How a retailers’ environment fund is restoring nature at scale through a small fee for plastic bags

Imagine a scalable system based on the concept of double dividends; charging a small fee for excessive plastic products while investing the revenue in nature restoration and circular economy projects.

It's no utopia – such a system has existed in Norway since 2017 and has become a substantial player in nature restoration and circular plastic value chain development.

The United Nations biodiversity conference COP16 was recently suspended with no deal on key issues, including financing to bridge the nature gap. While the business community showed up in high numbers, displaying eagerness to tackle the challenge of biodiversity loss, the convention fell short of its expectations of achieving “peace with nature”.

Nature restoration is crucial to solve the biodiversity crisis by facilitating the basis for nature to recover from decades of unsustainable resource extraction. While meaningful, state-level investment in the protection and restoration of nature is being increasingly demanded through regulation such as the EU’s Nature Restoration Law, progress is slow and in danger of being backtracked by changing political interests.

Natural habitats are being lost and poorly managed, while 80% of the world’s population wants stronger climate action by governments and more than half of the world’s gross domestic production (GDP) is vulnerable to nature risk.

Plastic pollution is a result of wasteful, linear value chains and is a global issue that aggravates the impacts of all planetary boundaries.

Due to the speed and scale of the biodiversity decline caused by anthropogenic pollution, climate change and loss of habitat, rapid reallocation of both private and public funds is required. Circular business models – with slower, narrower, closed and regenerative value chains – are now being incorporated in regional and global sustainability strategies.

The practical implementation of circular economies could unlock major socio-economic advantages through accommodating for increasing innovation, sustainability, and cross-sectoral cooperation.

This applies also to the plastics economy; the potential benefits of transforming toward circularity and zero plastic pollution by 2040 are estimated to create twice as much value to the global society than maintaining in the linear business-as-usual system.

A key step toward plastics’ circularity is to include the cost of negative externalities caused by linearity in the price of plastic products, as the profitability of the plastics economy is currently based on environmental degradation and social injustice.

One way of considering plastics’ total costs while correcting the behaviour of plastic use to a more sustainable level is implemented by the Norwegian Retailers’ Environment Fund, or Handelens Miljøfond. Through a NOK3/€0.25 ($0.26) membership fee per plastic bag sold by its retail members, the fund effectively contributes to behavioural change, at-scale nature restoration and circular plastic value chain development in three ways.

Firstly, the plastic bag fee has contributed to a 50% reduction in plastic bag consumption in Norway, compared to 2016. To reduce excess plastic consumption beyond plastic bags, the fund invests in innovation and research to find sustainable alternatives to diverse consumer behaviors related to plastics. Through investments in more than 1,500 projects supporting plastics’ circularity and innovative business models, various solutions are now financed to reduce plastic consumption.

Secondly, the fund has become a cornerstone in nature restoration in Norway, as it is the main contributor to cleaning the Norwegian coast of marine litter through financing systematic, knowledge-based clean-ups.

In just seven years, the fund has distributed more than NOK1.2 billion to projects that clean Norwegian nature of plastic, thus restoring beaches, coastal forests and marshlands. In comparison, the preliminary Norwegian state budget for 2025 allocates NOK30 million to nature restoration.

In total, the Norwegian Retailers’ Environment Fund has financed the cleanup of 5,600 tonnes of marine litter, the removal of 10,400 discarded leisure boats from nature, and the retrieval of 20,700 abandoned fishing gear.

Finally, this initiative has grown to become a key driver of circular innovation and business development, responsible for an ecosystem of viable businesses now growing within this space. Through financing numerous projects, start-ups and intrapreneurship processes that ensure circular plastic value chains internationally, while accommodating for knowledge transfer across industries, the fund has become an important global driver of circular innovation and sustainable business development.

The fund, through its members’ contribution, has grown to become a substantial player in restoration of nature and development of circular value chains for plastics in Norway and abroad. Can this mechanism be exported?

The plastic bag fee was a result of the Norwegian implementation of the EU Plastic Bags Directive. Through the fund, the retail industry met regulatory demands by agreeing to a voluntary membership fee.

However, progressive industries do not have to wait for policies and regulation. Collective industry mechanisms based on double dividends should be applied in speed and scale to industries looking to take progressive action, and especially to value chains with unresolved societal consequences.

The Norwegian Retailers’ Environment Fund is independent and insensitive to political volatility. The lack of bureaucratic bonds is a key factor to efficient distribution of regenerative funds. Such a flexible, yet consistent system based on voluntary memberships can be swiftly applied to various value chains, today.

The global business community is expressing their willingness to contribute to circular, regenerative development as there is a growing recognition of the inability to hide from nature risk. The 3,000 business representatives, including major plastic buyers like Unilever, that took part in the recent COP16 were asking for a level playing field to remove uncertainty and stop harmful business practices.

The Norwegian Retailers’ Environment Fund represents an example of how businesses can take control over value chains regardless of the outcomes of regulatory negotiations, whether it be at the biodiversity COP16, the ongoing climate COP29, or the negotiations for a global plastic treaty to be finalized this December.

The wasteful, linear plastics economy can be transformed to a circular economy where the true costs of plastics are visible in pricing, eliminating the externalities currently burdening marginalized communities, the environment, and future generations.

Were the fund’s plastics model applied widely across sectors – with earmarked finance to limit overconsumption, restore nature and innovate for the future – we would stand a much greater chance at making peace with nature.