Strategies and interventions aimed at reducing the use and promoting the reuse of plastic products. This approach involves eliminating unnecessary and/or avoidable packaging, minimizing packaging where possible, and encouraging consumer behaviour that prioritizes reuse. Reduction and reuse are critical interventions because studies have shown that without these upstream interventions, it will not be possible to meaningfully address plastic pollution given that waste management infrastructure alone cannot cope with the exponential growth of plastic waste.

There are two main types of reuse models: Business-to-Consumer (B2C) and Business-to-Business (B2B). Within B2C there are four distinctive subtypes of models as described by the Ellen MacArthur Foundation, depending on whether the consumer refills the packaging themselves or returns it to the business, and whether that refill/return takes place at home or on the go.

Source: Ellen MacArthur Foundation, Reuse – rethinking packaging (2019, p.7).

B2B reuse models such as reusable pallets, crates, foldable boxes, pails, drums, and various alternatives to flexible pallet wraps have seen greater adoption compared to their B2C counterparts. Large scale reuse systems come with benefits including shared costs and lower resource consumption. B2B operations have also seen the emergence of 'reuse-as-a-service' providers, and the market is predicted to continue its growth trajectory.

Reduction and reuse potential is particularly high for bottle packaging, transport packaging (B2C and B2B film), and refill applications.

Optimised reuse cycles and logistics can lead to a 13% reduction in packaging demand by 2030 and 30% decrease in plastic packaging and the resulting waste by 2050, while cutting GHG emissions by 26% (Systemiq (2022). ReShaping Plastics: Pathways to a Circular, Climate Neutral Plastics System in Europe ).

At scale, these models have multiple benefits:

• Potential cost reductions: At scale, well-designed and successful reuse models may offer significant cost savings and drive efficiency in the supply chain. Passing cost savings on to consumers will help incentivize customers to adopt reuse, while maintaining profit margins for retailers/brands. Algramõ reports that its platform refill system, for example, not only allows firms to save 30% of costs but also offers refill products at low prices. Concentrated refill capsules, such as Everdrop's cleaning tablets, on the other hand, can save up to 80% of transport costs by avoiding the need to transport water (Ellen MacArthur Foundation, Upstream Innovation: A guide to packaging solutions, p.82). Companies are encouraged to complete a cost analysis of a reuse model for their packaging format.

• Personalized user experience: Carefully designed reuse models can bring consumer benefits, including improved choice, more automated deliveries, and the ability for customers to mix and match flavors, personalize packaging, and choose desired quantities (Ellen MacArthur Foundation, Rethinking Packaging ). PepsiCo's SodaStream, for example, reduces space and travel requirements, as there is no need to carry water bottles, and accommodates user preferences by offering different flavors (Ellen MacArthur Foundation, Upstream Innovation: A guide to packaging solutions, p.84).

• Stronger customer relationships: Subscription schemes for reusable packaging create long-term customer relationships and boost brand loyalty and customer retention. Bite toothpaste bits, for example, offers auto-refill subscription models, sending refill bites every four months. In addition, by incorporating digital offerings, firms can gather information on user preferences and improve system performance (Ellen MacArthur Foundation, Upstream Innovation: A guide to packaging solutions, p.80).

• Lower emissions and plastic pollution: When well implemented, reusable packaging may reduce GHG emissions and plastic pollution compared to single-use plastic.

Costs and revenue model

Return business models' Opex and Capex are highly sensitive to economies of scale , system design and efficiency, including level of shared collection, sorting and cleaning infrastructure, packaging standardisation and pooling, return rate and scale.

Costs for B2C return systems are roughly evenly split between production packaging, and return/refill costs (i.e., transportation, collection, sorting, and cleaning). An estimated 80% of total costs are operational expenditures, of which 60% are labour costs. Collection costs represent 35% of the total return costs and include collection, reverse transport logistics, and sorting and cleaning).

Modelling system costs at today's prices, highly scaled returnable packaging systems, built collaboratively from the outset, can compete on cost for beverage (6% per unit of utility cost saving vs. single-use (SU)) and personal care (14% per unit of utility cost saving vs. single-use (SU)) sectors. However, food applications likely require additional enabling conditions (e.g. higher EPR fees, virgin plastic tax, carbon tax) to make the economics work due to lower costs per unit for the single-use equivalent packaging for the reusable packaging to compete with.

B2B models, most common of which is "Reuse as a service", are more established and can be profitable, while the majority of B2C models still lack maturity. “Reuse as a service” refers to the service that a business might handle the reuse system on behalf of a restaurant or café, offering the items required for food delivery (cups, containers, etc.) and then taking care of the washing, collection, and redistribution (e.g. Globelet, Ozzi). Successful business models exists, for example Svenska Returnsystems , a reusable packaging provider for the food and beverage industry, has shown a 25% cost savings for its client companies by switching from single use packaging to reusable crates.

A detailed analysis of costs and GHG impacts of different reuse models for different applications and how to make them work can be found in the Ellen MacArthur Foundation (2023). Unlocking a reuse revolution: scaling returnable packaging report.

