Partner Content by ING: Changing habits – Romania's bottle battle

Welcome to the Uncovered Sustainability Podcast. I'm Katie Prescott, a business and technology journalist in London. This podcast showcases how some incredible business projects were created sustainably by incredible people and the challenges that come with that, plus crucially, how they were financed. This episode is about a recycling revolution in Romania. We're going to explore how a country with one of the lowest recycling rates in Europe is turning this around. With a unique partnership involving Roturo, drinks producers, and brewers. Make no mistake, this will transform the environment by stripping away plastic bottles and making them worth something, incentivizing people to bring them back. We're going to look at their goal of collecting 7 billion containers a year, and most importantly, what exciting plans they've got for the future. I am delighted to introduce our guests: Gemma Webb from Returo, the recycling company that's aiming to change the face of bottle recycling in Romania. Hi, Gemma.

Hi, Katie. Great to be here.

And alongside her, Claudio Sabau from ING, who got an €86 million loan in place to make this all happen. Hi, Claudio.

Hi, Katie. Good to be here.

Great to have you both here. Thanks so much for joining me. Let's just kick off for an audience who, who might not have a clue about recycling in Romania and just explain, Gemma, why are recycling rates so low? What's the picture like for an outsider who doesn't know it at all?

Basically, in Romania, the recycling rates are very low. It's the second lowest in the EU. And the main reason is it's not part of the culture because the infrastructure isn't in place. And this is one of the key reasons it's not easy for people to recycle here in Romania.

Claudio, just reflecting on what Gemma was saying, what's your sense of the picture in Romania for recycling and why you were so excited to be involved?

Katie, I fully agree with what Gemma said. The infrastructure is not or has not developed at the required level. And here we are referring from the shops that should provide this option to the entire network of collection and transportation. Apart from that, probably we should also invest more in our education. We need to better understand the impact of our actions on the environment because in the end, it is the people who need to change the mindset because they are the ones who basically take the bottles to the recycling points. And until now, they either didn't find this activity convenient or they were not incentivized properly.

And recycling aside, what's the situation with rubbish in Romania? What's that look like?

In terms of the countryside, then you do see waste packaging and materials along in the countryside, but the cities are maintained fairly clean because there's a cleaning regime in place. But as Claudia said, the culture isn't here for recycling in Romania, and that's part of the big thing that needs to change.

Do you feel that that change is happening in the younger generations? Who tend to be perhaps more environmentally aware?

Yeah, the younger generation really want this to happen, and through all of the research, the Romanian citizens in general want this change and want to be able to recycle. And a lot of it has come from the determination of the younger generation in terms of supporting and helping to get things done. And what we've found here is that there's a real passion to make a difference.

It's really interesting, isn't it, sometimes how that happens in the younger generations but has an effect further up as people talk to their parents and grandparents about the evidence of it.

Absolutely, absolutely. And that's something that we'll build on and that will really have that catalyst effect over the next couple of years.

Now, Claudio, you obviously stepped in to support the project. Why were you— what engaged you about it? What really grabbed you?

The DRS was a topic we were interested in ever since the Minister of Environment launched the public consultation back in 2020. So it was one of the recurring agenda topics that I personally had while meeting back in those days retailers and the average producers. So hearing in 2022 that the project is moving ahead, this was music to our ears. And from the outset, we were very keen to get a good grasp of the setup as it would be the first such system ever implemented in Romania. And we carefully looked at the drivers of the system, the sponsors and their involvement, the management, and the level of the ambition in collection rates over the coming years. We already knew that other countries where the DRS system was already implemented were showing collection rates close to 90%. So achieving a payed rate of 90% for plastic and metal by Retouro after just a couple of years, it shows the right level of ambition for the company and for Romania in general.

And Gemma, you, when you were out trying to find financial support, what was it about ING that made you want them to be involved?

With ING, what we found is that they have the same values as us. Sustainability was very high in their strategy, in their agenda, and this was important. So we both spoke the same language. Obviously, the commercial terms, you know, we went to a number of banks, a large number of banks, to present what we were doing, and ING gave us great commercial terms. But what made the real difference was the philosophy and the values of ING. And it was fantastic. It came together very quickly. And that understanding and working together made it so easy to achieve what we achieved in a very short space of time. We achieved a loan of €86 million, one of the largest green loans in Romania, and everything was done for this in record time.

And when you talk about record time, that's not something I often hear from people who are getting financing. What sort of frame are we talking about?

We were talking about over a few months, just a couple of months. Something like this, you know, when we started, we were told, oh, it's going to take 18 months, 2 years from, you know, the different institutions. You're crazy, you need to do everything in a year. And because we only started last November, and in 2024 we have to reach a recycling target of 65% for all beverage packaging, and this we will do.

And Claudio, from your side, how did you get the money in place so quickly and get this through so quickly? It's quite impressive.

