How are things developing with the game changing topics of sustainability and digital transformation? Is there any particular progress or are we living a Groundhog Day and having the same discussions over and over without making any advancements? In the end, have only the problems continued to evolve, but not the solutions? It’s worthwhile to keep an eye on recent developments because the challenges are essential and failure can have brutal consequences for companies. Just keeping your fingers crossed will not fix it.
Thomas Reiner, CEO, Berndt+Partner Group explores two of the biggest topics influencing the packaging industry.
2019 was the year of big goals. Brands, retailers and packaging manufacturers, as well as national and European politicians, announced a series of sustainability goals. The focus on the packaging side was almost always on plastics. One got the impression that everything would be fine again if only the use of plastic could be reduced as drastically as possible, if the material could be avoided completely and replaced.
“It's about plastic, stupid!”
And indeed, something has changed on the material side. For months hardly a day has gone by without new, "sustainable" packaging being presented. In variation of Bill Clinton's well-known dictum "it's the economy, stupid!" the common denominator is the movement away from plastic and towards glass and paper or cardboard. This shows that especially in the field of food packaging, but also for other consumer goods such as cleaning agents, detergents and cosmetics, very serious and successful work, as well as research and development is being done. It’s noticeable that areas are now also being opened up that were long regarded as the domain of plastic without alternatives, such as confectionery or frozen food.
The topic of circular economy, which is at the heart of sustainability, is also still characterised by the plastic factor. This is only logical, because plastics and composites, especially for consumer and disposable packaging, only have a future if it is possible to close the cycles for the material - as we have already succeeded in doing for glass and paper. Recycle or die.
Within the world of plastics we see that things are getting tight for certain materials. The sales trends for PVC and PVDC are clear. Polyamides and polystyrenes also have a hard time. This is happening in an attempt to simplify the immense complexity that we have built up on the plastics side. The development is not always really meaningful in terms of recyclability, as we could, for example, close the cycles of polystyrenes relatively more easily. The big winners are currently polyolefins and also polyesters. In the UK in particular, polyester for bottles and cups has been declared a great saviour, even though the recycling issue of cups, for example, has not yet been clarified.
The plastics and recycling issue also has a clear influence in the area of composites. In the course of the substitution of plastics, coated paper is increasingly being used. More fundamental and significant, however, is the movement towards the mono-material solution, which is limited to the use of a single material and gives it different properties through different production and processing methods, with which the different requirements of the individual barrier layers can be covered.
The cycle is not (yet) closed
With all the positive reports of completion that have been published in large numbers and regularly in recent quarters, it should not be overlooked that we are only at the beginning. Apart from interesting individual solutions, especially in the substitution of plastics, we have not yet made any decisive progress in the area of the recyclability of plastics.
For example, the 87.3 percent recyclability of packaging may satisfy the new packaging law and hold its own well in the bonus-malus systems. However, the figure says little about the actual material recyclability. Theoretical recyclability does not yet make a cycle that works in reality. If we are unable to obtain a suitable recyclate from packaging as it is designed, produced, used and collected again, then all our efforts will be in vain.
The importance of the circular economy is shown not least by the new "Green Deal" of the EU, which is to develop around the circular economy and, as a new growth strategy, aims at a resource-efficient economy that will no longer release net greenhouse gas emissions from 2050 onwards and decouples economic growth from resource use.
Blind spots: Life cycle assessment
But the greater the consensus, the greater the risk of blind spots in the calculation. After all, it is precisely the focus on the waste issue that tempts people to stop at the circular economy and Design for Recycling. That would be a mistake. In the same way, the renaissance of paper as a packaging material makes perfect sense from a climate perspective. From an overall ecological point of view, however, i.e. including other ecological factors such as water and energy consumption, things often look very different though.
