How CP Companies Can Proactively Drive Sustainable Packaging Transformation – Corporate & Company Law
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Packaging can play a surprisingly large role in the sustainability equation for consumer product (PC) companies, affecting everything from consumer perception to reducing waste to emissions. And with legislative measures such as the SEC’s proposed disclosure rule and the EU Sustainability Reporting Directive looming, companies need to quickly determine their next steps and put their plans into action.
Consumer packaging accounts for nearly 60%1 of all packaging end uses, which means that CP companies have a major role to play in solving this problem. Since most CP companies have a few suppliers focused on this area, there are opportunities to make systemic changes. However, evaluating and implementing changes to improve sustainability continues to be a challenge.
Moving from commitment to action
Most major CPG companies are committed to increasing recyclability, minimizing packaging, or creating reusable packaging materials. However, the speed from concept to implementation is still slow.
It remains a complex problem with a multitude of choices: from incremental changes such as lightening and changing raw materials, to redesigning and redesigning packaging concepts and entire supply chains. Companies should first take stock of the solutions and technologies available to vendors in the market, such as increasing the percentage of post-consumer recycled (PCR) content and using biodegradable resins or fiberglass. source 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, the cutting-edge chemical recycling solution is the next wave of infrastructure needed to tackle multi-resin or lightweight plastics. The environmental qualities of these options must be assessed, which can often be a stumbling block, as various considerations require a detailed end-to-end life cycle assessment.
Then, they should adopt a detailed end-to-end costing to aid in decision-making and prioritization. Finally, they must mobilize cross-functional teams to implement and capture the impact of initiatives across the entire value chain, while considering potential operational challenges.
Balancing Tradeoffs and Benefits
In addition to understanding the environmental impact across the entire lifecycle, it is essential to assess all trade-offs, including cost, ease of implementation, and impact on functionality. Packaging also plays an important role in the qualitative and quantitative perception of the brand. Because it’s often the first thing a customer will see when buying, receiving, or unboxing a product, companies need to both ensure that any packaging meets brand standards and doesn’t offend. today’s increasingly environmentally conscious consumers. According to a recent survey, consumers are 57% less likely to buy products in environmentally harmful packaging, and 44% of consumers said they would not buy products in environmentally harmful packaging. .
For any CP company looking to create or scale a sustainable packaging initiative, there are several key elements to completing the technical implementation:
Set top-down goals and gain management support: It is imperative that specific, measurable and achievable goals are defined and clearly articulated – these goals can be more market-driven (such as enabling consumers to reduce, recycle and reuse) or more driven by regulations governing single-use plastics , recycling levels , and mandatory recycled content. PC companies are increasingly committing to packaging-specific ESG goals. P&G, for example, has committed to producing 100% recyclable or reusable packaging by 2030 and will reduce the use of virgin petroleum-based plastic in packaging by 50% by 2039.
Create dedicated teams to get things done:Empower procurement and sustainability teams to launch specific initiatives. Companies should establish a detailed, phased plan, allowing plenty of time for briefing, laying the groundwork, research, testing, and ultimately production. Companies should explore sustainable packaging solutions across multiple dimensions, with pros and cons that come with each, especially since some changes can take up to two years to fully absorb into operations.
Prepare to compromise: Every company must find a balance between its financial performance, its brand image, its operational impacts and its environmental impacts. There are some cases where design changes can create a win-win situation. For example, a luxury retailer has replaced bubble wrap with honeycomb paper and expects to see a 56% cost reduction while relieving customers concerned about plastic packaging. However, in general, companies should take a portfolio view of their options because not all options will result in a win-win.
Packaging selection is a critical lever that can help CP companies achieve multiple ESG goals at once. With looming government regulations and mounting consumer pressure, companies should embark on this journey as soon as possible so they have enough time to articulate a clear and realistic goal, align with stakeholders, build teams internals, understand and mitigate trade-offs, plan budgets, test and learn.
1. Credit Suisse Connection Series; Global Packaging: how packaging could be the solution, not the problem; page 11; February 2022
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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