Gartner on how the packaging value chain can meet its sustainability goals

Late last year, research and consulting firm Gartner made the claim that 90% of public sustainability goals will not be met by 2025. To dig deeper into this announcement, and to learn more about how companies can look to meet their objectives, we spoke with the author of the report John Blake, senior director analyst with Gartner’s Supply Chain Practice.

Gartner has said that 90% of sustainable packaging commitments won’t be met by 2025. Could you break this down for us, and explain why you think this will be the case?

Considering the commitments that organizations have made, we find that broad sweeping goals such as 100% recyclable packaging or committing to a very high recycled content is problematic depending on product, processing, supply chain, sourcing, and infrastructure constraints.

Another way to think about it is that the vast majority of products and packaging warrant customized goals over common goals. If an organization is currently in highly recycled materials such as corrugate, glass, aluminium, or rigid PET, a 100% recyclable packaging goal is more feasible to achieve than if their packaging is primarily thin films, multilayer mixed materials, or their products contaminate the packaging resulting in packaging that is not recyclable.

Packaging that is not currently recycled, and has no clear path to being recycled in its current form, will require organizations to rely on innovation to replace those materials, or a redesign of their product, manufacturing or packaging.

Many of the sustainable packaging goals are dependent on vast improvements to the recycling infrastructure and investments by converters and raw material suppliers.

One of the key issues is setting goals that are not based on the technicalities of internal factors (such as product requirements, manufacturing, and costs) and external factors (such as supply base, recycling infrastructure, the economics of aftermarkets). Further challenges include a lack of infrastructure for the collection, sorting, and processing of packaging waste. In addition, supply shortages of sustainable packaging materials are making it difficult for organizations to meet corporate commitments for recycled content.

Another challenge is the lack of fundamental packaging specification data to capture how much and what types of packaging an organization consumes and produces. Much of this data currently sits in siloed functions and is managed in systems that require significant manual intervention to look across SKUs and regions to capture and manage packaging production and consumption in aggregate.

Could you give us a behind-the-scenes look at the research your team undertook to reach this conclusion?

The research was part of one of Gartner’s formats called a “Predict”. Predict research identifies crucial trends over a 1-3 year planning cycle. Predicts help to inform tactical planning and investment decisions in the short term and overall strategy in the long term. We looked at several sources of data in the research process.

This includes proprietary Gartner research methods and a deep dive into public reports from various foundations and initiatives where the members have committed to detailed reporting of their progress as well as their challenges. Additional data points come from reports on bio-based and recycled plastic production forecasts, data on global recycling rates for various materials, and the adoption rates of reusable, bio-degradable and compostable packaging.

Let’s look at some potential solutions now. You’ve highlighted eliminating unnecessary packaging and reducing packaging size. Could you talk a bit about how these strategies can be put into practice effectively, and introduce the idea that they can also help to drive upstream innovation?

This really gets to the heart of making sustainable packaging goals a reality. We need to move from incremental improvements such as downgauging, reducing pack sizes and replacement practices such as swapping virgin resin for recycled resin or bundling products with paper instead of plastic to transformational change through upstream innovation. There is a place for incremental change, and we are seeing measurable improvement in the types and amount of packaging used. Waste reduction is a great example.

If you follow the waste hierarchy, prevention is the most preferred option. It also tends to have an attractive ROI and can be relatively easy to implement. But there are limits to how far we can go when we base our future sustainable packaging goals on a portfolio of designs, pack functionality and manufacturing processes from the past. Much of the reusable packaging innovations appear to be stuck in pilot mode.

There needs to be a commitment to investing in new business models and customer experiences. If we take waste reduction to an extreme, we can envision reusable primary packaging that is refilled in store, from bulk dispensing units, changing how we envision transport and primary packaging. Product innovation is also key, we cannot separate sustainable packaging innovation from product innovation.

In the context of shifting to sustainable profit, could you tell us more about how companies can leverage reusable and refillable packaging successfully?

Sustainable profit is the idea of organizations adapting and embracing circularity, stewardship of resources and protection of communities. It also requires organizations to account for the consequences of their activities and actions that fall involuntarily on other parties – think about the rise in Packaging EPR legislation or the UK Plastic Tax to offset the impact of managing packaging waste that has fallen on local municipalities.

Finally, it takes into account the concerns of stakeholders other than shareholders. An example of this can be retailers or B2B customers and the impact that hard-to-manage packaging has on their business or their ESG goals. Reusable and refillable packaging can address these three areas by reducing waste, maximizing the use of finite resources and creating more efficient business models.

Value-aligned ecosystems: what are these, and how can they be implemented effectively in the context of packaging sustainability?

An ecosystem is a community of organizations that shares and combines capabilities and develops equitable relationships to generate and exchange value across participants. Competing with the help of a partner ecosystem is essential in today’s complex and competitive supply chain and is a necessity to overcome the biggest challenges standing in the way of a more sustainable packaging industry.

Organizations need to integrate partners by going beyond linear interactions and extending the ecosystem to a broader network of entities. For sustainable packaging, this includes Tier 2 suppliers and beyond, end customers, innovative start-ups, government agencies, and competitors. Supply chain, procurement, and R&D teams need to support interactions with trading partners to form an effective ecosystem to benefit the entire business and the industry as a whole. Competitors need to work together as the sustainable packaging challenges are greater than any one organization or function can tackle on their own.

You say that 90% of packaging sustainability commitments won’t be met. How about that remaining 10% - what are they doing right? And more broadly speaking, what makes up a successful packaging sustainability commitment?

This gets back to data – understanding clearly the types, quantity and location of use of the packaging that organizations sell and buy. This may seem simple, but many organizations struggle with the massive amounts of data required to look at material categories in aggregate across their businesses.

Organizations also need a very clear understanding of the dynamics of the processes and practices outside of their direct control. For example – how do material recovery facilities handle our packaging – is it too small or too large or the wrong colour – preventing it from being recycled in practice?

Are suppliers as a whole investing in line with our vision for sustainable packaging? Finally, multiple functions need to take part in setting sustainable packaging goals. Goals cannot be made in a vacuum – they cannot be solely driven by brands or high-level ESG teams. They require the involvement of procurement, R&D, manufacturing, supply chains and suppliers. All parties must contribute to the feasibility assessment and the development of the roadmap for an achievable sustainable packaging strategy.