B2B models are attractive to commercial capital providers such as venture capital and private equity firms, especially those who have patient capital and can await for the regulatory changes that are expected to boost reuse solutions. Well established B2B models such as reusable pallets and crates have attracted significant commercial capital. Brambles, one of the largest provider of pallets, crates, and containers is a publicly listed company on the Australian Securities Exchange with annual revenues of over $5 billion. Private sector actors looking to adapt to changing consumer choices while also having a positive societal impact also invest in reduction and reuse models.

While the role of commercial capital is expected to continue growing, philanthropic grants are often needed to support the early development of these business models (especially B2C, which are more vulnerable to market volatility) until they further mature and flourish. Grants from donor agencies and governments and concessional capital are often needed to complement and reduce the risk of new initiatives. Therefore in the near-term and in emerging markets philanthropies and charities, governments, donor agencies and impact-first investors will likely continue to drive capital supply, as entrepreneurs experiment with business models and regulations evolve. In one example, the city of Aarhus, Denmark is rolling out a city-wide pilot to scale standardised, reusable cups in partnership with TOMRA See also Case Studies library. In this case, the municipality has invested the required amount to ensure reusable cups are cost-competitive with the single use alternative. As the program scales, the required investment is expected to be reduced, until it can be eliminated altogether.

EPR funds may be shifted towards reuse solutions. For example, CITEO and Adelphe, the French EPR funds, has allocated financing towards a reuse system incubation initiative called project reUse. If implemented at scale, reuse solutions may benefit from a large boost of investment.

Companies with access to public market capital can benefit from the emergence of Sustainability-Linked Bonds whereby the financing structure of the bond is directly linked to reduce / substitute targets. While the bond doesn't directly fund reduce and substitute initiatives, it can lower the overall cost of capital for the companies and allow them more flexibility in their overall sustainability strategy.

Examples of policy interventions that support Reduction and Reuse

• EU Single-Use Plastics Directive (2019): This law bans certain single-use plastic items (like cutlery, straws, and polystyrene containers) and requires EU member states to promote reusable alternatives. It also sets targets for reducing plastic consumption and improving waste collection and recycling. It is applicable across 27 EU countries. Specific EU countries have included even more ambitious legislation such as France’s Anti-Waste Law (2020) that gradually phases out disposable plastic packaging, including a ban on plastic packaging for fruits and vegetables and requiring restaurants to use reusable tableware for dine-in customers starting in 2023.

• California’s SB 54 (2022): Also called the Plastic Pollution Prevention and Packaging Producer Responsibility Act, this law mandates that 100% of packaging in California be recyclable or compostable by 2032, with a strong focus on reusable alternatives and extended producer responsibility (EPR) programs.

• UK Plastic Packaging Tax (2022): This tax applies to plastic packaging that contains less than 30% recycled content, encouraging companies to shift to more sustainable materials and reusable options.

• Chile’s Extended Producer Responsibility (EPR) Law (2016, updated 2021): This law requires companies to take responsibility for managing plastic packaging waste, encouraging reusable and recyclable alternatives. It also includes a ban on single-use plastics in food establishments, promoting reusable options instead.

• India’s Single-Use Plastic Ban (2022): India has banned a range of single-use plastic items, such as cutlery, straws, and packaging materials. The government has also promoted reusable alternatives through incentives for startups and businesses developing sustainable packaging solutions.

• Kenya’s Plastic Ban (2017, expanded 2020): While Kenya’s strict ban initially focused on plastic bags, it was later expanded to include single-use plastics in national parks, beaches, and protected areas. This has driven innovation in reusable packaging solutions, particularly in retail and hospitality.

• Colombia’s National Plastics Law (2022): This legislation phases out single-use plastics by 2030 and encourages reusable alternatives in foodservice, retail, and manufacturing. It also includes an EPR system to promote circular economy initiatives.

For additional examples and detail, the Reuse Policy Playbook (2022) by Upstream offers a comprehensive guide to implementing policies that promote reusable systems. It features examples of local ordinances that have successfully encouraged reuse, serving as templates for other jurisdictions.

Other enabling conditions

• Shared infrastructure: Reuse business models can more easily achieve economies of scale and high user adoption through shared infrastructure across the value chain (collection, sorting, cleaning, and transportation). Businesses can leverage combined technical expertise to plan and develop this shared infrastructure, while policymakers can implement financial measures (e.g. EPR, taxes, subsidies) to ensure financial viability and incentive widespread adoption and investment in shared infrastructure.

• Supply chain and logistics improvements: Reuse and return business models require significant re-organization of logistics, including implementation of collection infrastructure, logistics network, and the creation of sorting and cleaning centres, which is currently a major barrier as reverse logistics are costly.

• Standardisation and pooling of packaging: Packaging and delivery standardization and pooling are key drivers of reuse and return system's environmental and economic outcomes, unlocking economies of scale and greatly reducing logistic complexity and costs.

• Lack of pipeline and unproven business model: B2C reuse solutions are still in their infancy and prone to market volatility. Further investment and scale are needed to support the development of these business models to full maturity.

• Reliance on progressive policies on circularity and changing demand patterns: Evidence suggests market demand for reuse and substitute solutions is largely driven by regulation targeted at enforcing production choices and/or shifting consumer preferences. The majority of investment capital to date has been deployed in Europe and North America.

• Restrictive policy: Some policies may restrict reusing and refilling containers for certain applications (e.g. food packaging, cosmetics, healthcare)