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Ending the “Disposal Society”: A Key Crossroads for the UK’s FMCG and Circular Economy Transition
Jacob Wan, ICSD Youth Ambassador
On 27 March 2025, the UK Environment Secretary, Steve Reed, delivered a policy speech at Dock Shed in London, announcing that the government would adopt a crosssector and cross-industry action blueprint to drive the UK’s ambition to “end the disposal society” and accelerate its transition to a circular economy.
To this end, the government established the Circular Economy Taskforce, chaired by Andrew Morlet, former CEO of the Ellen MacArthur Foundation. The taskforce will focus on five priority sectors: textiles, transport, construction, agri-food, and chemicals and plastics. It has pledged to provide businesses with the certainty needed for effective planning and investment through the forthcoming circular economy strategy and sectoral roadmaps—aimed at stimulating investment in recycling infrastructure and green jobs.
This marks not only a major policy shift in UK environmental governance but also a signal of structural adjustments in supply chain management, industrial upgrading, and the management of geopolitical risks. The fast-moving consumer goods (FMCG) sector—situated closest to the consumer end of the supply chain—has long supported the retail market through its high turnover and extensive packaging. Yet, precisely because of its scale and speed, it bears the brunt of pressures concerning packaging waste, limited recyclability, and the governance of post-consumer behaviour.
Recent industry observations and public data show that the UK’s household waste recycling rate was approximately 44.1% in 2022, a slight decline from 2021, with significant regional disparities. This indicates that the entire chain—spanning policy, infrastructure, corporate design, and consumer habits—still requires coordinated and simultaneous upgrading to enable higher levels of reuse and material recycling.
In terms of governance tools, the UK Plastic Packaging Tax has entered a new phase of data transparency and normalised compliance. As of 6 August 2025, 4,927 companies had registered, generating £259 million in tax revenue for 2024–25. Of the total declared plastic packaging, 38% was taxable, while the remaining 62% either met the 30% recycled content threshold or were exempt due to export or other criteria. These figures demonstrate that material specifications and supply chain design are increasingly driven by both price signals and compliance obligations, prompting companies to integrate recyclability, renewability, and traceability into the early stages of product development and procurement.
However, for the circular economy to take root in everyday consumption and brand management, it is vital to address the gap between consumer motivation, willingness to pay, and behavioural change. A study released by Consumer Scotland at the end of 2024 found that 76% of respondents expressed concern about climate and environmental issues, and 80% wished to reduce the carbon footprint of their household purchases. Yet, cost and convenience remain the main obstacles to behavioural change: 63% cited the price of low-impact products as one of their top three concerns, while 62% mentioned the limited availability of such products and the lack of clear environmental impact labelling for comparison.
Conversely, only 10% of respondents stated they were “likely” to change their shopping habits in the coming year due to environmental concerns—highlighting that high levels of concern do not necessarily translate into sustainable action. This reminds brands and retailers that circular design, pricing structures, and communication strategies must work together to ensure that good design crosses the “last mile” into everyday purchasing decisions.
Capital markets are also reassessing the growth trajectory of circular commerce. In 2024, disclosed funding related to the UK’s circular economy reached £2.2 billion, a 64% year-on-year increase. While the number of deals remained relatively stable, the average deal size grew—indicating that investors are shifting from proof-of-concept to scaling. They are now prioritising business models that can deliver cost advantages, regulatory certainty, and supply chain resilience across the entire value chain.
For FMCG companies, this suggests that systemic innovations—such as reusable packaging systems, refill and recycling–remanufacturing loops, and traceable materials platforms—will become prime targets for investment and mergers and acquisitions.
Drawing from these policy signals and market trends, FMCG transformation strategies should embrace integrated governance across design, procurement, distribution, recycling, and remanufacturing:
Design stage: Prioritise single-material and separable structures, maximise the use of recycled materials, and reduce consumer decision-making costs through clear labelling (e.g. recycled content, recyclability guidance, and collection points).
Procurement stage: Secure stable supplies of recyclable and recycled materials through long-term contracts, joint development, and pre-certification mechanisms.
Distribution stage: Collaborate with retailers to establish collection and reuse systems—embedding refill packs, deposit schemes, and recycling points into everyday consumer journeys rather than treating them as isolated demonstration projects.
Recycling and remanufacturing stage: Combine Extended Producer Responsibility (EPR) with local infrastructure investment to achieve economies of scale, transforming compliance costs into marginal cost advantages in material recovery.
