Sustainable packaging is becoming a fact of life for companies that seek to remain competitive. Companies employing sustainable packaging report cost savings, improved environmental footprints, brand image and company reputation among other benefits. Those businesses that take the lead now will be ahead of the curve and enjoy the benefits in the future.
by Aysu Katun, Green Economy Post
Companies continue to face growing pressure from consumers, government and the media to make their operations and products more sustainable. One area that companies are increasingly focusing on is sustainable packaging. Internationally, the environmental impacts of packaging are subject to an increasing number of government regulations and co-regulatory agreements. A report from independent market analyst Datamonitor also identifies sustainable packaging as a growing consumer issue, revealing that while sustainable packaging is not yet a primary motivator of purchases, it is increasingly expected by consumers.
While there is no consensus on what actually constitutes sustainable packaging, the Sustainable Packaging Coalition (SPC) defines it as packaging that is “sourced responsibly, designed to be effective and safe throughout its life cycle, meets market criteria for performance and cost, made entirely using renewable energy and once used, is recycled efficiently to provide a valuable resource for subsequent generations.”
According to a study by AMR Research, 76% of sustainability efforts are focused on reducing packaging waste. A recent Pike Research study also found that sustainable packaging is expected to grow to 32 percent of the total global packaging market by 2014, up from 21 percent in 2009.
In spite of these growth projections, critics of sustainable packaging point to higher cost as a reason for companies to avoid its adoption. Yet, according to an IndustryWeek article, companies employing sustainable packaging report cost savings, not increases.
In his article, “Sustainable Packaging Initiatives Are a Viable Cost-Reduction Solution in a Downward Economy,” Ryan Humphrey, Director of Professional Services at ModusLink Global Solutions, urges companies to take a holistic approach that “affords visibility into the entire product lifecycle, from manufacturing and packaging, to delivery, recycling or disposition. When sustainable improvements are considered from this perspective, most organizations will realize a cost savings and positive impact on the bottom line.”
Humphrey further states that companies should analyze product packaging and supply chain processes to develop a model that reduces packaging size and minimizes operational and logistics activities that contribute to GHG emissions. “More compact packaging will result in a reduced material cost. By simplifying the packaging process with fewer pieces, you can extend the savings with less labor. The amount of warehouse space required is reduced, further impacting logistics costs. The domino effect continues through redesigning pallet configuration and shipping more product per pallet.”
Moreover, lighter packaging is cheaper and more efficient to transport, and requires less energy to manufacture. Therefore, a change in packaging creates a ripple effect throughout the supply chain producing efficiency gains, cost-savings and reduced energy consumption.
A recent survey conducted by the Supply Chain Consortium in which 79% of survey respondents stated that sustainable packaging has the most impact on energy and material costs, supports Humphrey’s argument.
Many companies are reporting savings achieved through sustainable packaging. Ben Sligar, a global packaging engineer for ModusLink, in the article, states that they have seen cost savings in almost every project by using recycled materials and increasing the product to package ratio. He adds, “For example, by moving clients to a trapped paperboard blister design and away from traditional clamshells that are not consumer friendly, we are able to reduce the amount of plastic and package size while increasing pallet density.”
Humphrey mentions that a global leader in computer hardware and accessories was able to realize savings of more than $500,000 in packaging and eliminated 99,183 pounds of packaging on 4.3 million products shipped. P&G has reduced the packaging weight of Pantene Pro-V bottles, which are forecast to save over 450 tons of plastic per year, which is the equivalent of over 13 million bottles of Pantene Pro-V. For Olay Total Effects, P&G has reduced the plastic in its pump to save 800,000 pounds of plastic per year, equivalent to the weight of a Boeing 747. Companies in the beverage industry report similar savings.
In addition to operational cost savings, companies report reduction in their environmental footprints, improved brand image and company reputation, greater market share, access to new markets, reduction in legal compliance costs and increasing global competitiveness as other benefits of adopting sustainability packaging.
Therefore, while many industries are still stagnating in the current bleak economy, sustainable strategies can provide the packaging industry with a silver lining to the downturn.
For companies considering adopting more sustainable packaging practices, a recent report by PricewaterhouseCoopers (PWC) offers some very useful advice:
- Review your customer base to understand which of them have made public announcements on their commitment to sustainability and begin talking to them about what their pronouncements mean in practice for their packaging needs.
- From your common understanding agree with your customers what criteria (e.g. carbon footprint, energy usage, waste, etc.) you could monitor and report to them to demonstrate your ongoing improvements on the sustainability of their packaging.
- Investigate what other market segments you could serve where your packaging technology could legitimately be argued to be more sustainable than the competition. Target the “sustainability aware” customers in these new markets.
- Include sustainability as a key consideration in your new product development process.
- Provide your sales and marketing team with both qualitative and quantitative arguments that allow them to place the superior sustainability of your product as a differentiator in their value proposition.
- Work in collaboration, up and down the value chain, and use techniques such as Life Cycle Assessment (LCA) or environmental input-output analysis to identify value chain hotspots. Consider whether it is commercially advantageous to you or your customers to work with other players in the value chain to address these hotspots and improve the overall sustainability of a product. Be sure that you can quantify any improvement for your customer.
Overall, companies engaged in sustainability efforts should focus on meeting consumers’ needs, reaching corporate objectives, and doing so in a way that demonstrates continuous improvement with regard to how it positively affects people and the environment. Sustainable packaging is becoming a fact of life for companies that seek to remain competitive. Those businesses that take the lead now will be ahead of the curve and enjoy the benefits in the future.
© 2010, Aysu Katun. All rights reserved. Do not republish.