Own Woolworths shares? Supermarket giant moves to team up with Coles on recycling blitz

Here's the supermarkets' multi-million-dollar plan to take on REDcycles' stockpiled soft plastics.

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Key points

  • Woolworths and Coles have issued a joint offer to take on responsibility for soft plastic stockpiles by recycling outfit REDcycle
  • REDcycle suspended its recycling scheme amid revelations it had been storing thousands of tonnes of the material due to insufficient processing capacity 
  • Both supermarkets have vowed to make a multi-million-dollar contribution to the effort

The ears of those invested in S&P/ASX 200 Index (ASX: XJO) supermarket shares may have pricked this morning as giants Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) revealed their plan to cooperate on a multi-million-dollar recycling blitz.

The pair have made a public offer to take on stockpiles of soft plastic waste left in limbo after the collapse of REDcycle.

The recycling outfit's soft plastics recycling scheme, employed by both supermarkets and over 270 consumer brands, was suspended in November. It came after REDcycle was revealed to have stockpiled thousands of tonnes of the material due to insufficient processing capacity.

The Woolworths share price is $37.05 right now, 0.3% higher than its previous close. Meanwhile, that of Coles is lifting 0.28%, trading at $17.95. For comparison, the ASX 200 is up 0.04% at the time of writing.

Woolworths and Coles team up on recycling offer

If you own shares in Woolworths or Coles (or both) you might be interested to learn of their pact to take responsibility for stockpiles of recyclable material that might otherwise end up in a landfill.

They intend to implement a strategy to safely store the mountain of soft plastics until they can be processed.

Woolworths and Coles have each vowed to make a multi-million-dollar contribution towards the effort. They will also welcome contributions from other outfits previously involved with REDcycle.

Coles chief operations and sustainability officer Matt Swindells said the supermarkets have paid a combined $20 million to REDcycle over the last decade and are "deeply disappointed by the unrecycled stockpiles".

REDcycle is yet to accept nor deny the offer. Its cooperation is needed to access the stockpiled material. The outfit's founder and CEO Liz Kasell commented:

REDcycle is and will always be dedicated to seeing recovered soft plastics successfully recycled, and we welcome the supportive and collaborative approach by the Coles and Woolworths.

The Environmental Protection Agency (EPA) Victoria previously fined REDcycles' operator after it failed to disclose the locations and amount of soft plastic piled in the state. The agency had uncovered 14 warehouses as of 3 February.

Woolworths CEO Brad Banducci said Australians were "let down" by REDcycles' failure to recycle soft plastics, continuing:

We hope REDcycle will allow us to help get the best outcome for the environment, and restore community trust in our recycling systems.

The offer doesn't extend to taking on any of REDcycle's liabilities or acquiring the business.

Soft Plastics Taskforce to hand down roadmap

News of the supermarket operators' offer comes ahead of the release of a roadmap prepared by the Soft Plastics Taskforce.

The Australian Competition & Consumer Commission authorised the task force shortly after the suspension of REDcycle's program. Woolworths, Coles, and Aldi were able to engage in meetings as the task force considered a solution for soft plastics recycling.

Minister for the Environment and Water, Tanya Plibersek commented on the release from Woolworths and Coles, saying:

This is the kind of positive action and leadership I hoped to see from the supermarkets when I brought them together through the Soft Plastics Taskforce.

The Soft Plastics Taskforce is due to release a public roadmap next week that will provide information about the steps to reinstate collection systems around the country.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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