The surge in urbanization and rapid industrialization has significantly intensified the demand for construction activities worldwide. This burgeoning need for infrastructure development, housing, and commercial spaces has, in turn, driven the exploration and adoption of materials beyond the scope of traditional construction materials. Environmental issues such as bottom ash disposal, plastic waste generation, and sand mining have paved the way for the sustainable use of these materials in our study as a backfill material behind the wall. The ongoing research investigates the suitability of utilizing bottom ash as a partial replacement for sand and plastic waste as a reinforcing element because of their exceptional strength-to-weight ratios. The study is motivated by the challenges posed by densely compacted soils behind retaining walls, which contribute to increased structural loads and, consequently, higher levels of deformation. Geofoam being only 1% of the weight of backfill when used as compressible inclusion (CI) behind the wall in different orientations is an innovative engineering solution that has gained popularity due to its lightweight, ability to enhance load-carrying capacity, and minimize differential settlement. The paper investigates the use of geofoam of densities 11, 16, and 34 kg/m3 behind the wall backfilled with either sand alone or with geomaterial prepared from bottom ash (BA) in 10–50% and plastic strips (PS) in 0.75–1.25% along with sand. The optimal mix of geomaterial was obtained as SB50P1 (Sand + 50% BA + 1%PS) and geofoam of density 34D based on the static load tests performed in the laboratory and as validated through the numerical study. A settlement reduction of 73% and bearing capacity improvement of 172% was reported when 34D geofoam was laid as CI along with 5 cm thick geofoam strips laid in layers behind SB50P1 as backfill.