What is paper trading and how it affects the industry

• September 25, 2024

What is paper trading and how it affects the industry

The recycling industry is massively based on trust and transparency, and with that comes accountability. Accountability to the brands buying recycled materials and to the consumers who are purchasing the end products. At the same time, brands are also responsible for being transparent with their audience and declaring that they are using recyclable materials throughout their production process and supply chain. It is a two-way street to maintain transparency and sustainability.

False claims on recycled products:

But with sustainability comes responsibility, and its juggernaut can put companies and brands under the spell of obligation. The need to appear greener, driven by conscious consumers, can have serious repercussions on how they handle things at a superficial level. There are brands that claim to advocate for recycled materials, portraying that they buy and use them in their supply chain. But reality begs to differ.

Companies, on a superficial level, can lie and get away with it, with no effective way to control such fraud. This puts other recyclers, who are doing an honest job, in jeopardy as trust in the industry erodes.

This can be termed as paper trading, and it has two forms:

1. Brands buy virgin material from recyclers and then obtain a recycled certificate from one of those recyclers, falsely claiming they have purchased and used recycled material.

2. They lie about the proportion of recycled materials used in production, claiming to have used 50% when they have only bought 10%.

In both cases, saving money becomes a bigger priority than going green for the betterment of the climate. Recycled materials come at a premium price due to higher production costs, and deals are usually done on a larger scale.

How to verify the recycled product?

The authenticity of recycled products can be verified, and here’s a way to do it. The process involves conducting a series of chemical tests, such as analysing Isopropyl Alcohol content, which is an index of the percentage of recycled material, temperature profiles, and Diethylene Glycol content. This way, we can confidently determine whether the product is recycled or not.

Profit margins at the cost of authenticity:

There are often unfortunate instances where brands are paying a premium for recycled materials, but recyclers are mixing them with virgin materials. This is a serious case of fraud, as brands lose transparency with their audience while recyclers exploit the situation for profit. This issue often arises in industries where both virgin and recycled materials are manufactured, increasing the chances of mixed outputs.

Even with certifications, it is quite possible to fake them. Certifications are not the most reliable method to verify whether products are genuinely recycled.

In conclusion, falsely marketed recycled products contribute to environmental harm and increased waste. We must support and advocate for transparency in recycling and choose brands that are genuinely committed to sustainability.