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Sustainable packaging: myth or reality Revisiting the debate two years on

While public views on the usefulness of packaging are notoriously difficult to shift, the industry has made significant steps in creating improved packaging solutions across the packaged goods value chain.

June 2012 Executive summary

Packaging and its role in our society has rarely been across the four key groups showed that progress has been out of the headlines. Praised, criticised, minimised, made in the following areas: ucing effec redesigned – it is always there to spark a debate and Prod tive • Efficiency drives (materials, , cost): these ing solution kag s wi divide opinions. have helped the debate focus on tangible, measurable pac m reso th inimu urce P m s m ro initiatives that drive sustainable thinking in i t g n e e n im c From manufacturers to users, the entire packaged goods s i ti everything from sourcing to after-life disposal; u l i n c s g r y in supply chain is subject to change, some incremental and e c Key influencers: t g t f e h r e • Common language: the long awaited reporting a • Cost of materials p some radical. The overall impact of all these changes is d r p o e n r v • Security of supply (fibre, d framework containing flexible structures of Key i a o t u difficult to measure and even harder to summarise in l , PET, , d c c a u

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has been agreed and put in place; and • Breakthroughs in new manufacturers, FMCG companies, retailers and technologies Government and trade bodies. • Finding sources of • Shared understanding: the product, its packaging competitive advantage D y and the related supply chain has to be viewed as a c is n In this report we have set out to revisit the packaging p e single solution, not a sum of disconnected parts when la i y fic debate and track the progress towards closer e ef it comes to reducing the impact on the environment. ffic rt ien spo collaboration and common language that goes cy Tran beyond the phrase “sustainable packaging”. We found that the direction of travel that the industry has taken towards most effective packaging solutions Progress is undoubtedly being made in spite of, or maybe is encouraging. It remains to be seen if the new even assisted by, the protracted economic downturn. materials and technologies, coupled with new Interviews with our select group of representatives consumer trends and retail channels will accelerate or side track this journey.

PwC Revisiting the debate 2 Taking another look Overview

What does the term ‘sustainable packaging’ mean Our initial report was published at the beginning of a Home Forward Print Quit Original report and does it even exist? protracted economic downturn that significantly changed Sustainable packaging: Executive summary 02 consumer behaviour and spending patterns. Our aim is to Findings and recommendations 03 Sustainable The role of packaging 04 threat or opportunity? Divided they fall? 05 Has packaging been unjustly focused In this new report, we aim to reignite the packaging see if the perceptions they held then are still valid now. packaging: on in the debate? 06 Spotlight on bio-plastics 08 Who is driving the agenda? 09 Implications and actions 13 debate sparked two years ago when we visited a As economic times remain turbulent, we ask if the threat or Local infrastructure provisions 17 Conclusion and questions to consider 18 group of companies on this issue. We published a downturn has affected the way sustainable packaging is opportunity? Contacts 19 report in 2010 which looked at the growing interest perceived. Is it a threat, an opportunity, or even a myth? in sustainable packaging1, based on a series of interviews with four key stakeholder groups: Macroeconomic trends and consumer behaviour growth without pushing up energy and commodity retailers, fast moving consumer goods (FMCG) Economies around the world are beginning to recover prices. These bursts of inflation have made cost control companies; packaging producers; and government from the depths of the financial downturn in late 2008 difficult for business and have pushed up consumer and trade bodies. We asked a number of fundamental and early 2009. Growth in Asia and other emerging prices, choking off spending growth. Many businesses are questions including; markets has been strong, but slow and uneven in the UK asking themselves how long this pattern of disappointing and other western economies. Business and consumer growth and volatility will last. Or indeed, whether this • What does sustainable packaging mean? confidence in most western economies remains fragile; might be the new normal for the foreseeable future2. • What do consumers understand as sustainable? the financial markets’ preoccupation with the euro downturn is the latest in a long worry list of issues. These trends are expected to influence consumer • How are each of these four key groups Volatility has become a feature of the economic climate. spending as we enter a new period of economic approaching the issue? Since the mid-2000s neither western economies nor instability. There’s no expectation of a return to the emerging markets have been able to achieve healthy pre-downturn world of financial exuberance and strong

