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Why sustainable packaging is good for profits as well as the planet
A Vietnamese woman rides past recyclable plastic bottles at Xa Cau village, outside Hanoi, Vietnam June 5, 2018. REUTERS/Kham TPX IMAGES OF THE DAY - RC1D590DE340
Only 14% of plastic packaging is recycled globally. Image: REUTERS/Kham
This article is part of the World Economic Forum Annual Meeting
Although sustainability is increasingly a priority for consumers when making purchasing decisions, with packaging often central to a product’s visual appeal for purchasers - many businesses are yet to sufficiently prioritize sustainability and circularity when considering design, use and disposal of packaging, with the majority of packaging still single-use and non-recyclable.
This ‘take, make, dispose’ economic model still largely dominates capital production. Only 14% of the plastic packaging used globally is recycled, the Ellen MacArthur Foundation reports. A worrying 40% ends its useful life in landfills, while a further third does so in fragile ecosystems such as the ocean. One estimate predicts that by 2050 there could be more plastic in our ocean than fish.
Fortunately, there are a number of pioneering organizations attempting to improve this bleak trajectory by investing time and resources in the development of more circular packaging solutions. These leaders are creating solutions where packaging waste is either infinitely reprocessed or can re-enter the system as raw materials for other products. This is an example of the Circular Supply Chain business model identified by Accenture Strategy. This model is good not just for environmental reasons, but it helps generate business value as well. As Unilever reported in an international study, “a third of consumers are now choosing to buy from brands they believe are doing social or environmental good”.
Image: Source: The Ellen MacArthur Foundation - The New Plastics Economy
Reaching 100% recyclability
Several corporations are adopting targets as ambitious as using 100% recycled materials in the production of new packaging, to limit unnecessary use of virgin materials. A partnership between Indorama Ventures and Loop Industries has enabled a joint venture using Loop’s technology to develop 100% sustainably produced PET resin and polyester fiber. Commercial production is planned for early 2020.
Procter & Gamble is also re-thinking how they can increase usage of recycled plastics - through internal R&D efforts, they have developed PureCycle technology to recycle polypropylene plastic, resulting in a material that can act as a high-quality substitute virgin polypropylene plastic. This recycled polypropylene plastic is then used as an input for products such as electronics, construction materials, and food and beverage packaging.
However, recyclable packaging has its limitations. Collecting packaging at the end of a product’s useful life in order to kick-start the recycling process is one of the biggest barriers for organizations, especially for consumer goods companies whose products are used by millions of people around the world every day. Consumers are often unaware how to take the extra steps needed to recycle or return packaging products, such as bottles and cans, or unwilling to change behaviors as clear benefit to doing so are lacking. Furthermore, the systems are often not in place to support the recycling process - according to a UPS/GreenBiz Research Study developed in the US, the logistical cost in reclaiming used products is the second biggest barrier to firms’ implementation of circular economy strategies.
The need for innovation to drive engagement
Some entrepreneurial organizations, recognized for their leadership in the circular economy through the award program, The Circulars, have approached this topical issue from a different angle, creating packaging solutions which harness unique circular material inputs. Ecovative Design has developed a technology that uses mushroom roots to produce biodegradable packaging with the same quality standards as typical plastic and foam packaging. Multinationals such as IKEA and Dell are already using Ecovative’s packaging for a subset of their products.
Other businesses are tackling packaging challenges by crowdsourcing ideas from a broad audience of bright minds. Multinational brewer, AB InBev, has launched the 100+ Accelerator programme through which they are collaborating with entrepreneurs to co-create solutions that will help them reach their own sustainability goals, such as their circular packaging target. In parallel, AB InBev are supporting these entrepreneurs in scaling their sustainable innovations, through funding and mentoring. Do Eat, which produces 100% edible and creative packaging containers, is one of the 21 initial start-ups chosen to participate in the programme. AB InBev will work with each of the start-ups to implement and scale their solutions across the AB InBev business and with their partners.
Finally, the cleaning products company Method offers refill pouches for hand wash, laundry detergent and washing-up liquid refillable products, and 8 x concentrated formulas to reduce the volume of packaging needed at the outset.
Mushroom roots and crowdsourced innovation - two innovative answers to our packaging problems Image: Ecovative, ABInBev
Moving forward: the value of sustainable packaging
The deterioration of the environment caused by discarded manmade materials has reached critical levels, with proven negative impacts on ecosystems and now also potentially human health. As consumers become more environmentally conscious and hold businesses and their packaging standards to account, the hope is that companies will be incentivized to produce and package more responsibly.
However, environmental and societal benefits are not the only incentives for change - as leading companies address this global challenge, shifting their strategies towards sustainable and innovative packaging design, they succeed in unlocking new revenue streams and creating unique competitive advantages within their industry. As PACE reports, innovative delivery models and changing use patterns are calculated to be worth approximately $9 billion to the plastics industry.
Through harnessing design and after-use system improvements, economic opportunities for a further 50% of all plastic packaging are now possible. The economic value of implementing best practice in packaging design and heralding recycling as an end-use alternative to incineration, landfill and energy recovery is estimated at $2 -$3 billion annually across OECD countries.
The competitive advantage to be gained, coupled with the opportunity to leverage brand power to shift consumer behavior, make compelling arguments encouraging all industries to join the packaging revolution. Certainly, as we lean in to the Fourth Industrial Revolution and the technological advances it offers, the time has arrived for industry to align on this pressing global challenge and forge a new reality together, through ambitious targets and innovations at scale.
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