Such practices not only respond to the government’s commitments to roadmaps and infrastructure but also align more closely with consumers’ real-world decision-making processes. When price, convenience, and quality can be met simultaneously, recycling has the potential to become the new norm.
Finally, it is important to note that stagnant recycling rates and regional disparities cannot be resolved by a single policy measure. They depend on local governments’ resource allocation, the standardisation of collection and sorting systems, and joint efforts from businesses in designing recyclable packaging. Once the central government releases a clear recycling strategy with departmental roadmaps and infrastructure investment plans, the sooner FMCG companies complete material audits, risk assessments, and product portfolio reconfigurations, the better they can transform compliance obligations into a dual advantage of brand value and supply chain resilience.
References
Reed pledges to “end throwaway society” working with business to slash waste, boost growth and clean up Britain. UK Government News, DEFRA (2025). https://www.gov.uk/government/news/reed-pledges-to-end-throwaway-society-working-with-business-to-slash-waste-boost-growth-and-clean-up-britain
Trends Shaping the FMCG Industry. Unipart (2023). https://www.unipart.com/resource/trends-shaping-the-fmcg-industry
Recycling Going Round in Circles? Frontier Economics (2024). https://www.frontier-economics.com/uk/en/news-and-insights/articles/article-i4886-recycling-going-round-in-circles/
Waste Generation by Major FMCG Companies in the UK in 2021. GlobalData (2022). https://www.globaldata.com/data-insights/macroeconomic/waste-generation-by-major-fmcg-companies-in-the-uk-in/
How to Achieve Sustainable FMCG Packaging. Greyhound Box (2025). https://greyhoundbox.co.uk/blog/sustainable-fmcg-packaging/
Circular Business Models for the Fast-Moving Consumer Goods Industry. ScienceDirect (2022). https://www.sciencedirect.com/science/article/pii/S2352550922000124
Venture Capital and Private Equity Drive Record Investment in UK’s Maturing Circular Economy. BDO UK (2025). https://www.bdo.co.uk/en-gb/news/2025/venture-capital-and-private-equity-drive-record-investment-in-uks-maturing-circular-economy
Consumers and the Transition to a Circular Economy (HTML). Consumer Scotland (2024). https://consumer.scot/publications/consumers-and-the-transition-to-a-circular-economy-html/
Challenges and Opportunities in Implementing Circular Economic Models in FMCG Industries. ResearchGate (2024). https://www.researchgate.net/profile/Tochukwu-Ijomah2/publication/383847272_Challenges_and_opportunities_in_implementing_circular_economy_models_in_FMCG_Industries/links/66dc4181b1606e24c212480d/Challenges-andopportunities-in-implementing-circular-economy-models-in-FMCG-Industries.pdf
Contribution to the Development of a Global Digital Literacy Skills Indicator. United Nations. https://sdgs.un.org/partnerships/contribution-development-global-digital-literacy-skills-indicator
The Intersection of Artificial Intelligence and Sustainability in the UK
Jacob Wan, ICSD Youth Ambassador
In recent years, the United Kingdom has experienced a notable transformation in its approach to sustainability, driven by growing awareness of environmental, social, and governance (ESG) concerns. Within this context, artificial intelligence (AI) — a technology capable of analysing vast datasets, predicting outcomes, and automating decision-making — has emerged as a key catalyst for sustainable change. The significance of AI in advancing ESG goals lies in its capacity to enhance efficiency, stimulate innovation, and foster responsible decision-making across both corporate and societal domains.
The Integration of AI and ESG
At the environmental level, AI contributes directly by improving energy efficiency and reducing waste. DeepMind, a subsidiary of Google, has collaborated with UK wind farms to employ AI algorithms that predict wind power output, substantially enhancing the efficiency of renewable energy generation (DeepMind, 2023). AI is also being utilised in the predictive maintenance of infrastructure such as wind turbines, ensuring consistent and sustainable energy production. Moreover, the application of AI in data centre energy management has proven effective in reducing cooling energy consumption and operational costs (Digital Realty UK, 2024).
From a societal perspective, AI is transforming healthcare services across the UK. The NHS has introduced AI systems for early disease detection and the creation of personalised treatment plans and will launch an AI knowledge base in 2024 to guide the ethical and responsible implementation of such technologies (NHS Digital, 2024). Similarly, AI’s role in education is fostering inclusive learning environments, supporting students with diverse learning needs.
