Digimarc Corporation: Smart Labeling

The Need: Increased consumer participation is needed to drive the collections required to meet recycling targets set by both brand manufacturers and legislation focused on the circularity of products. A key barrier to increased consumer participation is confusing labeling regarding the recyclability of a product. It is difficult for a consumer to identify what is recyclable if there is no label, and with the rise in eCommerce and the global nature of manufacturing, many products are mislabeled for the state or region in which the product item is sold. Every region has different recycling rules and protocols. When no instructional labeling is present, many consumers falsely believe the resin identification code indicates recyclability.

How do we create a labeling system that is instructive and accurate given the inconsistencies in recycling programs across the U.S.?

The Solution: Smart labeling, which can use QR codes, digital watermarking, near-field communication (NFC), or RFID tags, allows brands to connect directly with consumers through digitized products. Combining digitized products with the product cloud allows brands to share real-time, contextualized recycling information with consumers directly through the product item.  

Consumers simply scan the code on the product’s packaging or label with their smartphone, to easily access information about the recyclability of a product, and how to correctly recycle that product based on zip code or geo-location. This creates numerous benefits:

–        Consumers do not need to search for a list or check their local government website for accepted recyclable material.

–        Human error is reduced. The customer is no longer burdened with determining the category of product and whether or not the materials are recyclable.

–        Consumers can be instructed on materials recyclability specific to product/packaging design features (e.g., the need to remove the bottle cap from the bottle, or the need to remove full-shrink labels or, the need to separate the box from the box lining).

–        No more confusion created by “check locally” wording.

–        The RIC gets to be the RIC – simply resin identification. The consumer has a new, more reliable, method of determining recyclability.

In addition to improving participation in recycling, and educating people on how to correctly recycle, smart labels create equity in the accessibility to recycling information across demographics – overcoming systemic barriers.

Which of the Pact’s 4 Targets does your work help achieve?

TARGET 1: Define a list of packaging that is to be designated as problematic or unnecessary by 2021 and take measures to eliminate them by 2025

Consumer participation and increased collections are critical to meet all the targets of the Pact. Problematic packaging can be addressed through Digimarc’s sortation technology that more accurately detects materials and gives facility operators greater control over outputs and yields.

TARGET 2: 100% of plastic packaging will be reusable, recyclable, or compostable by 2025

A digital identifier in packaging can advise consumers on proper disposal, such as whether a package is recyclable or compostable. This reduces contamination and ‘wish cycling.’ Guidance on reusability can also make refilling packaging/containers more efficient and convenient.

TARGET 3: Undertake ambitious actions to effectively recycle or compost 50% of plastic packaging by 2025

Smart labeling encourages active participation by consumers through trusted and accurate information. As the information can be dynamically updated in the product cloud, the consumer is always given the right guidance, increasing trust and improving consumer recycling confidence.

TARGET 4: By 2025, the average recycled content or responsibly sourced bio-based content in plastic packaging will be 30%

Improved collection of post-consumer material is critical for the recycled feedstocks needed to reach recycling targets. This is tied to greater consumer education and participation, enabled through smart labeling, and increased sortation accuracy through digital watermarking.

What makes it particularly smart or circular? In addition to improving consumer participation in recycling, some forms of smart labeling, such as digital watermarking, can also facilitate better identification and separation of recycled plastics. Examples of how sortation of plastics could be taken to the next level include:

–        Differentiation of food contact and non-food contact materials, increasing the supply of recycled materials eligible to go back into food contact;

–        Identification of recycle-ready multi-layer packaging;

–        Recovery and ID of difficult-to-recycle packages including plastics using carbon-black, full body shrink label designs, etc.  

The information can also be used to capture brand specific data that can facilitate EPR and compliance reporting. As a component of Design for Recycling™ programs, a watermarked package improves recycling and may be recognized with an eco-modulation of EPR fees. Better detection and more detailed sorting enables a step change in achieving a circular economy for plastics.

Results, Benefits, and Outcomes to Date: Oregon, the state Digimarc is headquartered, was the first state to undertake a review of recyclability labeling in the U.S. The Truth in Labeling Taskforce recognized the many benefits of smart labeling and included a recommendation that smart labeling is used on all packaging to communicate recyclability by 2030. These recommendations were submitted to the legislature, and a bill reflecting these recommendations will be introduced in the 2023 legislative session. If passed, Oregon will be the first state to require the use of smart labeling to inform consumers not only what’s recyclable, but how to recycle it, either through curbside or drop-off-, and where the nearest drop-off locations are.

Meanwhile, the technical feasibility of digital watermarking for improved recycling sortation has been proven through trials in Europe and Canada, through the HolyGrail 2.0 industry initiative and a demonstration project by the Circular Plastics Taskforce, respectively.

How are you communicating your success? Digimarc is actively engaged in advocating for the use of smart labeling to improve recycling education at the state and federal level. And the comprehensive benefits of digital watermarking for the entire recycling system are being communicated to brands to encourage leadership. In fact, P&G already has taken an industry leadership position with a number of watermarked packages on shelf in retailers now.

Additionally, Digimarc’s involvement in industry collaborations and partnerships, such as HolyGrail 2.0, offers an important platform for sharing outcomes with our peers and leading companies.

What’s Next? Digimarc remains in dialogue with policymakers in the US and abroad to improve access to consumer-facing recycling information through smart labeling. In tandem, Digimarc is working with leading brands to advance the state of product labeling for consumer engagement that leads to better plastic collection and recycling outcomes.

We have launched the Digimarc Recycle® product to bring a comprehensive recycling-oriented smart labeling value proposition to market. We will continue to work with our partners to drive adoption and unlock the numerous sustainability benefits of product digitization in this way.

Digimarc also continues to be an active participant in the Pact’s On-Pack Labeling Workstream.

Quote: “The US Plastics Pact provides the industry with a clear vision and packaging circularity mandate through its established targets. It is well recognized that increased consumer participation and technology innovation are also pivotal pieces of the puzzle. Digimarc is excited to participate actively in the Pact with commercially available products designed to help the industry meet the Pact’s goals of recycling-focused consumer engagement and significant improvements in recycling sortation.” – Mignon Senuta, VP ESG Engagement & Corporate Communications

Company/Organization Information: Digimarc is a global leader in product digitization, delivering business value across industries through unique identifiers and cloud-based solutions. A trusted partner in deterring digital counterfeiting of global currency for more than 20 years, Digimarc illuminates a product’s journey to provide intelligence and promote a prosperous, safer, and more sustainable world. With Digimarc, you can finally see everything. And when you see everything, you can achieve anything. For more information, visit us on digimarc.com.

Digimarc was founded in 1995, and is headquartered in Beaverton, Oregon. Digimarc is a Nasdaq-listed public company (NASDAQ: DMRC) incorporated in Oregon.

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