1 Sustainable Packaging – Threat or opportunity, PwC 2010 2 PwC Senior economic advisor, Andrew Sentance

PwC Revisiting the debate 3 consumer growth in the developed world, but as a new Figure 1: Consumers’ view of contributing to more sustainable environment middle class emerges in developing countries, we’d expect to see rapid growth in consumer spending in Recycle , cans, and other materials those regions. Spending patterns around the world will continue to be volatile, as a result of financial Walk or cycle instability and bursts of energy and food inflation. Avoid dropping

Globally, buying patterns have shifted and consumers Avoid creating waste tend to look for the best value for money and for products that perform well. Consumers are far less willing to pay Use public transport a premium for greener products than they were before Use less electricity the downturn, even in the grocery sector. According to Kantar’s survey of 52 weeks to January 2012, only two Make fewer car journeys of the Big Four supermarkets in the UK (Waitrose and Sainsbury’s) say that products Use water wisely are outselling expectations3. Clear up litter

All of these trends have an effect on the way consumers Turn down home thermostat think about how they can contribute to a more sustainable environment. An IPSOS MORI poll in botles, 2011 (Figure 1) showed that consumers see as having the most significant impact4. Buy organic produce Take fewer holidays

0102030405060

Source: IPSOS MORI Packaging poll 2011

3 Kantar Survey, 52 weeks to Jan 2012 4 IPSOS MORI Packaging Poll 2011

PwC Revisiting the debate 4 Packaging supply and demand Figure 2: Global packaging markets As far as supply is concerned, the packaging market is still highly fragmented and even large companies have Tetra Laval 3% International paper company 3% been unable to gain a substantial share of the market Smurfit Kappa 2% Amcor 2% (Figure 2). Barriers to entry are quite low for the ‘The main interests that industry; the main expense for new entrants is the consumers have in packaging necessary machinery and equipment. Finding skilled are about the personal benefit staff such as designers and chemical engineers is they gain in terms of price, now becoming a bigger issue and a potential barrier in the future. convenience and about how it helps them with their The food and drinks industry is still the biggest market purchasing decision. Only for packaging products. It’s a stable and non-cyclical when it’s discarded do local market which is growing steadily, which makes it environmental impacts Other 90% attractive for material producers. Even so, wider external become a consideration.’ factors such variations in the price of oil, metals, plastic (Source: Datamonitor, February 2011) resin, paper and cardboard will always have an impact. Rowland Hill, Marks & Spencer

In terms of demand, consumers have shown great resilience in the past two years. The use of packaging by FMCG companies and retailers remains strong worldwide, with growth in demand in emerging markets in low double figures and developed countries showing more modest, single digit growth. Consumer demand, which encourages innovation in product design as well as more efficient packaging, will continue to shape the industry.

PwC Revisiting the debate 5 The packaging, paper and print industry supply chains Figure 3: Impact of mega trends on efficient consumer packaging analyst, PIRA International Ltd, conducted a survey across the global packaging value chain, researching Ageing the key drivers of the development in more efficient packaging. Almost 80% of the respondents stated that More single-person/smaller households consumer exposure to environmental issues was either a growth driver or a major growth driver. Other Increased exposure of consumers to environmental issues significant drivers of more efficient packaging were advances in materials, processing and converting technologies. All market mega-trends were more Reduction in disposable income resutling from economic downturn widely seen as growth drivers rather than growth barriers (Figure 3). Increased cost of transportation and travel

Rising consumer demands for convenience

Increased raw materials/energy costs

Advances in materials technology

Advances in processing/converting technology

010203040506070 Growth driver Major growth driver

(Source: PIRA International, January 2011)