At the governance level, AI technologies are helping UK organisations to improve transparency and accountability. Financial institutions, for instance, are deploying AI tools for compliance monitoring and fraud detection, ensuring adherence to regulatory and ethical standards (UK Parliament, 2023). Meanwhile, the government is developing an AI governance framework aimed at balancing innovation with effective risk management.
The Dark Side of AI in ESG
While AI presents unprecedented opportunities for advancing the UK’s sustainable development agenda, its deployment also brings significant ethical and practical challenges. In the absence of robust ethical design and regulatory safeguards, AI systems can inadvertently generate adverse environmental, social, and governance impacts.
Firstly, the energy consumption associated with AI infrastructure poses a potential obstacle to the UK’s carbon reduction objectives. According to an August 2025 report by The Guardian, plans for a £1 billion AI data centre in Lincolnshire are projected to emit 857,254 tonnes of CO₂ annually — equivalent to the combined emissions of five major airports (The Guardian, 2025). This example illustrates how inadequate design and regulation of AI infrastructure could negate its environmental benefits and jeopardise national carbon commitments.
Secondly, concerns surrounding data ethics and fairness in decision-making persist. A December 2024 NHS England report noted that AI is being used to identify patients who frequently utilise emergency services, reducing revisit rates by half in certain regions (NHS England, 2024). However, if training datasets are biased or decision-making processes lack transparency, such systems risk exacerbating inequalities in healthcare access and undermining public trust.
Finally, while the UK government’s AI Opportunities Action Plan and AI Governance Code launched in March 2025 aim to promote innovation and competitiveness, the policies have faced criticism for insufficient ethical and security oversight (Infosecurity Europe, 2025). This tension between encouraging innovation and ensuring accountability highlights the need for a coherent risk assessment and regulatory framework. Without it, the misuse of AI could erode public confidence and generate long-term governance issues.
Ultimately, the “dark side” of AI lies not in the technology itself but in the institutional and regulatory shortcomings that fail to keep pace with its rapid development. For AI to genuinely advance ESG goals, the UK must establish a coordinated framework aligning policy, ethics, and industry practice — one that balances innovation with accountability to ensure AI development aligns with legal, sustainable, and socially responsible principles.
The AI ESG Protocol: A Framework for Action
The AI ESG Protocol offers a structured framework for systematically assessing the ESG impacts of AI. Its purpose is to help organisations identify, measure, and disclose the environmental, social, and governance effects of their AI and datarelated activities, while recommending practical improvements.
The framework comprises four key stages:
Initial Descriptive Statement: Analyses a company’s integration of AI and data in terms of operational responsibilities, strategies, governance, and ethical policies.
Material Impact Statement: Balances qualitative and quantitative data to identify the ESG impacts of AI activities through a risk matrix and materiality analysis.
Action Plan: Outlines specific measures to mitigate risks, capture opportunities, and enhance ESG performance.
Practical Assessment: Enables companies to implement the protocol in full or in part, depending on their ESG strategy.
Its distinguishing features include:
Flexibility and adaptability: Customisable for different industries and compatible with existing ESG frameworks.
Comprehensiveness: Encompasses both direct and indirect impacts.
Dual materiality: Considers financial risks alongside sustainability outcomes, guiding companies towards actionable and measurable ESG initiatives.
Conclusion
AI offers the UK a transformative pathway towards sustainable development, improved social welfare, and enhanced governance transparency. Yet its potential can only be realised through a careful balance of ethics, regulation, and innovation. The AI ESG Protocol provides a pragmatic route for businesses to advance technologically while remaining committed to sustainability and responsibility. As the UK continues to embrace AI, ensuring that technological progress serves as a genuine force for environmental protection, social advancement, and good governance will be paramount.
References
The Guardian (2025). “Planned AI data centre in England could cause five times emissions of big airport.” theguardian.com
NHS England (2024). “NHS AI giving patients better care and support.” england.nhs.uk
Infosecurity Europe (2025). “Reviewing UK AI regulation.” infosecurityeurope.com
DeepMind (2023). “Using AI to fight climate change.” deepmind.google
Digital Realty UK (2024). “Sustainable data centre AI.” digitalrealty.co.uk
UK Parliament (2023). Governance of Artificial Intelligence (AI). publications.parliament.uk
Sætra, H. S. (2022). The AI ESG Protocol Structure. ResearchGate
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