Materials

<h2 style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p style="text-align: justify;">For over 8 years, I have dedicated my career to generating awareness about and solving plastic pollution in Chile and abroad. As CEO of Plastic Oceans Chile and a member, I have done so mainly through advocacy, education, and multi-stakeholder engagement, including industry, government, consumer, nonprofit, and grassroots initiatives.</p><p style="text-align: justify;">From the beginning, I have included the circular economy as a possible solution for this problem, and unfortunately, we have given disposable use to plastics. I'm a staunch believer that solutions need to be proposed while considering economic aspects as well to really be able to provide an alternative for the throw-away (linear) economy, where generating waste is still good for business, that we currently have.</p><p style="text-align: justify;">Legislation has been part of my work as well. However, I&acute;m not a lawyer or policymaker; over the years, society has moved beyond voluntary initiatives and is looking for effective ways for legislation to help solve this environmental crisis through bans, incentives, and other mechanisms to include all costs when putting a product in the market.</p><p style="text-align: justify;">Over these years, we have seen the implementation of a single-use plastic bag ban and a national Extended Producer Responsibility (EPR) legislation come into effect in many parts of the world, and with Plastic Oceans Chile, we stood at the forefront of a national single-use plastic law for food establishments in Chile. This law has been hailed globally as groundbreaking in the fight against plastic pollution as it regulates, amongst other things, styrofoam food containers, cups, plates, and cutlery, demands a % of recycled plastic in plastic beverage bottles, and promotes reuse solutions. On a global scale, I have been part of discussions and UN conferences regarding a global instrument to end plastic pollution, better known as the future plastics treaty, since 2021.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q2. What is the anticipated impact of the global plastic treaty on capital expenditure for companies investing in sustainable plastic alternatives?</span></h2><p style="text-align: justify;">I expect it to be huge, but it all depends on the result of the negotiations of the treaty, which are still underway and expected to conclude in 2025. Globally, plastics made from renewable sources only account for 1% (source: plastics the facts 2023) of all production. So, if we end up with a low-ambition treaty, it will mainly focus on waste management and recycling, and not too much will change. Plastic production will not decrease, and all solutions will focus on dealing with traditional, fossil-based plastic and its management and recycling; there won't be much room or a push for alternatives to traditional plastic.</p><p style="text-align: justify;">In a high-ambition treaty result, where a systematic change is considered, solutions like plastic alternatives have a bigger chance to be meaningful alternatives and will be incentivized. However, it will come with a set of global rules to avoid promoting a solution that might be worse than the problem we are trying to solve. Some studies have shown that alternatives to plastic could result in a 17% decrease in plastic pollution, which is huge, compared to now.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q3. What are the short- and long-term implications of the global plastic treaty on industries heavily reliant on plastic packaging (e.g., consumer goods, food &amp; beverages, e-commerce)?</span></h2><p style="text-align: justify;">It will be a big challenge for any business to adapt to a new global set of rules and develop a market that complies with them, but I expect it to be a gradual process so companies will have time to adapt and innovate. On the other hand, it will also bring great opportunities for innovation, so companies already on the path of rethinking their packaging needs and alternative delivery models, reuse systems, for instance, will have a huge market advantage.</p><p style="text-align: justify;">I would advise anybody not to wait for a treaty and start the change now because even with a low-ambition treaty, countries and economic collaboration zones like the EU will complement the treaty with their own set of ambitious measures. You can see that already happening when the European Union approved new guidelines on packaging this week. All these changes are happening now, without a treaty, and are expected to accelerate in the coming years once the treaty has been approved.<br>But it doesn&acute;t mean there aren't issues that still need to be solved, as has become painfully clear this year with the recycling industry in the Netherlands, where 5 plastic recyclers have filed for bankruptcy this year mainly because the market still prefers cheap virgin plastic and cheap recycled plastic from outside the European Union.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q4. What is the market outlook for companies producing plastic alternatives such as bioplastics, hemp-based plastics, or other sustainable materials?</span></h2><p style="text-align: justify;">In my opinion, it looks very good. Using the example of Chile, where we have had a single plastics law in place since 2022, it promotes the switch to certified plastic alternatives. And not just any alternative from renewable sources; these materials must meet specific criteria like proven compostability, labeling, and education about separation at the source. So, national legislation and possibly a global plastics treaty will be great catalysts for the market for plastic alternatives if they are done well.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q5. Which industries or companies will likely emerge as winners in the transition to sustainable practices under the treaty?</span></h2><p style="text-align: justify;">I believe there can be winners in various sectors, but it will all depend on whether they get their governments on board quickly so that favourable legislation will help them innovate and expand. Too often, I see very innovative companies struggling because legislation is not up to speed with the latest technology and solutions, making it hard for companies to grow.</p><p style="text-align: justify;">An example is decreit 239 in Chile, which prevents the sale of personal hygiene items in bulk and reusable containers for daily use. This is where startups and multinationals hit a wall of bureaucracy. A global treaty can help advance these initiatives and eliminate obstacles.</p><p style="text-align: justify;">Other winners will be the companies that understand that for a circular economy to work, they need to think outside their business bubble and work actively with their providers and customers. Just like it is already happening in countries where Extended Producer Responsibility (EPR) systems are being implemented, these systems only work if all stakeholders are on board. That's one of the reasons that part of the treaty text being negotiated is about how to expand EPR legislation worldwide, as it has proven successful in many countries already. According to data from WWF, in over 400 states and countries, EPR is being implemented or is already functioning.</p><p style="text-align: justify;">In the end, I believe that the winners will be the companies that understand that to continue doing business as usual is a dead end; change will come, and the sooner they start, the cheaper this transition will be, and in the end, profitable too.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q6. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><p style="text-align: justify;">How do you see your company in 10 years, and what are the current trends in your industry and legislative projects that will make your company increasingly competitive against traditional materials and business models?</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><br><span style="font-size: 14pt;">Expert Summary</span></h2><p style="text-align: justify;">Mark Minneboo serves as the Director of Advocacy at Plastic Oceans International, bringing over 20 years of expertise in sustainability, marketing, art, and education. With more than 8 years dedicated to addressing plastic pollution through advocacy, education, and collaboration with diverse stakeholders, he is a strong advocate for circular economy solutions. Mark has been instrumental in driving transformative legislation, such as Chile&rsquo;s groundbreaking single-use plastics law, and has actively contributed to global efforts like the future plastics treaty.</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>