Katie, this was a project in which we wanted to play an instrumental role, and it shows how committed we are. Sustainability is part of our DNA. We communicate a lot about sustainability and the progress and our endeavors. But most importantly, what I find really, really important is that we do help our clients. And in this case, it's not only Returo, but it is the entire country, Romania, to transition towards a cleaner, greener state. As Jamal was saying, it involved a lot of hard work with very tight deadlines. We were getting final credit approvals over a couple of days. We were signing final contracts over the weekend. So it required a lot of coordination. But having the close contact with Jamal and Arturo and also swiftly acting to accommodate various requests, sometimes last-minute requests, I think all these ingredients contributed towards the success of the transaction.

So we've got the problem that you mapped out right at the start, the issue with recycling in Romania, and then you pulled the finances together to make this happen. Let's talk about the project itself. Gemma, could you explain in quite simple terms for the audience what exactly you put in place here?

So this is the implementation of the deposit-return system in Romania, and Romania, the deposit-return system is when you buy a beverage in glass, plastic, or aluminum, you pay, in Romania it's 50 bani, like 10 cents. So you pay this when you buy the beverage. When you've consumed the beverage, bring the bottle back to the retailer, then you get your money back. It's like the shopping trolley. Now, the infrastructure for that is quite complex because first of all, you have Retouro, the company that's implementing the DRS. And it's an independent company that was started last year. So I was the first employee in November. The complexity of the system comes with, as we said earlier, to make recycling work, you have to put the infrastructure in place. So the infrastructure that's required is we have 80,000 retailers in Romania, and every single retailer where you buy a beverage is also a return point. So they have a legal obligation to take back the packaging from the consumer and give the consumer back their money. So that's the first thing. The other thing is the producers and importers, and we have 4,000 producers and importers where we also connect to, which have to report the packaging that they put on the market. And most importantly is the Romanian consumer, and we have 19 million Romanian citizens in Romania, and these are the structure. And the ecosystem to make all of this work. So what we've put in place is these 19 million Romanian citizens, wherever they buy beverage packaging, wherever they buy a drink, they can bring that empty bottle back to anywhere and any retail outlet in Romania. And that's what makes it easy. So what's been done in the last year is we have set up the system from scratch because when I started, it was a startup, no phone, no computer, and that was last November. So very quickly we moved to bring the people on board, which is the most important thing. So I got great people on board the team. Then we went to get the loan and also then we signed up and put in the first part of the IT system, which is highly complex, and we registered the initial registration of retailers with 64,000 retailers registered on our system to be part of this network. And since then, now we have implemented the IT system connecting the 80,000 retailers, the 4,000 producers and importers. We have also built our first center because throughout Romania we have to have regional centers where all of these bottles come back to for sorting before the material is sold to the recyclers. And we opened our first one 2 weeks ago. So now the system is in place and we already have containers coming on the market with the specific logo. So the DRS, you have to have a logo on your bottle, and that is the bottle that you paid the additional €0.50 for, and you get the money back. So they started to come on the market and into the stores a couple of weeks ago, and over the next number of months, those, they will replace the non-DRS product. And I reckon about April, we will have all DRS product on the market and in the shelves, and we will achieve the 65% recycling rate from the very low rate we are today.

I mean, it's an extraordinary story, and actually the speed with which you've achieved this is really quite staggering. What's been the biggest challenge? I mean, the way you set it out there, you said the first thing and the second thing, you made it sound quite straightforward, but I imagine there were a lot of hurdles along the way.

Yes, and look, it's, it's, it's been crisis management every day, but the thing, the key to our success is the people. Today we have 80 people on board. This time last year we had 2. I was the first one and my financial director was the second. And it's the people and the passion because it's not just a job for people, it's a passion to make a difference for the country and the step change. So once you've got a willing and a drive and a determination, tenacity, then you will get things done. And what we found is like with ING, as Claudio said, I mean, it's quite complex getting a green loan first of all, but a green loan for €86 million where we had the corporate guarantees for all our major shareholders.

Gemma, have you learned from previous experiences in doing this?

It's the first time I've done a startup, but I've been in corporate businesses for the last 25 years. So for me, it's been really an honor and a pleasure, and I thank Romania for giving me this opportunity to use all of my experience and skills over the last 25 years to be able to deliver this project.

And Claudio, what was your experience in terms of seeing this all come together? I mean, it must have been a huge learning curve for you as well.

Yes, indeed. I mean, we, let's not forget that, uh, Returo is operating under a very strict legal framework. We did have a competition, the deadlines were tight. So in the end, it was a huge push to have this transaction done. But at the end of the day, I'm extremely proud because If you like, just picture this transaction as an opera, as an orchestra, where a very diverse team is united to create a masterpiece. The team comprises Returo, the sponsors, ING team, yeah, and the job of each person is to play their best. And different instruments in an orchestra will know each other's part so well that they act in perfect sync. They breathe, they focus, and they move in the same time. And this is what we all did. And do you remember the exhilarating feeling that you had when you were at the last concert you attended? It's exactly how this sustainable transaction made us feel.

