Plastics are attracting negative publicity due to the scale of current pollution levels, yet they are irreplaceable in several applications such as food packaging, where different types of plastics are combined in laminate form to produce multilayered packaging (MLP) materials which extend the life of food items packaged within them. Increased plastic recycling is urgently needed, however for MLP it is particularly difficult. For the first time, this study combines engineering tools with environmental policy towards developing solutions for current single use plastic packaging. This study investigates recycling challenges for MLP and emerging melt-blending based mechanical recycling solutions as this is the main current method for material recovery of conventional plastics. Melt-blending of MLP with compatibilisers is explored, and the current lack of models addressing the influence of compatibilisers is identified. This gap in knowledge is addressed using novel engineering models based on the finite element (FE) micromechanical modelling technique to estimate the mechanical properties of recycled blends. Our model output is compared with experimental data available in literature and the good agreement highlights its predictive ability, providing a fast and cost-effective novel method for optimising recycled plastics. The policy aspect proposes the introduction of twenty policies based on mission-oriented innovation strategy to enable deployment of the recycling technologies studied whilst improving the viability of recycling of material currently not recycled. Implementation of these measures by the stakeholders will enable adoption of new MLP recycling techniques, create demand for recycled materials from MLP and incentivise MLP collection to mitigate pollution.