PwC Revisiting the debate 6 Discovering the changes Two years on

Key stakeholder groups and their influence Retailers Figure 4: Key stakeholder groups In our 2010 report we identified the four key stakeholder It’s a tough time for traditional retailers who are groups that were driving the development of sustainable struggling with shrinking demand from increasingly packaging but all from a slightly different perspective. cautious and cost-conscious customers, coupled with Governments, through regulation; FMCG companies and the increasing pace of online shopping. This new model packaging producers, who react to the needs of retailers; for retail has opened up new opportunities for more retailers and customers, who say they’re looking for more efficient use of packaging materials for example, FMCG Retailers sustainable packaging but who are often unwilling to pay in distribution centres where products come with companies a premium for it. There have been subtle changes in minimal primary packaging. emphasis for all of these groups over the past two years, but all have been influenced by one overriding driving Food and grocery retailers have generally fared better Consumers force that is the voice of their customers. than their non-food counterparts, despite sinking margins. This sector is particularly active in the sustainability debate and the US and UK, are driving it. Government and Packaging One retailer told us that it has moved towards a more trade bodies producers informed consensus over the past two years, and now looks for products with the lowest possible environmental impact, as well as packaging that has as low as possible an impact in the supply chain it’s designed for.

PwC Revisiting the debate 7 FMCG companies In some cases, though, this has led to tension between ‘ is at By contrast, most of the major FMCG companies are FMCG companies and retailers. One FMCG company the heart of our commitment to reappraising their growth strategies to address emerging told us that they had some tough discussions with Creating Shared Value by trends, such as a surge in demand in emerging economies retailers, who were making big data demands for all increasing the world’s access to and the rise of power brands (Figure 5). Many FMCG of their products, from carbon foot- to ethical higher quality food & beverages companies have invested heavily in product development sourcing. These could not be met without adding a whilst contributing to and innovation, and it’s clear that there’s a far closer significant overhead and a compromise was found. environmentally sustainable collaboration between retailers, suppliers and packaging Compromise has become the order of the day, aided by an improvement in the common understanding of the social & economic development. manufacturers as a result. language and metrics around sustainability. It is even more important than ever before to find the so-called innovation sweet spot where Figure 5: Key trends for FMCG companies consumer needs, environmental impact, technical & business capabilities converge.’ 4 1 Anne Roulin, Nestle Reshaping portfolio Power brand investment through M&A and innovation M&A Innovation

3 2 Efficiency to finance Efficiency Emerging Focusing on emerging profitability market market growth and investment

PwC Revisiting the debate 8 Packaging manufacturers use less material, of a lighter weight, and ‘The consensus around what represents We said in the 2010 report that packaging have concentrated on creating efficient sustainable packaging has developed manufacturers have been historically slow processes for the production, distribution significantly in the past few years. The to engage in the sustainable packaging and disposal of their products. Rather debates about lightweighting, recycled debate, and were sometimes at the mercy than concentrating purely on their products, content or recyclability as the ultimate of the conflicting opinions of other the intention is to think of ways of making measures of how sustainable a package stakeholders, particularly consumers the entire business more sustainable, and is have been replaced by a more holistic and regulatory bodies. The past two of the role of manufacturers in improving the sustainability of the products’ entire debate around the product, the package years have seen the industry take an active role in the debate, but emphasising supply chain. and their use from inception to post- that packaging is only a part of the wider consumer use.’ sustainability story. The industry as Manufacturers are also entering into a whole has argued that focusing on a conversation with their customers, Peter White, P&G packaging alone in the sustainability actively encouraging them to look debate is counterproductive and short- at product design and developing ‘The pressure for change comes directly from sighted. As a result the industry has relationships with clients with a view to our customers and not so much from increased its communication efforts, creating packaging solutions that benefit everyone involved. A good example of this retailers. It’s mostly specific product-related, particularly in explaining to the public is found in the corrugated packaging and the larger global drinks producers seem why and how packaging is used, the contribution that it makes to a sustainable industry, where the move to substitute to be more focused than other groups in society and how consumers can play virgin materials with recycled ones is driving improvements to their products today. their part in the life cycle. gathering pace thanks to the more open We have been very active in supporting their and informed dialogue between packaging initiatives, especially in closing the material It seems that sustainability investment has manufacturers and FMCGs and retailers. to material loop on beverage cans side.’ increased rather than decreased during The financial benefits are significant and the economic downturn, as companies often shared among this group. John Revess, Rexam pay greater attention to the effective use of resources. Manufacturers are tending to

