Join our community of smart investors

Is supermarkets' rising plastic use an ESG threat?

A new report claims UK supermarkets have made "little tangible progress" on plastic reduction
December 5, 2019 and Alex Janiaud

Seven of the UK’s top 10 supermarkets have increased their plastic footprint and made “little tangible progress” over the past year in reducing their use of throwaway plastics, claims a report from the Environmental Investigation Agency and Greenpeace.

Companies have come under increasing pressure from shareholders and consumers in recent years to reduce their use of single-use plastics, as awareness of the environmental impact grows, but experts say supermarkets must balance the need to reduce waste with the lack of alternatives available for maintaining hygiene standards in meat products.

The report, 'Checking out on plastics II: Breakthroughs and backtracking from supermarkets,' claims that only J Sainsbury (SBRY), Tesco (TSCO) and Waitrose reduced their total plastic packaging footprint between 2018 and 2019. Marks & Spencer (MKS) and Wm Morrison (MRW) increased their output by 2.2 and 2.3 per cent, respectively. That is despite Morrison reporting that the cost of loose and refillable ranges was 10 per cent cheaper than packaged counterparts.

A spokesperson for Marks & Spencer said the retailer wanted to better understand how it could remove plastic packaging from produce without affecting quality and increasing food waste. "That’s why we trialled loose fruit and veg at our Tolworth store and are now using insights from the trial for produce across all our stores," the spokesperson said. The retailer's goal is to ensure packaging can be reused or widely recyclable by 2022. 

Morrison did not respond to a request for comment. 

“The number of plastic reduction targets has doubled from five to 10, with all the major grocery retailers now committed...” the report said. “However, almost all of these targets are set relative to sales – meaning that a company can increase its overall plastic footprint but still achieve the target”. It added in many cases companies were meeting targets through swapping plastics for other single-use materials, which have their own environmental impacts.

Dr Clive Black, head of research at broker Shore Capital, said plastic use and sustainability was an increasing focus for investors and companies, citing the removal of black plastic – which is harder to recycle. Morrisons has removed black plastic from all of its own-brand food and drink packaging, Tesco is due to do the same by the end of this year. Sainsbury is doing the same for fresh food, and will remove black plastic from frozen meals by March 2020.

However, Mr Black said challenges still remained.

“The big problem is one of food safety and shelf life,” he said. “Plastic is a very important part of shelf life and microbiological protection.” Indeed, while Sainsbury has removed plastic bags from online deliveries, it said raw meat and fish would still be bagged “for food safety reasons”.

The report also raises questions over the progress made by packaging suppliers with regards to plastics and sustainability. Alex Manisty, group head of strategy at packaging group DS Smith (SMDS) said that the findings were “concerning at a time when consumers are more conscious than ever about the effects of plastic waste on our planet”. Recent DS Smith research found that 1.5bn tonnes of plastic per year in supermarket aisles could be replaced with alternative renewable materials, such as cardboard. 

Reusability, regardless of the material used to make a carrier bag, is central to improving the sustainability of these products, Mr Manisty added. DS Smith has helped Waitrose & Partners meet one of seven sustainability pledges, providing a cardboard punnet for Waitrose Duchy Organic grapes. The packaging group agreed the sale of its plastics division in March 2019 for $585m (£448m).

Supermarkets and packaging suppliers must also bear in mind perceptions among the public towards their transition towards alternative materials. Gladys Naylor, group head of sustainable development at packaging and paper group Mondi (MNDI), said that there is a need to correct public attitudes towards the shift towards fibre-based (paper) packaging. “An important misperception in the public debate is that fibre-based packaging solutions drive deforestation,” she says. 

As long as harvesting does not outpace annual growth and conservation areas are treated with respect, she added, forests can sustainably provide the materials we need, without deforestation or degradation. “We need to think in terms of sustainable systems rather than what is a sustainable material.”

Peter Atkinson, chief executive at packaging distributor Macfarlane (MACF), was surprised by the report’s findings, given the extent to which supermarkets have beaten the drum on reducing plastics. “They’ve clearly got plans in place to try to make reductions,” he says “but they don’t appear to be working too well!”.