Retailers are rising to the state-mandated challenge of plastic reduction

Over the next 10 years, the retail landscape in California is going to be changing. From restaurant takeout to grocery shelves to online shopping, anything and everything packaged will, by 2032, be recyclable, reusable, refillable, or compostable.

That’s because, at the end of June, California Governor Gavin Newsom signed Senate Bill 54, which shifts the onus for recycling infrastructure over to producers and sets ambitious sustainability goals, including a 25% reduction in plastic-packaging use.

California’s new law may pose additional challenges for the retail industry, but the concept of producer responsibility isn’t a new one, said Dan Felton, executive director of the American Institute for Packaging and the Environment.

“Producers and brand owners have been grappling with this issue for some time now,” Felton told Retail Brew. “When you’re looking at the potential impact on retailers, it’s not just California. It’s moving across the country.”

Break it down: Maine was the first state to hand financial responsibility for recycling systems over to producers, with a law passed in July 2021. It was followed a month later by Oregon, and Colorado passed its own version in June 2022.

California’s law calls for $5 billion in funding from plastic producers over the next 10 years to go towards plastic-pollution cleanup and mitigate the effects of existing pollution.

• The law requires a 25% reduction across all plastic packaging sold in the state, and mandates that all forms of single-use packaging—not just plastic—be either recyclable, reusable, or compostable by the 2032 deadline.
• SB 54 replaced a ballot initiative around plastic reduction that would have gone directly to voters in November, and which included a shorter compliance timeline and banned polystyrene food packaging entirely.

Meeting the challenge

Ten years may seem like an eon to implement California’s strict new requirements, but retailers shouldn’t put  it off, said Stephanie Sheridan, a partner at San Francisco law firm Steptoe & Johnson LLP, who specializes in retail and e-commerce.

“In order to meet SB 54’s requirements, it’s really time consuming and expensive, especially for companies that don’t use recyclable packaging, or that use large amounts of plastic packaging,” Sheridan said.

• Retailers should start by making sure they know exactly which of their products fall within the purview of California’s requirements—and how many—Sheridan said. “What we’re telling people is to make sure they’ve got an eye towards inventory,” she explained. “So they can have something very clearly laid out as to things they’re going to need to change.”
• The other thing retailers should be thinking about are their contracts with packaging manufacturers. This is key, Sheridan said, because retailers aren’t going to be able to get off the hook for California’s requirements. “There is responsibility and liability all along the chain,” she said.

Catch-up: Plus, there’s a bit of compensating to do, noted Rachel Michelin, president and CEO of the California Retailers Association. While the industry as a whole was already moving toward sustainable packaging—especially because “consumers are demanding” it, she said—the pandemic slowed R&D efforts as retailers around the country struggled to operate.

“People sometimes forget we are still catching up from being shut down,” Michelin said. “We’re getting back to that point, where there’s going to be more opportunities for these types of products to get into the hands of retailers and businesses who are part of the packaging and then selling it to the consumer.”

A changing landscape

One impact of the new regulations is likely to be that sustainable packaging becomes more accessible and affordable for smaller brands, said Ashlee Piper, a sustainability expert and author who advises companies on sustainability efforts.

“The good news is that it’s not going to be as difficult to find those products,” Piper told us. “And because there’s going to be so much more of that type of sustainable plastics produced, it will probably be less expensive than it has been before,” she added.

Zoom out: While the packaging requirements apply to goods sold in California, the industry will see the impact beyond the state, Felton said.

“Brand owners and packaging manufacturers don’t design their packaging and label their products for a single state,” he explained. “So if California is driving the market, they’re going to see that shift happen in other markets in the United States as well.”

And SB54 doesn’t exist in a vacuum. Sheridan said her retail clients are concerned about other California laws, (including the Truth in Labeling for Recyclable Materials bill, which limits which products can have the three-arrow “recyclable” symbol) and how they’ll comply with an increasing number of regulations that vary from state to state.