The misleading accounting behind your ‘recycled’ plastic todayheadline

Imagine you’re filling up 100 bags of coffee. You’re using beans from a few different providers — 10 percent of the beans they sent you are decaffeinated and the rest are caffeinated. However, you mixed them all together, so each bag is an even blend of 10 percent decaf, 90 percent caffeinated coffee beans.

It’s a shame, though, because in this hypothetical, decaffeinated coffee is in high demand. People will pay a premium for bags of 100 percent decaf coffee. So instead of labeling each bag as a 10/90 blend of decaf/caffeinated coffee, you decide to label 90 bags as regular, fully caffeinated coffee beans, and the remaining 10 as “100 percent decaf.” You can now charge much more for those “decaf” bags.

It’s a misleading strategy, at best, and one that could cause rioting among coffee drinkers. But it’s not just a thought experiment. Plastic companies are using an even more convoluted version of this accounting technique in order to make it seem that their products have more recycled content than they really do.

Mondelez, the owner of snack food brands like Chips Ahoy, Clif, Oreo, and Ritz, announced last September it would use this system, known as “mass balance,” for its North American Triscuit packaging. According to a press release, up to 50 percent of the plastic in the cracker boxes’ inner bags would be “sourced from advanced recycling technology” and provided by two of the companies in Mondelez’s supply chain, the plastics maker Berry and the chemical company LyondellBasell. 

Mondelez hasn’t labeled its Triscuit packaging with these recycled content claims. But the company said the plan would contribute to its overall goal of achieving 5 percent recycled plastic content by the end of 2025, and that it would ease consumer guilt. “Triscuit fans can snack easier knowing that the brand is playing a role in helping reduce plastic waste,” Mondelez said.

Independent and government watchdogs, however, aren’t as keen on mass balance. Last year, two dozen environmental organizations sent a letter to the Federal Trade Commission arguing that it was “not based on scientific facts or operational engineering evidence.” They drew an analogy similar to the decaf coffee one outlined above. The California attorney general’s office recently called mass balance a “false and misleading marketing scheme,” and the accounting system was rejected last August by the Biden administration’s Environmental Protection Agency, which had considered whether to allow it to be used in products labeled with its “Safer Choice” logo. Now, mass balance has made Mondelez the target of a shareholder resolution demanding that the company substantiate its recycled content claims. 

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“This is just a bogus scheme,” said Jan Dell, a chemical engineer and founder of the nonprofit The Last Beach Cleanup, who owns Mondelez stock and filed the resolution. “As a shareholder, I’m very upset that they’re spending corporate funds on this — just return that money to me as a dividend. Don’t waste it on a PR stunt that’s actually going to cause you legal liability.”

To understand mass balance, you first have to understand “advanced recycling.” Also known as chemical recycling, the term refers to a suite of recycling methods that use high heat and pressure to convert plastics into their chemical building blocks. The most common method, pyrolysis, produces a kind of oil that, after further refinement, can theoretically be turned into plastic consumer goods.

Pyrolysis represents an opportunity for the plastics industry to save face in light of its widely reported failure to recycle more than 9 percent of the world’s plastic waste via conventional methods. Instead of addressing plastic pollution by making less plastic, companies are trying to restore consumer confidence in the idea of recycling by promoting this supposedly cutting-edge type of reprocessing, which they say can handle mixed plastic waste and “hard-to-recycle” items like snack food wrappers and grocery bags. 

But actually creating new products from pyrolysis has proven to be a major challenge. 

Jesse Nichols / Parker Ziegler / Grist

The first problem is that there aren’t very many pyrolysis facilities in operation, so there isn’t much pyrolysis oil available. Furthermore — and this is the more central problem for recycled content claims — it isn’t possible to convert pure pyrolysis oil directly into new plastic. It first has to be separated into a derivative called naphtha, which, due to contamination from additives in the used plastic it was made from, has to be diluted with cleaner naphtha from virgin fossil fuels. Only then can the naphtha mixture go through a “steam cracker” to extract the chemical bases needed for new plastic pellets.

This process is so complicated and expensive, said Andrew Rollinson, a chemical engineering consultant, that most pyrolysis oil is turned into fuels that can be burned for energy. “Often it’s burned because it’s no good for anything else,” he said. 

The need to dilute pyrolysis-derived naphtha means that any products claiming to contain “chemically recycled” plastic necessarily have a lot of virgin plastic in them too. The ratio is at most 10 percent recycled to 90 percent virgin content, according to one investigation from ProPublica. Rollinson said the actual number for plastic consumer goods may be less than 1 percent.

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Those figures mean that, using normal accounting methods, companies would only be able to claim their products are made from 10 percent or less recycled content. They’d rather say a higher number, since it makes their products look more environmentally friendly. Surveys suggest that consumers are more likely to buy — and pay more for — products that appear sustainable.

This is where mass balance comes in. Instead of keeping track of exactly where recycled naphtha goes, what it’s diluted with, and so on, the owner of a plastics facility only has to write down the amount of pyrolysis oil it started out with. This oil was made from some amount of plastic waste, which can be translated into recycled content credits or certificates — pieces of paper or cells on a spreadsheet.

