The plastics problem is getting harder to solve

May 27, 2020, 10:13 AM UTC

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.

Good morning.

“Plastic is my passion.” So says Surendra Patawari, Zooming with me yesterday from Belgium, where his giant global recycling company is based. I spoke with him about the state of plastics recycling, and it was not an encouraging conversation.

I’ve noted in this column before that an increasing number of big companies are targeting plastic recycling as an important goal. The Alliance to End Plastic waste includes companies like Dow, Pepsi, P&G and ExxonMobil, who have committed $1.5 billion to solving the plastics problem, and I believe they are sincere in their ambitions. Patawari, who sits on the board of the Alliance, believes they are sincere as well.

But here’s the thing: plastics recycling has pretty much collapsed. That was happening even before the pandemic, after China made its decision to stop importing plastic refuse for recycling. And it has gotten worse, in part because collapsed oil prices have made virgin plastic less expensive, and in part because other countries are regulating waste shipments, causing trade in plastic for recycling to shrivel. While companies like Pepsi and Unilever have set goals of using 25% recycled plastic packaging by 2025, Patawari says in fact only 16-17% of plastic is recycled now, and the percentage will decline next year. His industry “won’t be able to produce the quality and quantity of recycled plastic” those big companies need to meet their goals.

Meantime, in part because of the pandemic, the use of plastics is soaring–with discarded face masks and gloves adding to the refuse. “We cannot live without plastics. COVID 19 has proven that,” Patawari says. But unless the current broken system is fixed, waste will continue to accumulate, and clog the oceans. And while many big companies have gotten religion on the topic, this is an issue that ultimately will require government action to find its solution.

Speaking of broken–the airline industry in the U.S. is certainly in a world of hurt, with passenger volumes down 90% and only faint signs of recovery. But Fortune’s Shawn Tully crunches the numbers and concludes there is a way for the Big Four to survive.

And for those of you thinking of changing careers, here’s one with big growth prospects: bankruptcy attorney.

News below.

Alan Murray


Boeing cuts

Boeing will reportedly announce 2,500 voluntary layoffs this week, representing the first phase of broader cuts that will involve roughly 16,000 job losses in total. Boeing hasn't made major layoffs for a few years, but union officials expect the initial wave of the new cuts to focus on the firm's Seattle-area commercial planes operation. Wall Street Journal

Hong Kong

As pro-democracy protests reignite in Hong Kong, tycoon Li Ka-shing says the spark—a new national security law drafted by Beijing—is fine. According to Hong Kong's richest man, the proposed new law "can allay concerns the central government has in Hong Kong and give rise to a positive outlook from here." Human rights activists and many international observers say the law would curtail civil liberties in Hong Kong. In protests today, around 250 people were arrested. Fortune

Eurozone contraction

European Central Bank President Christine Lagarde reckons output in the Eurozone will shrink by between 8% and 12%—in line with the ECB's more pessimistic forecasts. Lagarde said the less pessimistic forecasts were now "out of date." The Eurozone's central bank will publish its official numbers next week. Bloomberg

European stimulus

To combat the pandemic's economic effects, the European Commission will today announce a much-awaited stimulus plan that will build on the €500 billion ($550 billion) proposal made by Germany and France. Those two countries favor grants over conditional loans, while the "frugal four"—Austria, the Netherlands, Sweden and Denmark—take the opposite approach. Which side will Commission President Ursula von der Leyen take? CNBC


Facebook divisiveness

Facebook conducted an internal review of how its platforms drive people apart…then shelved the research and blocked attempts to apply its conclusions to Facebook's products. According to the Journal, Facebook policy chief Joel Kaplan decided the proposed changes, designed to stop polarization and make the social network more civil, were "paternalistic" and would have disproportionately affected conservative users and publishers. WSJ

Business models

Politico's Christian Oliver examines the question of whether Europe should be building champions such as South Korea's Samsung or Hyundai—and finds Koreans are sick of their chaebol conglomerates and would prefer to emulate Germany's Mittelstand SME model. He writes: "The chaebols rebuilt a country, but they can’t conjure up another miracle to take it to the next level in the showdown with China. Korea now realizes that it needs to change tack to unleash the country’s bottled-up talent and pump more oxygen into SMEs in areas like gaming, fashion, music, biotech and medical services." Politico

French cars

The French government has announced an €8 billion rescue package for its auto industry, and it's pretty green. Citizens will get grants of up to €7,000 to buy electric cars (or of up to €3,000 to buy a less-polluting car that's currently languishing in a showroom) and the industry will get investments to stimulate their electric-car production. President Emmanuel Macron: "We need a motivational goal - make France Europe's top producer of clean vehicles by bringing output to more than one million electric and hybrid cars per year over the next five years." BBC

Greek tourism

How can Greece restart its critical tourist industry without abandoning the success it has had in containing the spread of COVID-19? The Brookings Institution's William J. Antholis and Filippos Letsas argue that compulsory masks would help, as would social distancing measures. They add: "Greece may want to experiment with electronic bracelets and cell phone–tracing applications. Such initiatives may be expensive and complicated, but they are achievable if established early on at points of entry." Fortune

This edition of CEO Daily was edited by David Meyer.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet