things pop into my head, but I know one thing that we want to try to do more from a recycling standpoint is use more post-consumer recycled, PCR, more post consumable recyclable content. And I know that's sort of a priority, and I know that some of the challenges to that is that frankly, it is cheaper in a lot of cases to use virgin-
Zach Muscato:
[inaudible 00:13:57].
Sean Riley:
Plastics. Yeah. So I guess, what can and should we be able to do differently to counterbalance that that it's more important to use the PCR than it is to get more virgin resin into the stream?
Zach Muscato:
Right. So we are strong advocates of using PCR, and that's just for the obvious reasons, but our demand for PCR is what fuels the recycling industry. So we all want to see those recycling rates increase and accelerate. The only way to do that, or there's multiple aspects to this, but the demand has to be there. There has to be, at the end of the day, if there's not an end market for that material, doesn't make sense for the recyclers to do what they do. And so it's really important to have that strong end market demand along with consumer access and education upfront. So yeah, you are absolutely correct. Oftentimes with PCR materials, especially for food grade applications, it can impact the cost. So what we do is again, looking at the system holistically and say, "All right, well, maybe there are areas here where we can reduce material or we can take costs out by being more efficient."
Also, it's important for the brand oftentimes to look at the whole picture and say, "Is there an opportunity to capture more market share? Is there a competitive advantage to using recycled materials?" So again, that would offset any potential cost increases that would come along the way. Oftentimes though, with materials such as polypropylene, there's just a lack of supply. So we're still very much in a supply limited environment, especially with materials like polypropylene when it comes to food grade applications. It's just scarce. And we're excited to see some new technology come online that will hopefully address that. But for right now, there's still multiple solutions that need to be in play.
Sean Riley:
Interesting. And you mentioned the consumer, so I guess, how about the consumer end of it? What can we do on our end to improve our efforts? And I think from a generational standpoint, I think the younger generations are better at this way about, the Gen X, whatever. So I'm a little on the older end of the generations, but I understand that coming up, I know my children are more prone to recycling than we are or I am. So what can we do from a consumer standpoint to improve this?
Zach Muscato:
I love this question. There's nothing that frustrates me more than when I hear someone say, "We just need people to recycle more. We just need consumers to recycle more." I wish it were that simple.
Sean Riley:
Exactly. Yeah. And I feel like I know where you're going with this.
Zach Muscato:
So I think there's many issues here. There's access. So according to The Recycling Partnership, a fantastic organization, they're doing incredible work, both in terms of research and impact, but according to their numbers, I think the most recent stat I've seen is only about 60% of Americans have access to equitable recycling, which means it's equivalent to the waste or garbage, trash, whatever you want to call it, set up that they have. So if someone comes to your curb, picks up your recyclables, you set them out every week or every two weeks, and they take it away to the recycling center. Only 60%, that's just not enough. We have to do better. But going beyond that, I think we need, as an industry, as a plastics industry, we need to build trust. We need to build trust in the system that if a consumer is going to take the time, make the effort to recycle, to place something in their blue bin and take it to the curb, that it's actually going to get turned into a product.
And we need to do a better job of telling those success stories of, "Hey, these are some products that we are making from that material, from that water bottle, from that that you put in your bin. This is what we made from it." So I think we need to build trust, and also from a packaging standpoint, we have to do our job and design packaging for the recycling infrastructure that's out there today. So we as a supplier, we follow the Association of Plastic Recyclers Design guidelines to a T. We've built that into our design and development process so that everything we develop and design, we're using those features that are preferable to recyclers whenever possible. So I think up and down the value chain, we all have a role at a play. There's all different things we can do, but yeah, ultimately it does come down to the consumer, but we need to bring access to more consumers and we need to build trust in the system.
Sean Riley:
And I think that's a perfect button to put on our discussion for today. And I really appreciate you taking the time, Zach, to come on here with us and take us on this little sustainability journey to help our listeners out a bit. So thanks again for coming on.
Zach Muscato:
Awesome. Thanks for having me. I really appreciate it.
