Unpacking the 7 drivers to reduce emissions in the packaging industry

It’s becoming increasingly important for every industry to accelerate its carbon emission reductions. 

In the packaging industry, multiple players make up complex supply and value chains. Incremental and individual efforts will only have a limited impact and will undoubtedly fall far short of the transformative work required to tackle climate change. 

This article unpacks the seven pressures driving collaboration and meaningful change in this defining period of business transformation.  

CSR has evolved and, with it, the role of carbon accounting

In 1993, 12% of companies published a sustainability report. Today, that number has increased to 80% and, among the world’s 250 largest companies, 96%. 

Clearly, sustainability as part of corporate strategy has evolved significantly. Not only has the amount of reporting increased, but the real impact of the work being reported on has grown.  We’ve moved far beyond corporate philanthropy and initiatives managed by public relations departments. Considerations with regards to carbon feed directly into business strategy. And vice versa. 

With the climate crisis becoming an increasingly prevalent issue, demand for large organisations to be better corporate citizens has rapidly been rising, most publicly from consumers. It’s essential that businesses demonstrate how they do better. 

Sustainability is a nebulous concept but carbon is a common denominator, understood by key stakeholders. (Critically, carbon is also a cost; lowering this is critical to maintain competitiveness and achieve profitability). Around two-thirds of global companies (and three-quarters of the world’s 250 largest companies) now have targets in place to reduce their carbon emissions. 

And these targets attract high levels of scrutiny. 

Focus on Packaging

The sheer scale of the packaging industry makes it a key sector in which its players have significant work to do. Emissions from the production of materials used for packaging alone are larger than global aviation or shipping.

The industry is experiencing pressures from both upstream and downstream. Pressures to measure, report and - ultimately - reduce carbon.

So it's no surprise that our recent survey of 155 leading packaging companies in the UK and USA found that 50% of these companies are working to reduce their carbon emission. In fact, nearly 20% have already set net-zero targets.

Off the back of this research we've identified seven core pressures that are accelerating this journey towards low and net-zero carbon emissions:

  1. Consumer
  2. Regulatory
  3. Investor
  4. Competitive 
  5. Customer 
  6. Supplier 
  7. Cost

1. Consumer pressure

As a first step, consumers want brands to make it easier for them to lower their own footprints. As the most tangible representation of their environmental impact, they will reward brands that drastically reduce the amount of packaging used - and ensure that their packaging won’t remain in landfills for eternity.

Consumers are also becoming more educated about the measures required to fight climate change. They’re aware of the importance of measuring emissions and are more willing to ask organisations questions to ensure that companies aren’t able to ‘greenwash’ messaging. 

Most significantly, packaging companies can no longer leave it to their customers to answer these questions. With their names often found on packaging (or identified via an online search), they need to be proactive in providing relevant information and demonstrating progress.

2. Regulatory pressure

Following on from the Streamlined Energy and Carbon Reporting framework (SECR), the Taskforce for Climate-Related Financial Disclosures (TCFD) came into effect from 1 January 2021; both outline reporting requirements. The Financial Reporting Council (FRC) also recommends that organisations report with reference to their sector, using the Sustainability Accounting Standards Board (SASB) metrics.

In November 2020, the FRC announced that it supports the introduction of global standards on non-financial reporting and will engage with organisations working to achieve that goal. These standards will likely build upon existing legal requirements and recommendations for reporting. 

Businesses can not only demonstrate good governance by upholding high reporting standards in advance of higher legal requirements, but also take advantage of the resulting lowered costs and increased competitiveness, should they act upon the findings being uncovered through this reporting process.

3. Investor pressure

The FRC’s review also found that “investors support the TCFD framework, but also expect to see disclosures regarding the financial implications of climate change. Investors are themselves facing a changing regulatory environment.” They also require standardised reporting of carbon across their portfolio to make weighing up - and reporting on - assets easier.

Additionally, investors have seen reputational backlash from negative climate investments and are keen to avoid this. Many are taking proactive action to get on the front foot. Although single-use plastics have been the first area of focus, carbon is likely to follow suit. 

An example of how this could work can be seen in The Plastic Solutions Investor Alliance, established “to engage publicly-traded companies on the threat posed by plastic pollution.” It currently has 51 signatories, including Aviva, AXA and Triodos.

4. Competitive pressure

“There is no inherent contradiction between improving competitive context and making a sincere commitment to bettering society,” wrote Michael E. Porter, for the Harvard Business Review.

The packaging industry agrees; 56 companies are working with the Science Based Targets initiative (SBTi) to reduce their emissions in line with climate science.

Key players in the industry are also introducing low-carbon options within packaging, changing the narrative from anti-plastic to reducing or reusing carbon. Recent examples include Maldon Salt’s cardboard packaging being made from carbon balanced card, Tetra Pak’s lower carbon packaging equipment and Unilever launching laundry capsules made from industrial carbon emissions.

5. Customer pressure

Linked to this, major brands are self-regulating because customer expectations are moving faster than governmental ones; carbon emissions are a key element of this.

Large companies, such as Amazon, Unilever and  Walmart, are already scrutinising their carbon footprints for regulatory and non-regulatory reasons. Instead of addressing scopes sequentially, they are looking at them in tandem, already focusing Scope 3 emissions. 

Unilever, for example, gave suppliers nine months to adopt science-based targets to lead to cuts. And, for the remaining emissions produced in the use of its products - such as boiling water for a cup of PG Tips - its goal is to cut these by half, by 2030. 

Carbon is a big part of the conversation; customers want to have the data to ensure they don’t get caught out over-promising and under-delivering. Although a bigger threat for consumer-facing brands, the potential consequences for all customers are high.

6. Supplier pressure

It is critically important for suppliers to find ways to maintain alignment towards sustainability goals and targets across the value chain. This not only enables them to remain competitive but to hit their own targets. Large organisations, in particular, have their own reporting requirements, either mandated by regulation, corporate governance or industry competitiveness.

Most importantly, suppliers face demand for innovation to lower carbon and create greater cost efficiencies - and remain competitive themselves. Lean operations (alongside high quality) beget business.

7. Cost pressure

The cost of raw materials has always been the primary area of focus for product cost reduction. With costs escalating, there’s a greater need now than ever before to seek greater cost efficiencies across the supply chain.

Carbon is a crucial frontier in this quest. It is, after all, a cost; therefore, carbon reduction equates to cost reduction.

In conclusion

Packaging companies are at the forefront of the war against climate change. Not only do they carry the burden of being incredibly visible participants in everyone’s carbon footprints - from large organisations to individuals - but they can also influence a wide group of stakeholders.

The good news is that the world is moving beyond anti-plastic messaging and delving more into the complexities of carbon reduction, an area in which greater impact can be achieved. 

This space is ripe for further innovation - specifically data-driven innovation. You can’t manage what you don’t measure, as the saying goes. More significantly, you can’t improve what you don't measure. The industry’s carbon footprint can and must be improved. Measurement is a core step in achieving this.

Bhakti Gajjar
Read time: 5 minutes
Published: Jul 26, 2021

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