PwC Revisiting the debate 9 Government and trade bodies In Europe, the EU Commission believes that an increase The role of Government in the past two years has in the annual turnover of the and changed focus, but it still remains an important recycling sector by EUR 42 billion will create over 400 communication forum for all stakeholder groups, if not a 000 new jobs by 2020, according to a new Commission driver, for efficient packaging solutions. Governments are study entitled Implementing EU waste legislation for increasingly providing platform for discussion among the green growth. The report analysed studies in stakeholder groups on topics from household collection Cyprus, Germany, Ireland, Italy and the Netherlands. schemes to running return schemes for recycled plastics. Its observations will feed into the legal and economic Packaging Recovery Note (PRN) or Packaging Export measures being developed under the Roadmap for a Recovery Note (PERN) schemes for recycled plastics Resource Efficient Europe.

The role of educating citizens into more sustainable ways Interestingly, when asked about the importance of of life is still there, and various campaigns aimed at food Government/NGO work in driving the demand for ‘The balance of my work as waste had a positive impact on customers. They improvements in the sustainability of packaging and INCPEN Chief Executive has highlighted the fact that actually food waste has a far products, two of our interviewees rated this as 3 on shifted: five years ago it was bigger impact on the environment than , a scale of 1 to 5 (1 is excellent), compared to 4 on the 80% research, 20% as one third of all food in the UK ends up in the bin. same scale two years ago. communications but today it’s 20% research and 80% The other important role remains setting the recovery Key themes emerging from the changing role of communication. We’re giving and recycling targets for packaging manufacturers. In the Government in sustainability are: the issue of packaging the UK, the March 2012 Budget has a new measure aimed at • Government regulation and legislation in packaging voice it deserves.’ increasing by linking the targets from is still a long way off. 2013 to percentage of glass recycled coming from remelt. • Shift from educating end consumers to helping Jane Bickerstaffe, INCPEN retailers, packaging producers and FMCG companies find common language. • Focus on practical measures and metrics • Keeping the public focus on the role of packaging and the personal contribution to reducing, reusing and recycling.

PwC Revisiting the debate 10 Across the supply chain ‘Companies have shifted their attention from addressing just one issue or a selection of issues on one Wholesale topic to a more holistic approach Raw materials Processing Use Disposal and retail incorporating economic, environmental and social considerations.’

Jane Bickerstaffe, INCPEN

The trade bodies, similarly, are focusing on brokering The companies we talked to in each of the main A significant step change in allowing this collaboration honest debate and driving collaborative behaviours. For stakeholder groups were making significant efforts to to happen across the supply chain is the introduction this survey we interviewed INCPEN (Industry Council for understand a number of factors. These included the of more sophisticated performance management Packaging and the Environment) and ACE (Alliance for impact of their decisions at each stage of the value chain. solutions in retailers, FMCG companies and packaging Beverage and the Environment). Although very They then identify the most serious impact on the manufacturers that track one product with its packaging different in scope, focus and membership, INCPEN’s and sustainability hot spots and finally, developing throughout its life. ACE’s view of the role of packaging converges around the relationships with partners who are affected the most. following three themes: Plans are then put in place to minimise the impact so This has made the interdependence even more • Environmentally – saves more resources than it uses. that the success of the plan is measured, monitored prominent. Now vital data can flow from one system to and adjusted when necessary. another, underpinned by a shared commitment to robust • Economically – reduces costs of distribution and and auditable reporting up and down the supply chain. merchandising. As one FMCG company in our study put it, sustainable Good practice examples of reporting now exist. • Socially – meets consumers’ expectations by providing packaging isn’t seen as a stand-alone concept anymore; product protection, safety, handling and information. rather companies are concentrating on trying to reduce the environmental impact of their products throughout From harvesting cocoa beans to running a waste the entire life cycle. Packaging, on its own, is seen as collection scheme, decisions made at any point in the having a relatively small impact on the environment and value chain are felt across the life cycle of the product and as a result many companies are choosing to analyse the its packaging. These incremental changes all contribute environmental impact throughout the value chain, from to the overall sustainability performance of a product ingredients to transport. value chain.

PwC Revisiting the debate 11 Case study

Puma PUMA’s 2010 E P&L results

Puma has the long-term mission of EUR million Water GHGs Land use Other air Waste Total % of “becoming the most desirable and use pollution total ‘Gaining a better sustainable sport lifestyle company”. understanding of the PwC recently supported PUMA to reach 33% 33% 25% 7% 2% 100% source of the natural goods a major milestone in this ambition. Total 47 47 37 11 3 145 100% and services PUMA relies PwC worked with Trucost to help on and the declining PUMA produce the first global PUMA <1 7 <1 1 <1 8 6% operations availability of the basic environmental profit and loss (P&L) resources required for our account. The focus of this P&L Tier 1 1 9 <1 1 2 13 9% business growth, will help statement was water usage and carbon Tier 2 4 7 <1 2 1 14 9% PUMA build a more emissions within PUMA’s operations Tier 3 17 7 <1 3 <1 27 19% and supply chain. (See insert) resilient and sustainable Tier 4 25 17 37 4 <1 83 57% business model and In a second phase of work, PwC is ultimately better manage supporting PUMA measure land PUMA’s environmental impacts across operations and supply chain its impacts on the use, waste, and air pollution. By 145m environment.’ understanding the financial value 83m Jochen Zeitz, Chairman and of environmental impacts, PUMA is CEO of PUMA and Chief better prepared for potential future Sustainability Officer PPR regulatory requirements. It can also focus its resources on the most Tier 4 Tier 3 Tier 2 Tier 1 Operations material impacts and business risks. 137m 8m

PwC Revisiting the debate 12 Focusing on collaboration

It’s clear that the debate around what constitutes good or that the objectives for sustainable packaging are bad packaging has moved on, to the extent that we would aligned. This increased collaboration brings many ‘Our approach hasn’t changed argue that ‘sustainable packaging’, as a term, is no longer benefits, including the fact that research and dramatically but we are looking relevant. No single definition emerges from any of the key development can be targeted more effectively. to collaborate more with our stakeholder groups. Instead, a more balanced view of suppliers and customers. efficient packaging is emerging. This means taking into We’re in the same boat Collaboration up and down account efficiencies that can be made during the entire The need for collaboration came up frequently the supply chain is the way life cycle of the product, including a packaging solution throughout our interviews and it is an encouraging forward, with technology and that uses the minimum amount of resources and produces sign. At PwC we believe strongly in looking for innovation being the crucial the minimum amount of waste, while also protecting the partnerships and shared objectives with suppliers components of progress.’ product. And beyond that, transport and display and customers. It’s evident that the packaging efficiency, and what happens after the product is used, industry, retailers and suppliers are putting aside Michael Wilson, Diageo is also taken into account. their traditional views of commercial sensitivities and the ‘silo’ approach to sustainability. In its place In 2010 we argued that retailers, suppliers and the is a willingness to develop an overall solution to packaging industry needed to look beyond their own sustainability that covers the entire life cycle. horizons and consider the wider environmental impact of packaging. We said that there were trade-offs at all points The current economic pressures have contributed to in the packaging value chain and more creativity and the feeling that everyone shares the same problems collaboration was needed. Two years on, it’s clear that in terms of maintaining margins and growing profit, this is happening . Packaging companies are talking to without losing sight of the impact that growth might suppliers, retailers and customers are trying to make sure have on the environment.

