Driving carton recycling value chain. April, Drinks Shanghai Jiayu WAN

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1 Driving carton recycling value chain April, Drinks Shanghai Jiayu WAN

2 We commit to making food safe and available, everywhere Number of Tetra Pak packages sold 184 billion Number of packaging machines in operation 8,850 Number of processing units in operation 74,450 Countries where Tetra Pak packages are available >170 Number of employees 23,600 * All numbers refer to 2015

3 Offer solutions to guarantee safe food UHT + Aseptic package Temp C 150 Direct UHT Indirect UHT 100 Pasteurisation 50 Time PAPER 75% Core Presentation/ / 3

4 Offer solutions to guarantee safe food UHT + Aseptic package Best milk belt in northern hemisphere: 45 north latitude 72% of Milk Sources 71% of Population Source: 2010 provincial raw milk output CDIA Documents

5 Our commitment to sustainability is deep-rooted Reducing food waste Our founder, Ruben Rausing, was a firm believer that a package should save more than it costs. Increasing food availability When food is packaged, it can be transported and made available to consumers everywhere in a safe, efficient and affordable way Improving resource efficiency

6 Environmental Excellence forms part of our Sustainability approach We are driven by our vision to make food safe and available, everywhere. Our innovative and market-leading processing and packaging solutions are making that vision a reality worldwide. We make social responsibility a priority when it comes to people. We seek to support communities wherever we operate and provide opportunities for our employees around the world. We strive to play an active role in shaping a better future, supporting the long-term success of our customers businesses and driving environmental excellence across our whole value chain. PROTECTS WHAT S GOOD

7 We work with industry organizations, non-governmental and international organizations and several initiatives Good governance is our fundamental framework for achieving all our sustainability targets

8 Drive environment excellence of the value chain Recycling Sourcing Product design Filling Transportation Packaging manufacturing

9 We continue to drive environmental excellence OBJECTIVES Develop sustainable products GOALS Renewable packaging goals: 100% FSC TM -certified paperboard, A 100% renewable package Increase recycling 2020 recycling goal: 40% global recycling rate Reduce environmental footprint across the value chain 2020 climate goal: Cap climate impact across value chain at 2010 levels

10 Used cartons are not waste. They are a valuable raw material for new products.

11 We have a strong starting point Average renewable content in carton packaging material today accounts for 75%

12 Value chain impact in 2010* 38% Suppliers Purchased materials for packaging & transportation 6% Tetra Pak Production sites, offices & business travel Scope 1, 2, 3 of the GHG Protocol Scope 3 of the GHG Protocol 6% End-of-life Post-consumer cartons not recycled or recovered for energy Scope 3 of the GHG Protocol 50% Customers Use of sold products life-time impact Processing equipment Packaging equipment Scope 3 of the GHG Protocol *2010 baseline data verified by a third party in 2015 Accounting based on GHG Protocol standards and guidelines for corporate and value chain climate accounting.

13 Turning used cartons into an asset Effective separation and recycling of all layers Collected cartons Repulping Pulp Products polyal Products

14 We have mapped used beverage carton recyclers globally Active recycling in 43 countries (trans-border shipments take place in several markets) Active polyal recycling in 24 countries

15 Key success factors to increase recycling Increase consumer awareness Support collection & sorting infrastructure Boost business opportunities for recycling entrepreneurs Expand market opportunities for recycled materials

16 Increase consumer awareness Increase consumer awareness Support collection & sorting infrastructure Boost business opportunities for recycling entrepreneurs Expand market opportunities for recycled materials Drive consumer campaigns Drive school programmes Partner with local organisations We teach school children in Turkey about recycling Since the start of 2005, the recycling awareness programme Little Things Renew Nature has been seen by over a million children in Istanbul, Bursa and Izmir.

17 Support collection and sorting infrastructure Increase consumer awareness Support collection & sorting infrastructure Boost business opportunities for recycling entrepreneurs Expand market opportunities for recycled materials Connect collectors and recyclers Cooperate with key stakeholders Tetra Pak India forms waste dealers club Tetra Pak India brought together NGOs, recyclers, scrap dealers and street waste pickers in Delhi, India. As a result, the city now has a waste dealers club (Paryavaran Mitra) and the process for collecting used beverage cartons has been significantly improved.

18 Boost business opportunities for recycling entrepreneurs Increase consumer awareness Support collection & sorting infrastructure Boost business opportunities for recycling entrepreneurs Expand market opportunities for recycled materials Increased recycling in China With development support from Tetra Pak, the Chinese recycling company, Hangzhou Fulun Ecology Technology increased its recycling capacity from 20k tonnes of paper to 35k tonnes (75% increase) in just under 10 years. They now also recycle the plastic and aluminium (PolyAl) from used beverage cartons, and sell it to plastic recyclers and fireworks manufacturers. Recommend recycling solutions Support technological developments

19 Expand market opportunities for recycled materials Increase consumer awareness Support collection & sorting infrastructure Boost business opportunities for recycling entrepreneurs Expand market opportunities for recycled materials Roofing tiles in Brazil Since 2000, we have supported the market for roofing tiles made out of plastic and aluminium from recycled beverage cartons. Manufacturers and local universities cooperated to enable material analyses, which led to important product improvements. Now, over 15 roofing tile manufacturers are operating in Brazil, producing a million tiles each year. Match recycled materials and market needs Promote recycled end-products

20 UBC Recycling Analysis UBC recycling Raw material type Semi-end product End products Post-consumer waste Kraft paper Toilet paper Sole pad Filling waste Copy paper Imported/ domestic factory waste Cardboard paper Balance paper Others Plastic wood Chipboard Most recyclers also recycle factory waste and other similar feedstock while recycling UBC, and their production is mainly for the Kraft paper. Others

21 Recycling value chain overview Recycling Value Chain Overview Collection Recycling Application Total Invoiced Tonnage of Packaging Material in 2016 is 644kt Social collection system Waste paper packing station UBC Collector UBC Recycler (Paper mill) Fibre recycling PolyAL recycling UBC Recycler (Full carton recycling) Paper PE Aluminum Plastic wood Chipboard Mixed into OCC Paper mill Paper Incinerator & Landfill In 2016, the total invoiced tonnage of packaging material in China market is 644kt, a total of 153kt UBC are recycled, of which Post-consumer waste and Filling waste volume 142kt, UBC mixed into OCC volume 11kt.

22 UBC Collection Analysis Compared with cardboard paper and PET Comparison among UBC/Cardboard paper/pet bottle collection Collecting Recycling UBC/PET/Cardboard paper: 0RMB/t or little Landfill plant Junk house/transit station Waste contractors/sorting centers Resident UBC RMB/t Paper/ other salvage station Waste paper packing station UBC RMB/t UBC collector UBC 1200RMB/t UBC recycler cleaner/junkman Cardboard paper RMB/t Paper/ other salvage station Cardboard paper RMB/t Waste paper packing station Cardboard paper 3000RMB/t Paper mill PET 2500RMB/t Paper/ other salvage station PET 3000 RMB/t Plastic packing/ crushing station PET RMB/t PET factory Note 1. UBC price between level I and II is estimated. 2. All prices are market mainstream price during Sep-Oct period. 3. Cardboard paper is A level This diagram sketches up the primary value chain. However disorder among levels and miscellaneous prices make it much more complex. The price gap of salvage station: UBC 200RMB, cardboard paper 850RMB, PET 500RMB. Price gap of single category professional collectors, UBC 300RMB, cardboard paper 450RMB, PET 700RMB.

23 UBC Collection Analysis Compared with cardboard paper and PET Margin comparison among UBC/Cardboard paper/pet bottle collection 5,000 4,000 3,000 Margin 300RMB/t Margin rate 10% Margin 445RMB/t Margin rate 12% 2,000 1,000 Margin 14RMB/t Margin rate 1% 3,000 2,500 3,700 3,000 1, UBC Cardboard paper PET bottle Price Feedstock cost Packing fee Logistic cost Land rent & environmental protection Shipping costs Margin Profits of UBC collector are very low because UBC collecting locations are a long way from plants and shipping costs are high.

24 Market Overview Waste paper and plastic Recovered paper (OCC) price Recycled plastic price The demand of recoverd paper is expected to increase the coming years due to growthing economies, and UBC price is very competitive compared with OCC under current market environment.

25 Butterfly Effect China ban on waste imports Not prepared for the change Need to find a new home for the waste Investing recycling infrastructure, and rebuild the waste management strategy & Potential destination for waste Not enough capacity to consume the excessive material Expansion and transformation underway & Decreased import volume and strict customs inspection Shortage of raw material and looking for alternatives Overseas investment Phase out SME Reshaping the global supply chain Additional cost to improve the quality Volatile market price Raise public awareness and trigger further action to tackle waste problems

26 Impact on UBC recycling China ban on waste imports Challenges Opportunities Impact on the current collection models, especially for UBC collect with mixed paper Lower waste price in some markets positions UBC as a less attractive source of raw material Pressure to remove UBC to improve quality Recognized as valuable material if it can be collected at a reasonable price Investing recycling infrastructure to recycle UBC locally Higher waste price encourages UBC collection and recycling(china) Newcomer step into the market due to raw material shortage

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