Environmental, Social, Governance (ESG) issues are in the spotlight as we look towards a world beyond-COVID-19 and offering sustainable packaging solutions is arguably more important than ever. A recent report by GlobalData titled: ‘ESG Strategy Survey 2021’ highlights that COVID-19 is still front of mind for most businesses, but ESG will be the driving force behind future decision making.
The report’s findings are based on an online survey that was conducted in October 2021 and featured responses from 1,500 ESG executives and influential ESG leaders from organisations in 24 countries.
It lists packaging as the sector most aware of its impact in terms of ESG out of a total of 20 different industries.
A number of companies, including waste-free shopping platform Loop and coffee company Starbucks, are already making an effort to reduce waste worldwide with their forward-thinking returnable and reuse schemes.
eCommerce, the environment and sustainable packaging
Before COVID-19 shook the world, the eCommerce market had already experienced exponential growth. In fact, the global US B2B eCommerce market grew from US$399bn in 2010 to US$2.2tn in 2020, according to GlobalData.
The convenience of Q-commerce (quick commerce) and S-commerce (social commerce) during COVID-19 lockdowns has also contributed to the growth of the eCommerce industry. The growing number of internet users has been key to its growth with worldwide users in 2020 being recorded at 4.5bn, compared to 847m in 2010.
A rise in eCommerce sales equals an increase in packaging waste and therefore reinforces the need for companies to set their sights on ESG targets. The ESG Strategy Survey 2021 suggests most businesses expect COVID-19 and ESG themes to dominate their attention over the next 12 months with 69% of those surveyed citing COVID-19 as having the biggest impact. The report also says that 57% believe ESG will have a significant impact on their business, which shows the majority of global companies still see these themes as existential threats.
The pandemic raised a lot of questions and put ESG firmly in the spotlight. Of those surveyed, 67% of the respondents said the pandemic acted as a catalyst for increased focus and action on ESG issues. The importance of ESG is shared across 20 sectors featured in the survey, which range from apparel and food service to construction and manufacturing. The majority (91%) feel there should be targets in place to meet ESG goals, whilst 65% said that ESG should be very important in decision making.
“The reluctance of many CEOs to fully engage with sustainability can be attributed to the age-old view that it will hurt profits. However, our research suggests the opposite. Companies that embrace all three elements of ESG will outperform their peers. CEOs that are too slow to improve their company’s approach to sustainability will see an exodus of customers and a drop in profits far sooner than they ever imagined,” explainedGlobalData Head of Thematic Research Cyrus Mewawalla.
The research shows that consumers are loyal to brands that support green/environmental matters. Most companies have made changes to meet ESG goals and many more are working on ways in which they can increase their positive impact on the environment.
Action is being taken across all sectors with 64% having already changed their policies and/or practices within the last twelve months and 69% plan to do so within the next five years. This proves that ESG is vital for future business decisions. The report shows that 86% of companies globally, across all sectors, said that ESG principles played a major role in investment decisions. However, most of the packaging sector(96%) stated that it played a major role.
All three ESG factors are crucial, however the ever-present threat of climate change thrusts ‘environment’ into the top spot as being the ESG factor that matters most to ESG professionals in terms of being given increased investment. Overall, 69% of respondents said the environment was the most important ESG factor for their sector and for packaging specifically this increased to 70%. With pressure coming from all corners, customers, investors and governments, the onus is on businesses to make forward-thinking moves, particularly within the packaging industry. Sustainability and everything associated with it, such as circularity or closed-loop systems are buzzwords within the packaging sector and there is an enormous amount of effort being made to reach global targets and create sustainable packaging alternatives.
The packaging industry is constantly looking at viable solutions to plastics in packaging, particularly single-use plastics with many companies turning to other materials such as paper and hemp. Meanwhile, others opt for circular models such as those run by reuse company Loop.
Circular economy success stories
Loop launched in 2019 under the Terracycle umbrella of companies with the central mission of protecting the planet. It is a circular platform that transforms consumer goods packaging from single-use disposables to reusable designs. By partnering with big retailers and brands such as Walgreens, Tesco, Walmart, Heinz, Coca Cola and Unilever, Loop was able to capitalise on consumers’ hygiene fears and concerns over packaging sustainability when the pandemic started.
Loop’s system of collecting, washing, sterilising and refilling for another customer to purchase is done with similar technology used within the aerospace and medical industries.
A recent case study conducted by GlobalData on Loop’s success at eliminating waste with reusable and returnable packaging suggests almost three-quarters (72%) of global consumers say that ‘hygienic’ packaging is ‘quite’ or ‘extremely important. While almost two thirds (65%) say reusability is ‘quite’ or ‘extremely important’ in a product.
“Consumers are being more vocal about their request for brands and retailers to make sustainable changes and one benefit of Loop for brands is to be able to test Loop’s model and durable packaging in a select number of stores and restaurants to fine-tune it before it is scaled. In the upstream phase of the project, Loop assists brands in the development of sustainable and reusable packaging,” explained Stephen Clarke, Loop’s Head of Communications Europe.
The programme works by the consumer paying a ‘packaging deposit’ for each product purchased, which is then credited to the consumer’s Loop account and deducted upon future purchases of Loop associated products. Loop has enabled this service in six countries US, Canada, the UK, France, Japan and Australia with online collection and in-store deposit services.
“Loop’s aim is to reduce waste and to provide a solution to the waste crisis. Today the vast majority of products come in single-use packages and much of that packaging is in a form that isn’t accepted in municipal services for a variety of reasons. It is essential that the most consumed products in the world today have a solution to reduce their impact on waste and the environment, thus turning to a positive approach. For that purpose, Loop’s reuse scheme is beneficial for brands in the sense it supports them in this move towards sustainable solutions,” Clarke continued.
Loop isn’t the only company pushing a circular notion of reusing packaging for products. Organisations such as Starbucks, health and beauty retailer Boots UK and premium spirits distillery Dunnet Bay Distillers have actively made steps to incorporate circularity into their processes.
In 2019, Boots UK trialled a Deposit Return Scheme (DRS) in Scotland before rolling it out across the UK. The nationwide scheme encourages customers to return empty packaging which cannot be easily recycled from home in exchange for advantage card points. More recently in February 2022, Starbucks launched its first returnable cup pilots in select UK stores. The company aims to implement this scheme in over 4,000 stores as part of its commitment to cut its waste in half by 2030.
Dunnet Bay Distillers introduced circularity into its process by packaging its Rock Rose Gin into recyclable pouches. Driven by the company’s aim to reduce its environmental footprint, the empty plastic pouches can be returned through the post via Royal Mail, ensuring they are upcycled into new products as part of a sustainable circular system.
Sustainable packaging going forwards
As Covid-19 fears begin to ease, eCommerce is still set to continue its growth worldwide and packaging sustainability will sit in the spotlight as the target date for various ESG targets edge closer.
The pressure is on companies to ensure targets are met but companies would do well to research and source viable solutions. Closed-loop systems are becoming of increasing interest as some no longer see pulp-based solutions as credible options for their business models.
Consumers do care about the environment and convenience can play a big part in decision making. Companies that extend their services to circular models and engage in green practices will reap the benefits going forwards.