PwC Revisiting the debate 13 Case study Life cycle analysis applied to an international hospitality group Accor Group Inputs Lifecycle of Accor’s business activity Outputs

The first global study to calculate the Energy environmental impact of an international Distribution consumption hospitality group. Raw materials g Water PwC collaborated with Accor to record the in r consumption u t U environmental impact of the group’s activities c a s

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across the entire life-cycle of its activities, taking u n Waste into account both direct and indirect impacts. Energy a

M production The study covered 4,200 hotels in 90 countries Accor and included 2,800 suppliers. R Emissions e a f w li of CO2 Water To carry out this pioneering study, baseline m f o a d methodologies and studies were used and te n ria E adapted to create a model that would be most ls Eutrophication relevant to the hotel industry. Environmental (water pollution) impact was assessed with respect to water consumption and pollution, energy, and waste The learning from the study have served to increase Accor’s commitment to sustainable ‘The learning of this study are priceless. It goes development and act as a basis from which to beyond intuition to provide reliable data about build an even more relevant environmental actual environmental challenges.’ strategy for the Group. Accor 2010

PwC Revisiting the debate 14 Navigating future trends Technology and innovation

New packaging materials, improved efficiency processes Printed functionality, sometimes known as printed Retail-ready packs (RRPs) have grown in popularity and ‘smart design’ products are all helping to improve intelligence, is another exciting area of innovation. as retailers look to increase their bottom line, and the impact of packaging across the supply chain. Product This moves traditional printing beyond graphics by this should provide new opportunities for packaging reformulation and usage of materials are only two introducing functionality into print on paper or plastics. producers. RRPs are mostly used in food packaging, of the number of innovative interventions used today. These could range from codes containing links to accounting for 78% of the total. Corrugated RRPs FMCGs in particular have invested heavily in more additional information to more sophisticated visual currently dominate the market but are expected to lose energy-efficient processes and equipment, and in new effects and images, electronics, optics and sensors. 0.5% of market share by 2016 as new technologies allow technologies, such as micro milling, that helps to improve for better graphics and performance. Plastic RRPs are the flavour and smell of food. The benefits of the technology behind intelligent expected to make the most gains and, according to the packaging have already been seen through the use of analyst PIRA International5, and should account for Nanotechnology, the process of manipulating atoms product tagging through electronic article surveillance almost a quarter of demand by 2016. and molecules, has the potential to create new materials and radio frequency identification tags. In this case, helping with the development of better-performing packaging is not merely protecting the physical integrity Speaking the same language sustainable packaging. R&D into new materials has of the product – it’s also ensuring that it is delivered as One of the strongest indications that the key stakeholder already been evidenced with the development of fibril intended, from a known source manufacturer to the groups are coming together is in the greater degree of cellulose by the paper manufacturer UPM. This appointed supplier. It can provide confidence about the uniformity of language and increasingly, the metrics innovation is a strengthening element derived from wood authenticity of products and be a disincentive to theft and key performance indicators (KPIs) used in the that has the potential to make products tougher, lighter and tampering. It also allows manufacturers and sustainability debate. This is an improvement from two and thinner. It began pre-commercial production in 2011. retailers to track and trace products. years ago, when firms were pursuing a whole host of objectives, presented by different metrics, which was at times confusing and detracting from the common goals.

5 www.smitherspira.com

PwC Revisiting the debate 15 In September 2011, the Global Consumer Goods The measurement system uses a series of metrics, ‘We have better tools available to Forum launched the Global Protocol on Packaging underpinned by definitions and units of measure analyse environmental impact than Sustainability. It provides the consumer goods and allowing stakeholders from all four groups to choose ever before. Life cycle assessment is the packaging industries with a much-needed common those that are most meaningful for their business tool of choice, and it is fully embedded language with which to discuss and assess the relative and agree them with their partners up and down into our R&D processes.’ sustainability of packaging. The Protocol consists of a the supply chain. framework and a measurement system. The framework Anne Roulin, Nestle AR Nestle sets a range of life cycle indicators and their relationship The Protocol increases the potential for everyone to the common sustainability indicators, such as involved to have thorough business discussions and recycled content. to make well-informed decisions on anything from sourcing to transport. It remains to be seen if the Figure 6 represents the reporting framework that GCC take-up of the Protocol will live up to expectations. Forum came up with as a comprehensive set of attributes and life cycle indicators, allowing members to choose the ones most suitable for their role and responsibility in the supply chain.

