Future of Packaging Report
Going green requires cost neutral thinking
Packaging has long-suffered from a legacy issue of commoditisation, which risks limiting advances in sustainability and widening the Green Gap.
To improve environmental performance, attitudes towards packaging procurement must evolve beyond being so cost-centric.
Paying the price of legacy issues
Although many forms of business procurement are heavily influenced by cost, purchasing decisions will also typically consider value. This hasn't always been (and isn’t) always the case when it comes to packaging. It’s typically viewed as a direct expense that erodes margins, meaning the lowest price will outweigh performance when it comes to purchasing.
This commoditised approach has limited the opportunity for the wider adoption of sustainable packaging solutions. The past few years have seen a gradual shift in this attitude, with forward-thinking companies looking at the far reaching efficiencies and benefits of sustainable packaging.
Businesses have realised a small investment in renewable materials such as GreenPE and recycled materials can be marginal in terms of outlay, and yet prove hugely positive for the environment, brand reputation, customer loyalty and sales.
Duo UK’s research suggests the gradual move away from commoditised thinking will gain increasing momentum in the next decade.
Over half (53%) of companies believe reducing environmental impact will be the most important factor in defining packaging strategies in the next ten years. Just 11% think that operating costs will be the most important factor.
On first review, this implies a major step forward. However, further analysis of the research shows this momentum risks proving a false dawn, with sustainable packaging optimism continuing to pay the price of commoditisation.
Continued influence of cost
When asked which factors will influence packaging design and development in the next decade, 59% of companies stated ‘cost’. It ranked in the top three most influential factors and there’s very little difference between how influential cost is today, compared to its perceived influence in ten years’ time.
The continued high ranking of cost highlights a disconnect between the ambition for packaging to become more sustainable and the prohibitive constraints of expenditure.
This disconnect or Green Gap exists because, despite there often being a general agreement within an organisation that sustainability is important, there isn’t a cohesive approach to putting actions into practice.
It’s not uncommon to hear about scenarios where one department is striving to change to a sustainable packaging solution, but unable to gain approval from other areas of the business because the change will add costs to the balance sheet.
To overcome this challenge, companies need a general consensus that packaging strategies will be approached with a cost neutral mindset. If a company is to succeed in truly achieving its environmental goals with new packaging strategies (or any new strategy), they must be communicated throughout the business with a clear, joined-up approach to succeed. Brands with understood, meaningful environmental and CSR policies are progressing faster than those that are not working cohesively.
Putting sustainability first
Taking a cost neutral approach makes price a secondary consideration, enabling the proper review and trial of different sustainable packaging solutions.
Financials are often so straightforward to calculate during procurement, while it’s more difficult to determine the value of how a sustainable packaging solution may positively impact the whole business. This is why commoditisation occurs and wins. Trialling and putting sustainable packaging solutions through their paces can help prove the wider business benefits.
Duo UK’s research shows the growing awareness among companies of how important branding / customer experience is. This is supported by other data, including a report by retail technology experts Conversity, which highlights that 51% of consumers are more likely to shop with retailers making efforts to improve sustainability.
Being able to trial different sustainability solutions enables companies to test how they will impact areas such as sales and customer satisfaction. This is only possible if businesses move away from such a strong cost-bias during packaging design and development.
Cost neutral thinking allows businesses to build a case for change, which can make their packaging strategies both environmentally and cost-friendly. This form of thinking will also stop the Green Gap from widening in the next decade and help end a legacy of damaging commoditisation in packaging.
Premium lifestyle brand Joules is one such forward thinking company that’s looked beyond the bias of price during packaging procurement.
Taking a cost neutral approach has supported the company in its efforts to respect the environment and helped shape its ‘Responsibly Joules’ commitment to operating fairly, responsibly and sustainably.
Joules approached Duo UK to learn more about its GreenPE mailbags, which are made from a thermoplastic resin using sugarcane. This means the bags are made using renewable content and are recyclable.
Impressed by the material’s performance properties and sustainability credentials, Joules and Duo set about developing an optimised size range to meet the clothing manufacturer’s specifications for its mailbags, which reduced the plastic required to produce the range.
What started as a small trial in 2018 has led to Joules making GreenPE mail bags its primary dispatch method for its global ecommerce business. This achieved an accumulative carbon savings in excess of 374MT CO2eq in 2019.
Claire Lockyer, Packaging Design and Production Manager at Joules, said: “Retailers and manufacturers have a responsibility to look at the ways in which they can reduce excessive packaging. It’s the right thing to do and is something consumers are increasingly demanding.
“Packaging is proving a type of sustainability barometer for shoppers and is very powerful in affecting sales and brand loyalty. Duo UK’s GreenPE mail bags help us to deliver meaningful carbon saving and are a practical step which consumers resonate with.
“We are on a journey to use more circular and renewable options throughout our business. This can only be achieved if we take an open-minded view about what we can do differently and then how innovations can work pragmatically. The implementation of the GreenPE mail bags is a case in point and we are taking a similar approach to other initiatives, where we think about sustainability first and then look at how changes can work for both us as a company and our customers.”
*Calculation based on Joules’ GreenPE packaging products delivered by Duo U