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Rock, paper, plastic

Packaging companies are under increasing pressure to match sustainability with returns
April 4, 2019

In March 2019, the Philippines experienced a Blue Planet moment. Distraught workers at the D’Bone Collector Museum discovered 40 kilogrammes of plastic bags inside the stomach of a Cuvier’s beaked whale, after it washed up east of Davao City.

"This whale had the most plastic we have ever seen in a whale," the museum said in a statement. "It’s disgusting. Action must be taken by the government against those who continue to treat the waterways and ocean as dumpsters."

The Philippino government does impose rules around waste management, having passed the Republic Act 9003 in 2001. But the legislation refers explicitly to plastic only once, pledging a framework for processing multiple recyclable materials.

Nearly 7,000 miles away, the UK government is still responding to the collective horror that first choked Blue Planet II viewers in November 2017. Footage of a pilot whale refusing to relinquish its calf, killed by plastic poisoning, prompted 88 per cent of viewers to modify their behaviour in relation to plastic, according to research by supermarket chain Waitrose.

Plastic bag taxes were promptly issued, while the 2018 Budget announced a tax on the production and import of plastic packaging with less than 30 per cent recycled content from April 2022, subject to consultation. The types of packaging and businesses that would be liable for the tax, along with methods for examining recycled content in packaging, are under question. A deposit return scheme for consumers is also being considered.

Packaging businesses seem receptive to the government’s ideas for waste management and aware of the consumer backlash against plastic. For example, Mondi (MNDI) has welcomed the idea of a deposit return scheme, arguing that it would "add clear tangible value for the consumer". DS Smith (SMDS), meanwhile, sold its plastics division last year, as it focuses on "fibre-based" (otherwise known as paper-based) packaging.

For now, the packaging sector seems to be shying away from plastic. But the online retail boom has simultaneously brought about a surge in packaging volumes, which also needs to be managed. And while the impact of our Blue Planet moment on packaging companies merits discussion, so too does the future of plastic, which shouldn’t be written off without considering the uses – and indeed sustainability – of the material.

 

The strengths of corrugated boxes

DS Smith decided to dispose of its plastics division to pursue growth opportunities in corrugated boxes, according to chief executive Miles Roberts. He extols the strength and versatility of corrugated boxes, which he says are easily moldable and personalised.

And while Sir David Attenborough has helped raise the importance of sustainability in customers’ consciences, "you don’t need Blue Planet", Mr Roberts says, "you just need to walk across any stretch of the countryside… to see it’s littered with rubbish that doesn’t degrade". It's imperative DS Smith recovers as much fibre as possible through recycling, he adds, which will require collaboration with online retailers.

 

Smurfit Kappa (SKG) chief financial officer Ken Bowles, meanwhile, emphasised that the transition towards more sustainable packaging remains in an embryonic stage, as developers assess the legislative environment, the cost and margin implications, and the consumer reaction to alternative products.

"Most targets are set out in the 2020s, so the activity today is intense, but the transition will most likely be evident over the coming years, not necessarily months," he says. Smurfit adopts a 'circular' approach with corrugated boxes, creating new from the old. As it experiments with ways to reduce packaging waste, Smurfit has developed corrugated packs for fruit punnets and corrugated replacements for shrink film, which is traditionally made from polymer plastic film.

The sector, which has been fraught with attempts at consolidation, is soon set to lose one of its constituents from the FTSE. RPC (RPC) has accepted a bid from US rival Berry Group (US:BERY), and will delist. It, too, is active in sustainable packaging, and claims to be "a pioneer in the development of one of the UK’s first plastics recycling schemes" on its website. But being under offer, RPC was unable to respond to requests for comment.

 

Reconciling premium with sustainability

Last year, 66 per cent of packaging professionals surveyed by packaging innovation consultancy ThePackHub and Easyfair’s Packaging Innovations event said that they were either implementing or considering introducing personalisation to their packaging.

The added value provided by packaging should not be understated. According to YouTube Keyword insights, over 90,000 people search 'unboxing' in YouTube every month. While much of this curious phenomenon is probably more about sharing in the serotonin blast that goes with acquiring new stuff, the "premiumisation" of packaging is valued by consumers, according to one expert. This needs to be balanced with customers’ requests for greater sustainability.

Paul Jenkins, managing director at ThePackHub, cites Apple (US:AAPL) as a leader in premium packaging.

"The packaging is to die for," he says. "That packaging is expensive, it’s heavy, it’s very premium, but it supports that positioning as a premium product." Companies such as Apple need to find the balance that allows for premium packaging and sustainability, he adds. And while he expects the use of renewable packaging to grow, "plastic will continue to be a viable packaging format".

 

Paper where possible, plastic when useful

Paper-based packaging undoubtedly sits near the heart of packaging companies, and its sustainable virtues are seemingly obvious. But not everyone sees plastic or indeed the plastic bag – the real villain that brought us to this point – as an unequivocal evil.

According to a UK Environment Agency study, a paper bag has to be used four or more times to bring its global warming potential below that of a conventional plastic bag. The paper bag’s lack of comparative robustness, however, makes it harder to reuse. It is also "significantly worse than the conventional high-density polyethylene bag for human toxicity and terrestrial ecotoxicity due to the effect of paper production".

Mondi recognises the rising demand for fibre-based packaging and the benefits of sustainability, but still views plastic as part of its future. The group uses "paper where possible, plastic when useful", according to chief executive officer Peter Oswald.

Mr Oswald argues that "flexible plastic packaging, when manufactured, used and disposed of appropriately, delivers many benefits". These range from resource efficiency (by reducing material usage and being less transport-intense) to lowering food waste by allowing for correctly-sized portions and longer shelf life. Plastic, in various scenarios, can be the most sustainable product over the course of its lifecycle. As a signatory to The New Plastics Economy Global Commitment, Mondi aims for all of its plastic-based packaging to be reusable, recyclable or compostable by 2025, with 25 per cent being from recycled content provided that it does not compromise functionality or food health requirements.

Steven Burns, commercial director at plastics test laboratory and research and development centre Impact Solutions, underlined the sustainable and practical credentials of plastics.

"Plastics are used for a reason," he says. "They are lightweight and they keep food fresher longer, and therefore they have a lower environmental footprint," he adds.

The Bank of England appeared to agree in 2013, when it published its research on the use of polymer-based bank notes versus paper notes. It found that the plastic notes lasted 2.5 times longer than their paper counterparts. "Overall polymer bank notes have lower environmental impacts than paper bank notes for all impact categories assessed except for photochemical ozone creation potential," the study found.

"The use of plastic will continue to grow," Mr Burns predicts, "because ultimately it is the best material available to packaging manufacturers".

"What you see in the press and in the supermarkets, a lot of it is a gimmick, to make it look like they are working towards a consumer goal," he adds. "But from a financial standpoint and from an environmental standpoint, ultimately the use of plastic will be the best option".