PwC Revisiting the debate 16 Figure 6: GCG Forum reporting framework

Attributes Life cycle indicators Packaging and weight weight and Packaging optimisation product to Packaging ration weight Material waste contentRecycled content Renewable custody of Chain Substances the hazardous to environment Production in areas of scarcitywater recovery Packaging rate Cube utilisation rate reuse Packaging energy Cumulative demand Freshwater consumption Land occupation warming Global potential depletion Ozone Toxicity/cancer Toxicity/non-cancer respiratory Particle effects radiation Ionizing () ozone Photochemical potential creation potential Acidification europhication Aquatic ecotoxicity Freshwater potential Non-renewable depletion resource

Packaging and weight optimisation Packaging to product weight ration Material waste Recycled content Renewable content Chain of custody

Attributes Substances hazardous to the environment Production in areas of Packaging recovery rate Cube utilisation Packaging reuse rate Cumulative energy demand Freshwater consumption Land occupation Global warming potential Ozone depletion Toxicity/cancer Toxicity/non-cancer Particle respiratory effects Ionizing radiation (human)

Life cycle indicators Photochemical ozone creation potential Acidification potential Aquatic europhication Freshwater ecotoxicity potential Non- depletion

Key Is automatically derived Will likely be derived Will help to derive PwC Revisiting the debate 17 Summarising the findings

The conclusion of our study is that sustainable packaging The evolution of efficient packaging solutions will Figure 7 as a term is no longer relevant today as the debate about be shaped by: good vs. bad packaging has moved on. Sustainable • Cost of materials packaging was used as an umbrella term to cover many cing effe Produ ctive aspects of sustainability and as such, is deemed too • Breakthroughs in new technologies, such as nano, ing solution kag s wi applied to both product and packaging pac m reso th broad a term to be useful at a practical level. The idea inimu urce P m s m ro i t that anyone from the key stakeholder groups can come g n e • Security of supply (fibre, glass, PET, water, electricity) e n im c s i ti u l i n up with a single meaningful definition of sustainable c s g r y in e c Key influencers: • Consumer demand for convenience t g t f e h packaging is largely proving to be a red herring and has r e a • Cost of materials p

d r p o e n r been consigned to history. The reality is that it has v • Security of supply (fibre, d • Finding sources of competitive advantage in falling a o i t u l glass, PET, water, d c c a u

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1. Producing effective packaging solutions with • Breakthroughs in new technologies minimum resources • Finding sources of competitive advantage 2. Protecting the product and minimising product waste D y c is n p e 3. Transport efficiency la i y fic e ef 4. Display efficiency and ffic rt ien spo cy Tran 5. Effective after use disposal and recycling.

PwC Revisiting the debate 18 Appendix 1: Methodology For this report, which is not based on full survey, we have chosen a small but representative sample of stakeholders from all four stakeholders groups. We conducted interviews with seven firms (nine representatives) in total and drew our conclusions from interviews, PwC publications, EU Commission websites and various analyst sources (Datamonitor, PIRA, Kantar etc.). We are grateful to senior representatives in the following companies who participated in the survey: • ACE UK • Diageo • INCPEN • M&S • Nestle • Proctor & Gamble • Rexam

The questionnaire attached served as a basis for discussion rather than a script and participants could choose the questions they felt were most applicable to them.

PwC Revisiting the debate 19 Appendix 2 This are examples of the questions we asked in our survey of representatives of each of the key stakeholder groups.

Topic Question Answer options Defining Sustainable Packaging What is your understanding of the meaning of “sustainable packaging”? Has it evolved in the past two years?

How much agreement is there in the industry compared to two years ago on what “sustainable packaging” means in practice? Do you think that different stakeholders have different opinions on what “sustainable packaging” means? (For example, retailers vs. FMCGs vs. customers vs. government vs. packaging companies)

Drivers of Sustainable Packaging Where is the pressure to improve the sustainability of your packaging coming from?

