Recently I have been made aware of a growing gap in the industry which is preventing resources from investment from truly supporting the packaging industry where it is most needed.
Investors who are hoping to support and grow recycling and compostable channels with manufacturers and brands can find it difficult to understand where they are going to get the best return on their investment. They may not have the expertise or the technical knowledge of how best to implement their investment to ensure success.
The retail banks will tend to not invest in recycling or compostable technology as the payback can require too much upfront cost and a very long drawn out pay off which does not gel with the risk algorithms they are employing. Any serious efforts to make genuine change in recycling for example will need extensive capital and not be able to pay off in 3-5 years. Maybe over 10 or more but few are willing to invest with such a long term partnership in place.
Compostable technology might appeal to consumers and be seen as the better rewarding path to follow, but this is nowhere near the kind of payoff time frames they usually operate around. Truly compostable technology in widespread use where you could drop the wrapper on the ground and have it naturally decompose.... maybe 15-20 years but that would be an optimistic horizon.
This leads to the current market issue. The investment is not being made and so the plants and assets are not being created that will drive down the price and increase capacity enough to truly be used throughout the packaging industry. Time and again technology has been the focus which is ultimately causing resource inefficiency. It does not matter if there is a technically superior technology if it can not be made in the numbers required. And these are huge numbers. Numbers and volume that will ensure an economically affordable scale over time, but with higher costs at the outset that have so far been thwarting progress.
If the investors were able to understand this scale and cost issue and be directed by those responsible to the technology that can be scaled while still being sustainable, they would be ensuring financial resources are being applied where best needed, with the highest output, growth and return available.
If the technical people are able to interact with the investors more and provide this information to help them make even more informed decisions, it will be possible to maximise the resource efficiency of their spend and look to make the investments lean and optimised.
Having seen firsthand the challenges of investment rounds with major institutions, this is such a vitally important need. Presentations that focused on IP and manufacturing footprint and executive strategy ended up being skewered to fit what they thought the investors wanted to hear. Meanwhile, what they wanted to hear and understand was how their investment could best be utilised. Where could they make the biggest difference? What would make them the most proud of investment where they could tell the market what they were doing and how it underpinned their desire to do better.
The intention is there. Investors who have identified this very market as the one they wish to support, bridging the gap some of the larger institutions might be skipping as they are more agile and can see the importance of investing in the processes and technologies that will allow that major scaling to take place, which in turn will help drive the economies of scale and more efficient recycling, and do so in the next 5-10 years. They just need the insight and support of those in the industry who can help guide them to where together they can make the biggest difference.
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