Executive summary

According to a 2025 report by Pew Charitable Trusts, roughly 130 million tonnes of plastic pollute the environment annually, a figure projected to reach 280 million tonnes by 2040 without ambitious action. Solving this challenge requires significant investment across a range of solutions, including recycling. While multinational companies have pledged to increase post-consumer recycled (PCR) resin use, actual supply remains insufficient as recyclers are hesitant to build new capacity based on pledges alone—they require firm purchase orders. This report evaluates the potential for advance market commitments (AMCs)—binding financial agreements used in fields like vaccine development—to address this imbalance. AMCs are deemed most applicable to materials and formats for which recycling is less mature, such as flexible packaging, film and textiles, rather than mature materials such as rigid PET or HDPE.

Introduction

The industry faces a ‘chicken-and-egg’ dilemma where brands seek a robust supply of PCR to meet regulatory requirements and reduce environmental impacts, while recyclers demand firm demand to invest in capacity and quality improvements. One estimate suggests at least 1,800 new recycling plants, each with an average output of 25,000 tonnes per year, would be necessary to achieve 2025 recycled PET targets. Additionally, 40 million informal waste workers provide 60% of global plastic collection, yet they face persistent marginalisation and lack social safety nets. AMCs aim to bridge the gap by committing buyers to purchase products if specific criteria are met, thereby providing the market signals necessary for investment. The research conducted by The Circulate Initiative included desk reviews of existing AMCs and interviews with over 40 stakeholders.

Plastic procurement: current state

Current procurement strategies include index-linked contracts, offtake agreements and the spot market. Offtake agreements allow brands to lock in larger purchases over longer periods; for example, H&M signed a US$600 million contract with Syre for textile-recycled polyester over seven years. PepsiCo and Eastman also entered a multi-year agreement for recycled PET from hard-to-recycle materials. However, these are often bilateral and may be non-binding letters of intent. The report notes that small- to mid-sized companies lack the buying power of major brands and rely more heavily on the spot market, though some cooperatives, such as the QCS Purchasing Cooperative, attempt to bundle demand.

Insights from expert interviews

Interviews revealed that volatile market conditions, exacerbated by a war in Iran that began in February 2026, have made domestic recycling uncompetitive against cheap virgin feedstock and imported recycled PET. In Europe, recycling facility closures increased by 50% in 2025. A ‘say/do’ gap exists where buyers are often unwilling to pay a premium for PCR despite public sustainability commitments, creating conflict between corporate sustainability and procurement teams. Experts highlighted that AMCs are better suited for complex materials like multi-layer packaging rather than mature materials like PET, where price and quality are the primary barriers rather than a lack of innovation. Alignment on technical specifications, such as melt index and density, is considered critical but challenging.

Collective demand mechanisms for procuring plastic and other materials

The report evaluates several mechanisms including public commitment platforms, buyers’ clubs, matchmaking platforms and AMCs. Unlike platforms such as the Plastics Pact Network or RE100, which are generally non-binding, AMCs are legally binding contracts. They are particularly relevant for goods with low market maturity requiring high research and development (R&D) and capital expenditure. Buyers’ clubs, such as the Zero Emission Maritime Buyers Alliance (ZEMBA), aggregate demand for environmental attributes, often using book-and-claim approaches. However, the document notes that while plastic credits can help meet collection targets, brands typically require physical PCR to comply with recycled content mandates. Any collective approach must also ensure compliance with antitrust and competition laws, which have come under scrutiny in the United States.

The case for AMCs and illustrative scenarios

Three scenarios are identified where AMCs hold promise. Firstly, advanced recycling of mixed plastic waste—which accounts for 44% of packaging use but has very low recycling rates. Technologies like those from Mura Technology use supercritical water to break down plastics to the molecular level, displacing virgin feedstock. Mura targets facilities with capacities up to 100,000 tonnes per site. Secondly, textile waste; roughly 120 million tonnes of apparel were discarded in 2024. The apparel sector generates 8.3 million tonnes of plastic waste annually, representing 14% of the global total. Thirdly, paper-based alternatives for flexible packaging are explored as a solution for regions with high leakage rates, provided they meet performance barriers and avoid negative impacts on biodiversity or water.

Conclusion and next steps

AMCs can potentially address the supply-demand gap if applied to specific resin types and formats where innovation is required. Success necessitates that buyers match their enthusiasm with firm, bankable financial commitments and a willingness to put funds into escrow accounts. Over the next year, The Circulate Initiative intends to define the structure of these platforms, including governance, transaction mechanics and logistics. This will involve deep dives into each scenario to identify opportunities, particularly within emerging markets where plastic waste prevalence is highest.