How, if at all has this pressure changed over the last 2 to 3 years? Please rate Government regulation on a scale of 1-5 (1 = very important, 5 = not important) each of the following FMCG (manufacturer) demands factors in driving the demand for improvements in the sustainability of Retailer demands packaging? Consumer demands (Please explain your choices:) NGOs (agencies such as Green Peace, ) In order to keep pace with other packaging companies

PwC Revisiting the debate 20 Topic Question Answer options

How important a role do you think that each of the following factors are playing General environmental concerns (CO2 footprints etc) in the drive towards more sustainable packaging (Please explain your choices:) The need to reduce the volume of waste sent to landfill in the UK Cost reduction initiatives by retailers and FMCGs Desire to use sustainable packaging as a prominent factor in the brand image of products Customer pressure

Do you believe that an ability to provide / develop sustainable packaging Is currently solutions for customers will be an important source of competitive advantage Will be in the future for packaging companies?

Leaders in Sustainable Packaging Which retailers / FMCGs (or other packaging companies) do you perceive to be leading the way in driving the adoption of sustainable packaging products and strategies? (names of companies in the table can be used as prompts)

Please also provide an explanation of why you see them as leaders

Do you have a regular dialogue with FMCGs/retailers around their sustainability needs in packaging? Why/why not?

PwC Revisiting the debate 21 Topic Question Answer options Strategies for sustainable packaging Which of the following strategies are you currently employing or Strategies prompt list: expect to employ? Eliminating packaging through re-design (of both products and packaging) Developing Using recycled materials in our packaging Product reformulation Usage of filler materials Reducing the weight of the packaging Substitution of different materials Usage of renewable materials (e.g. Bio Plastics) Developing and using fully recyclable materials Improving the efficiency of our own production process (lowering wastage and energy use etc) Reduced fuel consumption

Which of the strategies are your customers (retailers, FMCGs, packagers etc) focusing on and pushing you to do more around?

Do you publicise any of these initiatives? Yes/no (please tick as appropriate) Which ones? Why/why not?

Recycled Materials What barriers do you face to the usage of recycled materials? Accessibility If aware of this measure: Price (are they more expensive than virgin materials?) Performance Other

How are these being or could these be addressed?

What role do you think recycled materials will play in the future?

Are you planning to use more/less recycled material in the future?

PwC Revisiting the debate 22 Topic Question Answer options Future Developments What role do you think sustainability will play in the packaging market in the future?

What role is innovation and technological development likely to play within this?

How do you think packaging companies will respond to the growing environmental awareness amongst consumers in the future?

Impact of current economic conditions How do you think demand for sustainable packaging is affected by the economic slowdown?

What is the impact of an economic downturn on your approach to sustainability?

Will the current decrease in oil prices affect sustainable packaging trends, e.g. by lightening cost pressure on the use of plastic packaging?

PwC Revisiting the debate 23 Keeping in contact Why PwC? We have over 161,000 people in 154 countries Our clients choose us because: helping organisations to work smarter and grow • We represent a leading breadth and depth faster. Our work is always evolving to respond to of sustainability and commercial expertise, industry trends and management focus, and we and experience combine our deep technical skills in response to our clients’ changing needs. • We have extensive local networks and insight • We deliver quality, tailored solutions Our Forestry, Paper, Packaging practice is a part of the Industrial Products practice and • We innovate and work in partnership Malcolm Preston Chris Baker has over 1,400 industry professionals located with our clients Partner Partner in over 20 countries, giving our clients access • We are a leading edge sustainable 020 7213 2502 020 7213 1500 to an international network of knowledge business ourselves [email protected] [email protected] and experience. We also have the largest Over time, what we do remains closely Sustainability and Climate Change (S&CC) linked with helping our clients improve practice of the Big Four and in 2011 won the way they operate; innovate and grow; reduce Consultancy of the Year at the Business Green costs; manage risks; leverage talent; and change Leaders Awards. We have a global network the way they do business. of 700 people and a team of more than 100 specialists in the UK.

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, Mark Thompson Maya Bankovich employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Director Senior Consultant © 2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the 020 7804 9643 020 7804 2968 United Kingdom), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. [email protected] [email protected] Design & Media – The Studio 21155 (05/12)

PwC Revisiting the debate 24