Packaging can play a surprisingly large role in the sustainability equation for consumer product (CP) companies, affecting everything from consumer perception to waste reduction as well as emissions. And with legislative actions such as the proposed SEC disclosures rule and the EU’s Corporate Sustainability Reporting Directive looming, companies must quickly figure out their next moves and put plans into action.
Consumer packaging makes up almost 60%[i] of all packaging end-use, which means CP companies have a major role to play in addressing this issue. And owing to the fact that most CP companies have a few concentrated suppliers in this area, there are opportunities to make systemic changes. However, implementing changes continues to be a challenge.
Stepping up from commitment to action
Most top CPG companies have made commitments to increase recyclability, minimize packaging, or create reusable packaging material. However, the speed from concept to implementation is still slow.
This remains a complex issue with a multitude of choices: from incremental changes such as light-weighting and switching raw materials, to rethinking and redesigning packaging concepts and entire supply chains. Companies must first take stock of solutions and technologies that are available for suppliers in the marketplace, such as increasing post-consumer recycled content percentage and using biodegradable resins or sustainably sourced fibers to replace conventional petroleum-based resins.
Companies should also keep an eye on the latest developments in the recycling industry and upgrade their packaging design accordingly to maximize their impact. For example, cutting-edge chemical recycling solutions are the next wave of infrastructure needed to tackle multi-resin or lightweight plastics. But the environmental credentials of these options need to be assessed, and this can often be a stumbling block as there are various considerations, requiring a detailed, end-to-end lifecycle review.
Next, they should adopt a detailed evaluation of the end-to-end costs to help facilitate decision-making and prioritization. Finally, they must mobilize cross-functional teams to implement and capture the impact of initiatives across the value chain, while accounting for possible operational challenges.
Balance tradeoffs and benefits
In addition to understanding the environmental impact over the full lifecycle, it is essential to assess all tradeoffs, including cost, ease of implementation, and impact on functionality. Packaging also plays a significant role in qualitative and quantitative brand perception. Because it’s often the first thing that a customer will see when they buy, receive, or unpack a product, companies need to both ensure that any packaging meets brand standards and that it does not put off today’s increasingly environmentally conscious consumers. According to a recent survey, consumers are 57% less likely to buy products in packaging that was harmful to the environment, and 44% of consumers said they would not buy products in packaging that was harmful to the environment.
For any CP company looking to build or scale a sustainable packaging initiative, there are several critical building blocks to successfully drive technical implementation:
Set top-down targets and gain leadership support: It’s imperative that specific, measurable, and achievable goals are set and clearly articulated – these goals may be more market-driven (such as enabling consumers to reduce, recycle, and reuse) or driven more by regulations governing single-use plastics, recycling levels, and mandatory recycled content. CP companies are increasingly committing to ESG-related goals specific to packaging. P&G, for instance, has committed to 100% recyclable or reusable packaging by 2030 and will reduce the use of virgin petroleum plastic in packaging by 50% by 2039.
Create dedicated teams to drive progress: Empower both procurement and sustainability teams to kick off specific initiatives. Companies must make a detailed and phased plan, leaving enough time for briefing, baselining, research, testing, and ultimately production. Companies should be exploring sustainable packaging solutions across several dimensions, with pros and cons that come with each, especially as some changes can take up to two years to be fully absorbed into operations.
Prepare to make tradeoffs: Every company needs to find the balance across financial performance, brand image, operational impacts, and environmental impacts. There are certain cases where design changes can create a win-win situation. For instance, a luxury retailer replaced bubble wrap packaging with paper honeycomb and expects to see a 56% cost reduction while providing relief to customers concerned about plastic packaging. However, in general, companies should take a portfolio view of its options as not every option will result in a win-win.
Packaging selection is a critical lever that can help CP companies address multiple ESG goals in one go. With government regulations on the horizon and consumer pressure increasing, companies should embark on this journey sooner rather than later so that there is enough time to articulate a clear and realistic goal, align with stakeholders, put internal teams in place, understand and mitigate tradeoffs, plan budgets, and test and learn.