JTPP: Green Packaging Leads to Greener Bottom Line
By John Walsh
Through a special
arrangement, presented here for discussion is a summary of a current article
from The Journal of Trading Partner Practices (JTPP), the official online
publication of the Vendor Compliance Federation (VCF), Trade Promotion
Management Associates (TPMA), and the Federation of Credit and Financial
Professionals (FCFP).
Whether they
buy into the warnings about climate change or dismiss it as a bunch of
hot air, trading partners recognize that green initiatives offer a chance
to build their brands and drive cost savings. As a result, new strategies
aimed at reducing waste and conforming to environmental best practices
in packaging are taking root.
At the VCF VisionSync
2009 Conference in Tampa, FL, June Anderson, partner at the Packaging Knowledge
Group, said the business case for sustainability was given a major boost
from the world’s biggest retailer. Walmart is leading the way with its
sustainable packaging initiative and its plans to develop eco-ratings for
the products it sells, which she said will force other retailers to boost
their sustainability efforts. “Walmart will be asking all of you to help
it meet its packaging and sustainability goals."
Ms. Anderson said organizations
should start by developing their vision and goals around sustainable packaging,
gather data and identify key metrics that will help them measure and assess
performance. Some of the metrics currently being measured in many organizations
include reducing emissions and waste, cutting back on water and electricity
consumption, and utilizing alternative resources in making products and
packaging.
Ms. Anderson
identified six steps to achieving sustainable packaging that makes sound
financial sense.
- Eliminate Materials: Optimize the design of packaging that reduces space
and eliminates unnecessary materials. - Change Materials: Utilize virgin materials from renewable sources and
design for recycling and re-use. - Reduce Materials: Use only the amount of material necessary and optimize
product design. - Improve Cube Utilization: Redesign packaging for optimal cube utilization
and easier transport. - Change Energy Sources: Use renewable energy sources for manufacturing
and distribution and participate in renewable energy credit programs to drive
demand. - Change the Product: Optimize product design for less packaging need.
Ms. Anderson
also cited the case of Nike, which introduced the Nike Trash Talk line
of basketball shoes made entirely from manufacturing waste. The upper shoe
is pieced from leather and synthetic wastes from the factory floor and
the mid-sole uses scrap-ground foam from factory production.
Today, Ms. Anderson
noted, materials and converting processes are mostly fossil fuel based,
although some cutting edge companies are making the conversion to renewable
energy sources. “In the future, you will see more and more companies making
the transition,” she said. Ms. Anderson cited the examples of wind turbines
on top of the exterior lighting at some Walmart stores. In determining
carbon footprints, “it is a well known fact that nearly 75 percent of the
impact comes from the supply chain and is unreported.” Ultimately, many
changes in business practices will be required.
Discussion
Questions: To what degree do you see any momentum toward sustainable
packaging gaining ground in 2010? What will support the trend? Which
steps or solutions around sustainable packaging make the most sense for
brands and retailers?
Judging from the sheer volume of tweets over the last three days about how difficult and annoying it is for parents to “unpackage” most kids toys on Christmas morning, I would say there is a movement bubbling just under the surface for consumers to demand more sustainable packaging from thousands of manufacturers.
Just think what would happen if all the bloggers and tweeters started to specifically call out each and every toy manufacturer and tell their stories tied to each of the brands. I dare say this would be the root of substantial change. Needed change.
I like what Amazon has done, working with hundreds of manufacturers to offer products that are already being packaged in more sustainable ways to their shoppers. Makes me feel good about both the maker and the seller. Plus it proves that with a little more vocal nudging, many of these manufacturers can indeed improve on packaging across the rest of the retail spectrum.
The economics of sustainable programs will have more to do with determining the progress of companies than the responsibility to the planet. Companies cannot afford to invest in technology or make major product or packaging changes without a short payback window. The risk to a brand in package redesign or perceived repositioning can be significant from a consumer acceptance perspective. (Not everyone can recover from a “Coke Classic” scenario!)
