Packaging is a dynamic industry - and sustainability is the key focus

Rarely does a week to go by without an announcement of a new and improved innovation targeted at improved sustainability, cost reduction or circular economy solutions in packaging. The widespread impact of packaging means that it is never far from the spotlight and sustainability is front and centre of that debate.

Balancing external factors such as labour costs and supply chain issues, corporates have been embedding new capabilities to reduce the environmental impact and enhance circularity within the economy. A range of sustainability themes are attracting focus, but according to our own consumer research, businesses are still not perceived to be doing enough.
 

Change in the air: how do consumers feel about packaging and sustainability?

Our study found that almost 60% of consumers surveyed believed that companies need to do more to address sustainability. Particular criticism was levelled at the electronics, home appliance and fashion & beauty sectors for their use of packaging. 60% of respondents stated that these sectors use too much packaging. This compares to 40% in healthcare and 50% in groceries.

The research also revealed that over 90% of consumers believe that businesses should bear the cost of improving the sustainability of their packaging. Although overall more than half (51%) of respondents said they were not prepared to pay higher prices for the use of more sustainable materials, there was a much greater willingness from consumers who are younger than 35 years to shoulder some of the cost. Clearly, this is potentially good news for businesses and may help drive the environmental agenda in corporate decision-making.

At the moment, consumers do expect businesses to absorb the potentially higher costs of more environmentally friendly packaging. This can be a real financial challenge for many companies to overcome but one that is critical for their public image and reputation.

An overwhelming majority of consumers are concerned about the impact of packaging on the environment, with 96% admitting that recycling and reuse is important. However, more than a quarter of respondents have only limited understanding of which materials are sustainable. Packaging companies will need to educate consumers in order to gain the maximum reputational benefit from their packaging choices.
 

Key themes for 2023

The key themes we expect to see in 2023, and the levers that need to be used to achieve environmental goals are;

Understanding materials

Growing understanding of the impact of different and newer materials through the entire lifecycle, the use of more sustainable materials, downgauging (reducing the amount of packaging) plus optimising the use of recycled in put materials;
 

New methods and substrates

Improving existing materials such as PET and advancing the development of biodegradables and compostables.
 

Smart packaging

Further customisation of packaging and the growth of interactive or smart packaging.
 

Automation

Continued automation of manufacturing processes addresses cost and labour inflation pressures while enhancing quality and efficiency.
 

M&A

M&A is a key enabler of acquiring new know-how, materials and capabilities and accessing new markets. M&A also can help businesses combat supply chain pressures and drive value creation across a fragmented market.
 

Levers that need to be pulled

Government regulations, taxes & incentives

These are required to drive innovation and/or uptake of newer materials and solutions. Legislation has helped to drive the adoption of measures supporting sustainability, but further work needs to be done to harmonise what is now a very disparate approach to recycling and sustainability. Recent HMRC data has showed packaging tax levels are surpassing expectations, but this is a worrying indication that sustainability and circular efforts are lagging.
 

Recycling infrastructure

The collection, separation and treatment of waste must be improved. Investment in existing and in new types of recycling operations and technologies is necessary.
 

Continued R&D in packaging

Investing to reduce waste generated, maximise the use of recyclates and develop new materials. Business can also help customers create closed loops and integrate or partner along the value chain.
 

Increasing consumer awareness

Pressure from consumers is driving change in the corporate world when it comes to packaging. However, for the circular economy to take hold, consumers need to “invest” by recycling, reusing, and repairing items and potentially paying higher prices that reflect the environmental impact of more for the products they purchase.​