Yes, that's a beautiful way to describe it. But was everyone always playing from the same songbook? I can't imagine sometimes, I know from experience, if you're a private business, it's not always easy dealing with government, for example. Was that ever a challenge?

Yeah, our shareholder structure is quite unique actually, and for the implementation of the DRS and DRS companies, we will be the second largest after Germany, but we're the only one outside of Iceland that has the government as a shareholder. So this was part key for our success as well. Now, it is all private money. The government did not give any public money to this. And it was the soft drinks, the retailers, and the breweries, these shareholders that gave corporate guarantees that enabled us to achieve this loan. So the government have been very supportive in terms of legislation, etc., and they've played their part there. And as Claudio said, every single player did their part to achieve what we needed to achieve.

And what's your goal, Gemma? What would you like to see happen in the next year, for example?

Oh, in the next year, the next year, what I want to see is that we put in the infrastructure, but the key is changing the culture and the infrastructure that we're putting in place. This is the catalyst to change the culture where there's a greater awareness of recycling in Romania, that the education increases and people really understand the impact that they're having on the environment. And what we really want people to see is that every single bottle you recycle makes a difference, and you can now make a difference in terms of the environment. And the real thing we're saying is, yes, we want to make a cleaner, greener Romania. So every single bottle you recycle is a statement of care for Romania. So this is where we really need to get into the hearts and the minds of the Romanian citizens.

Gemma, starting with you and then Claudio, I'd love to hear your reflections on this as well. Were there any other countries that you looked to when you were putting this scheme together, sort of model yourselves on? I mean, I think of the time I've spent in East Africa, for example, where Coke bottles— there is a kind of very well-established, and beer bottles, recycling system in place along the lines that you describe. Yes, we did.

We looked at a number of countries in Europe that have implemented the deposit return scheme. With Slovakia, with Norway, etc. The difference between those countries and Romania is we are recycling, or we will recycle 7 billion. So that's 7 billion plastic, glass, and aluminium beverage containers, whereas the other countries are about 1.5 to 2 billion containers. So the complexity in Romania is vastly different to those countries. But what we did do is we looked at the best practice, we look at what they did, how they launched and how they're operating. And we took the best of what was there around Europe and took that on board as part of our implementation and planning here.

And how about you, Claudio? Was there anything in the funding of this or the implementation that you were looking to other parts of the world or other models of recycling?

ING is a global bank, and definitely we have tapped into the global sector knowledge. However, as Gemma was saying, this project is unique. So what we did, we used our extensive sector knowledge and sustainability experience in order to cater for this project. So we couldn't find a similar project because the complexity of what Gemma and Deretouro did in Romania, it's at a different scale.

Now, I appreciate we're still very much in the thick of it. As you say, the scheme's really just going live and the bottles only went into the supermarkets a couple of weeks ago. Have you had a chance to sort of sit back and think, my goodness, I feel really proud of what we've achieved?

I think the first, the first time where we all got together in when we were opening the first site, the first counting regional counting and sorting centre, we went to see it about a month ago. And so there was 50 people in the business at that time and we all went to see it. And this was the moment that when I looked around and with the rest of the management team, we looked around and we were standing in a new building with machinery and the people that are going to run the machinery and all of the different functions, everybody in the company, and thinking, well, 10 months ago, none of this existed. And that was a moment that we thought, okay, we're moving, we're making progress. But up until then, it was very difficult because there was so much to do to get things done. But honestly, it was the willingness of all our supporters, suppliers, shareholders, everybody that wants to make the difference, that really helped us to get things done in such a short space of time.

And how about you, Claudio? Do you feel you've had a chance to reflect on this and think, yeah, we did something really amazing here?

What we did is amazing, and we are extremely grateful for the opportunity to write the history together with Returo, because we realize it or not, we are writing the history as we speak. The history in setting up the most important circular economy project in Romania.

Well, congratulations to both of you. It's an extraordinary story.

Absolutely.

With pleasure. So the scheme is now just live and has created an integrated bottle return scheme like no other in Europe. 80,000 retailers are involved in Romania's recycling battle, which looks as if it will literally change the landscape of the country in such a short space of Romania has moved from a country with little association with recycling, with certainly no infrastructure for it, to one that has a fully fledged return scheme. With the right finance and people, it happened at an unprecedented speed. What an amazing story. Thank you so much for listening to us on this episode of Uncovered Sustainability. Society is transitioning to a low-carbon economy. So are ING's clients. And so is ING. The bank finances a lot of sustainable activities, but still finances more that's not. See how they're progressing at ing.com/climate.