2017-02-08

Answers to questions about our plastic packaging recycling

When following-up our contracts with four plastic packaging recycling facilities in 2014 and 2015, it was discovered that one of the companies, Swerec, could not verify how its plastic packaging had been handled. We immediately engaged external auditors to perform in-depth monitoring and control. In late April 2016, these auditors confirmed our own discoveries and concerns.

We disclosed the irregularity we had discovered on May 4, 2016. We deeply regret these events and are concerned that the disappointment felt by more than FTI will affect people’s willingness to sort their waste. At the same time, we initiated a legal process that is still ongoing. We also intensified our monitoring of the company’s efforts to perform in accordance with the contract. We have searched for other reasonable alternatives, both in Sweden and abroad, but have not found any alternatives that are better, and have a capacity to handle our plastic packaging.

Following an article in Dagens Nyheter (DN) on February 6, 2017 about the matter, we have received questions and feel there is some concern about our recycling. The recycling of household packaging and newspapers remains a key environmental priority. Despite exceeding the Swedish government’s target for plastic packaging recycling, we are now working to achieve the new and higher targets that will apply from 2020. In Sweden, we have to sort more, not less. We are therefore presenting answers below to the questions received via our Service Center, the press, social media and various personal meetings. For more information about the matter, refer to our description from May, 2016.

Question: Has all of the plastic packaging you have delivered to Swerec been incinerated?

Answer: Swerec has recycled a large amount of the plastic packaging we have sent to their facility. There is no appropriate technology for recycling all of the different types of plastic packaging that are now being manufactured, which is why some must be used for energy recovery. Under our supplier contracts, the guidelines stipulate that at least 80 percent must be converted into new material. This level has not been reached.

Question: Can citizens feel confident that the packaging and newspapers they sort are really being recycled, that we are being told the truth?

Answer: Absolutely. You can have confidence in our packaging and newspaper recycling. The irregularities committed by Swerec were revealed by our follow-up of the contract. Our contracts are continuously monitored, and this was how the irregularity was discovered.

Question: Other parties that collect plastic in Sweden – municipalities, recycling contractors, etc. – what do they do?

Answer: We cannot tell you what other parties do, we can only account for our own work.

Question: Where has my plastic packaging gone?

Answer: The plastic packaging that we collect is divided between four different sorting facilities; sometimes it goes to Germany, sometimes to Swerec. It is impossible to say where a specific item ends up.

Question: What is Plastkretsen’s responsibility in this situation?

Answer: Plastkretsen is one of FTI’s several owners and is also, therefore, ultimately accountable to the Swedish producers affiliated with us for the recycling of their plastic packaging in Sweden. It was also our contract follow-ups that revealed the irregularities committed by Swerec, and Plastkretsen has been responsible for investigating the matter and resuming the contracted levels as soon as possible.

Question: Why haven’t you reported Swerec to the police?

Answer: We have acted on the recommendations received from our lawyers, who have made the assessment that Swerec has not exposed us to anything that the police are able to handle. Our own view is that the contract has been breached.

Question: Why haven’t you terminated the contract with Swerec?

Answer: We have chosen another approach, i.e. to demand that Swerec increases its rate of recycling to meet the contracted levels. That is what happens in our German facilities, so we have chosen to adopt the same approach in Sweden. Our audit has shown that if the facility was used for its designated purpose, a significantly higher rate of recycling could be achieved.

Question: Will you continue to use Swerec’s facility?

Answer: There are no other short-term options and there is a lack of sorting capacity for plastic packaging throughout Europe. Alongside of these events, we have now intensified the planning of our own facility.

Question: How has Green Dot Norway reacted?

Answer: Although we work closely with our Norwegian colleagues, we have two completely separate contracts and cannot answer for their actions.

Question: Are all facilities for the sorting of plastic packaging inspected?

Answer: Yes, the contracts we followed up in 2014 at the three German facilities showed that they are performing in line with their contracts.

Question: Can you guarantee that this will not happen again? Will you introduce any other forms of control?

Answer: We can never protect ourselves from a supplier’s intent to deceive us. But we are refining our contracts by adding traceability and enhanced control requirements.

Question: Could what happened at Swerec also occur in other packaging categories, newspapers, food waste, batteries or other waste?

Answer: In regard to packaging and newspapers, we are using this experience when we sign contracts, and in our control and monitoring of the suppliers we engage. We cannot answer in regard to other waste.

Question: How much environmental harm has this caused?

Answer: Every item of packaging that is collected and recycled represents an environmental gain. Recycling plastic packaging is better than incineration.

Question: Does this constitute an environmental breach?

Answer: It is not our place to make that judgment. We had already informed the relevant authorities in 2016.

Question: What are the volumes of plastic involved?

Answer: Of the 91,000 tons of plastic packaging that we collected and reported to the Swedish Enviromental Protection Agency (EPA) for 2015, 35,000 tons were delivered to Swerec. Under the contract, 80 percent of this volume should have been recovered, and the dispute concerns exactly how much has actually been recovered. The remaining amount was sent to other sorting and recycling facilities contracted by FTI and Swedish producers.

Question: How do you think this process will end – when will you have all the answers?

Answer: The legal process is still ongoing and, as expected, this contract dispute will take time to resolve. The goal is to ensure that the recycling of plastic packaging complies with our guidelines.

Question: How will this affect material recycling rates? Will you still be able to achieve the recycling targets?

Answer: The data for recovered material is based on the amount of packaging delivered to sorting facilities divided by the amount of packaging sold in, or imported into, Sweden by our affiliated producers. Sweden has one of the strongest methods for calculating material recycling rates in Europe. We engaged in dialog with the Swedish Enviromental Protection Agency (EPA) in spring 2016, and agreed to continue with this method of reporting. We presented a materials recycling rate of 38 percent for 2014, compared with the national target of 30 percent. Our plastic packaging recycling rate for 2015 was 40.02 percent.

Kind regards,

THE PACKAGING AND NEWSPAPER COLLECTION SERVICE (FTI)

Kent Carlsson, CEO