Additionally, the pressure to drive prices lower from retailers must be balanced with an opportunity for manufacturers to get a win from these initiatives, not just a “pass through.” The next several years will be quite interesting and the companies that figure out the right balance will prosper.
Sustainability is a growing wave and therein lies the problem. A “Greener than thou” mania has already engulfed certain industries (like paper). When sustainability becomes the basis of a marketing campaign rather than business process, the inevitable result will be widespread consumer skepticism.
In RSR’s Green Benchmark reports, reducing packaging costs by “going greener” is cited by retailers as the number one or number two greatest opportunity they see from green initiatives. That, plus store HVAC costs go back and forth as the biggest cost opportunities. And then there’s the brand image which is also rated really highly.
Let’s not forget, Walmart has taken a leadership position here as well, and declared it will use only renewal energy and create no waste (essentially a zero footprint).
It’s coming our way. You may like it, or you may not, but sustainability is good business…and our customers consider it good Karma too.
Good for the economy, good for the consumer, good for the environment and good for the bottom line. This is another major change in the way we do things.
There are three primary drivers of the sustainable packaging movement that I see picking up momentum as we move into the new decade.
The first is the increasing need for brands to find points of differentiation on the shelf. Given the ubiquity and parity of product, in many cases packaging has become the last frontier of competitive advantage. It wouldn’t surprise me to see commodity items (e.g. salt, sugar, batteries, printer paper) talk as much about sustainability on their packaging as they do about the actual product inside.
The second is fashion. In the last 20 years, the “green” agenda went from being an idea that resided on the lunatic fringe to becoming hip and cosmopolitan. I expect this “cool to be green” trend to continue. The same sense of chic will apply to companies who make radical changes to their business in the interest of sustainability.
The third is perhaps the most obvious–the need reduce costs. Continued price pressure at retail will force companies to find and eliminate input costs wherever they can.
There is significant momentum in “green” packaging heading into 2010. What drives this movement (it is way more than a trend) is first and foremost resource efficiency and saved costs to the corporation. What then greatly encourages further steps toward integrating corporate sustainable practices is consumer response and demand.
Walmart and Nike are among the case studies from which all brands should be learning. The linear reasons (save on cost of goods sold) bring corporations into sustainability, but the more relational reasons (happier planet and appreciative consumers) will keep it growing. And, if the women’s market is of any interest, a brand should already be very motivated by those relational reasons.
The terms green packaging and sustainable packaging are really very general terms used improperly when describing materials or products which can impact the environment.
In fact, most claims of green washing occur precisely because of the misuse (misguided or intentional) of green claims. In the case of environmental marketing claims, the FTC has issued specific guidelines which may be accessed with this link.
June Anderson’s outline of six things that manufacturers can do to improve their packaging are a good starting point.
Most western nations have already enacted Extended Producer Responsibility laws which require the Brand Owners to pay taxes on their packaging and electronic wastes as an example. There is a movement in this country to enact similar programs that will directly impact the Brand Owners and will result in their becoming much more aware of the true cost of their packaging to their company.
We needn’t look much further than to our Canadian neighbors to see how they (manufacturers, retailers and communities) approach the concept of packaging in their manufacturing and communities.
A lot of companies and consumers are talking about sustainability. A lot of companies are beginning initiatives. That creates good press, good marketing, and some consumer goodwill. However, the problem comes with determining what is “green,” what is “sustainable,” and what approach or company or packaging is “more green or sustainable.” Not all initiatives are equally effective. Determining the difference, quality, or level of sustainability will be the next debate.
For suppliers, sustainable packaging has quickly gone the way of barcodes and RFID: the bonus cred window has slammed shut and everyone should be operating in mandate mode. Sustainable packaging is now a point of parity; HOW sustainable will define points of differentiation going forward…. Are you just using recycled paper? Or will it grow a tree if you plant it?
I did notice a considerable lessening of the amount of packaging in the toys my children (3 who are 5 and under) received this Christmas. Maybe that is a start.