Using an accounting method called “free allocation,” a plastics company can attribute these certificates to any of its finished products, regardless of the amount of pyrolysis oil that was actually used to make them. Maybe it decided to turn all of its pyrolysis oil into fuels and lubricants while continuing to make plastic from 100 percent virgin fossil fuels. It could still decide to move the credits over to a portion of that plastic and say that 40 percent, 50 percent, or 90 percent is recycled.

Renée Sharp, director of plastics and petrochemical advocacy at the nonprofit Natural Resources Defense Council, called this a “deceptive greenwashing scheme” because it allows companies to say that their products contain more recycled content than they actually do.

It’s actually more extreme than the coffee example, Sharp argued. Even though it’s misleading to claim bags of coffee have more or fewer decaf beans than they really do, at least all the coffee beans are used to make a coffee blend, and not burned to generate energy. “Recycled” plastic associated with pyrolysis via the free-allocation approach may not actually be linked to any genuinely recycled content at all, if pyrolysis oil is exclusively burned or turned into waxes, lubricants, and other byproducts.

In those cases, “That ‘recycled’ plastic does not exist anywhere,” Sharp said. “The industry is trying to obscure what they’re actually doing.”

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There is a lot of uncertainty around Mondelez’s use of mass balance, and neither Mondelez nor Berry, one of the two companies it’s working with, responded to multiple requests for comment. LyondellBasell, the other company named in Mondelez’s press release, declined to comment.

Dell, who used to work with large plastic-producing companies, believes LyondellBasell is buying pyrolysis oil and mixing it with the large amount of virgin stuff it already processes into plastics, fuels, and other products. Then LyondellBesell may be transferring credits generated by the pyrolysis oil to Mondelez, via Berry.

“The same plastic continues to be sold, but now they’re just handing out a certificate to say, ‘You get credit for all that pyrolysis oil,’” Dell said. The claim that 50 percent of Triscuit packaging will be sourced from chemical recycling suggests that the companies are using free allocation, she said, because it is “technically impossible” to incorporate this much chemically recycled plastic into a particular product. 

Her shareholder proposal against Mondelez claims that the purchase of chemically recycled plastic linked to mass balance creates legal and financial risks while doing “nothing to help the environment.” She estimates that Mondelez is spending around $2,000 per ton of plastic tied to mass balance, based on an analysis from the consulting firm McKinsey, compared to around $1,300 a ton for virgin plastic. The proposal requests that Mondelez issue a report by the end of the year “including the factual basis for legitimacy of all recycled content claims made on plastic packaging.”

In a written response to the shareholder proposal, Mondelez’s board of directors affirmed its commitment to a “more circular economy for packaging” and said their company has policies to help ensure that marketing claims “are not misleading to consumers in accordance with applicable laws and regulations.” 

The board said a report substantiating its recycled content claims, as requested by the proposal, “would not provide shareholders with additional meaningful information” and that it would divert time and expenses from its current efforts. Mondelez shareholders are scheduled to vote on the resolution in mid-May. 

The International Sustainability and Carbon Certification, or ISCC, an industry-affiliated standard-setter for the use of mass balance, has lent its imprimatur to Mondelez’s recycled content claims. Facilities owned by Berry and LyondellBasell have been approved to use the mass balance approach developed by the organization, allowing Mondelez to claim that its Triscuits packaging is ISCC certified. A spokesperson for the ISCC said it sets “strict requirements to ensure transparency” regarding the use of mass balance-based marketing claims. It encourages the companies it works with — which also include Exxon Mobil, Shell, and Chevron Phillips Chemical — to provide information to consumers explaining the mass balance approach.

Peter Blair, policy and advocacy director for the environmental nonprofit Just Zero, doesn’t think efforts like these are sufficient. “When we’re talking about accuracy, there’s not really room for mass balance,” he said. And while plastics trade groups are lobbying for the accounting system, including at the federal level, at least some actors within the industry have called for caution. At an industry conference in 2023, an executive from the toy company Lego warned that mass balance claims could lead to accusations of greenwashing. The Association of Plastic Recyclers — an industry group that focuses on mechanical, rather than chemical, recycling — raised similar concerns, drawing on results from a 16,000-person survey in 2021 in which it found that “virtually no adults” know what mass balance means.

Dell hopes her proposal will spur Mondelez to rethink its strategy on sustainable packaging. “They should focus on investment in paper-ification,” she said, referring to the replacement of plastic with paper packaging. Lots of consumer goods companies are already pursuing this strategy, for everything from candy bar wrappers to tissue packs to coffee bags.

The other important strategy she endorsed: reducing the amount of material used to package any given product. Mondelez did this last September when it announced a new type of packaging for its Lu cookies in parts of Europe. The company said the new packaging would reduce the need for virgin plastic by 63 percent per package.

“This is what authentic, honest progress on packaging looks like,” Dell said in an email to Mondelez at the time.