4 Key Issues Impacting Packaging Sustainability4 Key Issues Impacting Packaging Sustainability

Consumer packaged goods (CPG) companies continue to prioritize packaging sustainability. But some challenges are seemingly insurmountable for now.

Packaging Digest recently spoke with Rebecca Marciniak, partner at international management consulting company Roland Berger, where she focuses on packaging in North America. Marciniak keeps a keen eye on market trends and offered her insights on what is currently impacting packaging sustainability.

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Major CPG brands have set ambitious circular packaging and related sustainability goals — and many have had to amend those goals. What’s contributing to these revisions, and what’s driving some forward?

Marciniak: It’s an amalgamation of multiple factors. Some of these are within the control of CPGs, and some outside of it, such as infrastructure, supply chain, and consumer behavior issues that present challenges to reusable / returnable packaging goals being met.

In some instances, the technologies simply don’t exist to economically or feasibly create a sustainable option. And brands, retailers, and consumers often aren’t willing to compromise on products for a more sustainable choice where functionality is key to the user experience, such as with pumps and sprays for example. Some challenges are within the control of companies to address, but sustainability commitments and mandates usually compete with other initiatives and are often seen not as a value driver but as an added cost.

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Additionally, sustainability teams are often outside of the business, and engagement models to get business units to act on sustainability sometimes just get paralyzed or stuck because of internal bureaucracies. That is especially hard in times of economic challenge where the consumer is downgrading. Sustainability can remain as a “pet project” rather than as a systemic decision-making tool.

Where we see sustainability goals advancing is at companies that have simplified what commitments they believe are achievable and then place a more singular focus on them. Companies that are thinking of sustainability holistically and willing to make larger changes in terms of a portfolio of packaging as compared to it being a side project, are making progress.

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Are bio-based packaging materials currently a viable option in terms of innovation, availability, and pricing? What more needs to happen to help make bio-based materials more feasible for brands?

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Marciniak: Biodegradable materials with traditionally low penetration, such as PLA [polylactic acid] or PBAT [polybutylene adipate terephthalate], have come a long way towards becoming more commercially economical. But they can still at times present too costly an option. The real question for biodegradables is, can they be produced at less cost and with more functionality and performance?  There are limitations in using these materials.

I’ve seen numbers suggesting just between 1% to 6% of the market can ever be converted to bioplastics, given their performance shortcomings. And therefore, brands and retailers have often opted for more recyclable materials. However, there are bio-materials in early stages of commercialization that can change this, offering bioplastic sustainability with performance (and sometimes costs) nearer to conventional plastics, making them a viable commercial alternative. But it remains to be seen if they can gain scale fast enough to make a meaningful impact.

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Extended Producer Responsibility programs are influencing packaging material choices and claims. EPR can be especially tricky to navigate for companies with a global footprint. What packaging-related tips can you suggest for food and beverage brands who are trying to comply with EPRs, especially when sustainable packaging material costs can be prohibitive?

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Marciniak: One good thing about EPRs is that, to an extent, they are forcing companies to think more. The first thing we are doing with our clients is getting a real understanding of their baseline, trajectory, and exposure, which can be challenging in and of itself given complexities of the business and that the regulations are still in formation.

We have found that creating an EPR strategy isn’t always about changing every piece of packaging as much as it is finding the right packaging, brands, or product/packaging families that can work with your business and will reduce exposure or risk to the regulations being implemented.

In general, brands and retailers need to understand what the risk/exposure is and then assess the multiple ways they can meet sustainability goals. For example, determining if changing a few SKUs [stock-keeping units] and supply chains and operations to meet select geographies is worth the added complexity or if changing a whole portfolio nationally is a better option.

If there are certain products that don’t have viable packaging alternatives for whatever reason, a business needs to determine if they should look harder at others. This needs to happen holistically, not brand by brand in a decentralized manner.  In some instances, if the product is the same product SKU across the globe, and supply chains are relatively similar, then making a change to meet the most stringent case (such as, in EU) might be appropriate. But we find most of our clients are thinking more regionally ... [as in] country by country. Changing just what goes into California or Maine [can be] too hard operationally to do most times.

Brands/retailers should come up with a clear strategy of how the business is looking to comply with EPR and other regulations, create a strong set of criteria outlining what can be changed and by how much, and then look at product and packaging formats and families to see what alternatives exist. Arming business units and brands with this information can then help decision makers within the business make the right decisions within their span of control.

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How is de-stocking impacting the packaging situation for food and beverage brands? Is there a correlation between de-stocking and the collective CPG slowdown toward improved packaging sustainability?

Marciniak: Destocking and the general economic situational slowdown for FMCGs [fast-moving consumer goods] have hit the packaging value chain relatively hard over the past few years. There was a build up during COVID when supply chains were hit hard; and finished goods inventory was built up. We see packaging inventories coming down, but demand has been slowed in some cases where the market is still working through inventories of finished goods. With consumer attention on cost and prices, and brands and retailers struggling to keep pace in today’s environment, the added impact on sustainability is that some sustainability decisions have been pushed back.

There is a general sense, however, that while a consumer currently may not pay more for sustainability, the need for sustainability has not gone away and the demand will come back as the economy improves and the next set of sustainability target milestone years get closer. Even in this environment, however, some brands are making changes to packaging material where cost and commitments make sense. For example, Amazon eliminated plastic air pillows, and some grocery retailers have been trading foam polystyrene for other more sustainable materials in eggs and proteins.

While we may see changes in regulations because of the outcome of the election, the general sense is that sustainability will continue to be a priority and be more pronounced moving forward as we get out of de-stocking and see a lessening of economic pressures.