A prominent example of this is the plastic carrier bag, which is more sustainable from an eco-balance point of view and under the real conditions of people's living and working environments than its paper or fabric alternatives. Another popular example is the cucumber or its foil. If dispensing with the foil ultimately leads to more cucumbers spoiling or being thrown away, the total ecological damage weighs more heavily than the CO2 savings.
Finally, the life cycle assessment also includes looking at the sources of the raw materials used. With fibres from the rainforest, from environmentally destructive monocultures or food, real sustainability goals can’t be achieved.
New challenges on the horizon
In terms of their own health, sustainability becomes concrete for people - beyond any CO2 or ecological balance. Fibers have already made their experiences in this regard in the areas of food safety and the migration of mineral oils and heavy metals - and until recently the problem has often enough been solved by using a barrier layer made of plastic. The same applies to aluminium, which as a packaging material for beverages and finished products, for example, is repeatedly discussed as a potential health hazard.
This is still to come for plastics - under the keyword micro- and nanoplastics. Currently still being discussed on a low scale, the topic will certainly become relevant. Plastic packaging will then not be able to duck away, as current investigations suggest that around three-quarters of the undesired nanoplastic entry into the human body is caused by consumption from drinks in plastic bottles.
The solution for closing the loops, for better ecological balances and for the protection of resources and health is obvious - and at the same time still ahead of us.
It is obvious that we can only master the challenges in joint interdisciplinary work along the value chain. We must continue to work meticulously, creatively and honestly on solutions and formats. And we have to step on it because the real, fundamental solutions are still largely ahead of us. We are still lagging far behind our own objectives.
The disruptive changes brought about by digital transformation are, as with the issue of sustainability, dynamic and multifaceted. The striking difference: there is comparatively little talk about digital transformation. But we should not be deceived by this. Even if the topics on the surface are still not very present, they will reach us. And their dynamics will not be less dynamic than in the case of sustainability, on the contrary, it will be much more "brutal".
B2B: Platform Economy
So far, digital transformation has been most successful at the frontend and in the form of web shops. On a higher level, we see the predicted development towards the platform economy, which is transforming the previous economic system.
The platform economy is the core topic of digital transformation that will catch up with us next and most strongly. It can already be seen that the platform economy is increasingly pushing into the B2B sector as a whole. It serves as an engine for service and process innovation and reduces complexity and inefficiency. As a result, the platform economy successfully serves the primary needs of our value chain. This is one of the main reasons why it is so successful.
Take the example of complexity: The complexity we have built up in industry over the past decades, including in the B2B sector, is simply madness and often only feeds itself. The product or the consumer usually does not benefit at all. It cannot and will not remain that way.
The logical consequence is a consistent digital transformation and automation that goes hand in hand with fundamental service and process innovations and that will also affect traditional business models in particular. This is about more than just a web shop, because it is at the core of the platform economy that it no longer just digitally brings offers onto the market, but also connects suppliers and consumers. This circle of suppliers and consumers also includes the company's own competitors.
Where sustainability and digital transformation meet
Interestingly enough, the first signs of the revolution can be seen in the area of sustainability and the circular economy, namely in secondary raw materials such as recycled materials and recycled cardboard. This is where the worlds of the two game-changing themes meet.
The same is the case where digital transformation gives us new possibilities for marking and identifying materials, which help us sort and recycle or even make this possible in the first place.
Ironically enough, the old economy would actually be predestined for this job, as that is where the supply chain is located and it has the market access that has been achieved and successfully defended in the past. Unfortunately, however, it is often the place where one stands in one's own way. The character of digital transformation does not match the image and understanding one cultivates of oneself.
This hesitation is being exploited by new players, who often enough come from outside. They may have less market knowledge and, for a start, less market access. But they understand the topic of digital transformation and the concrete, convincing advantages that can be generated and sold with it.
B2C: Internet of Packaging
Digital transformation will also bring changes for retailers, brands and consumers. It will be fundamental, for example, where networked packaging connects all players in an Internet of Packaging.
In the digital age, packaging links the various communication devices and channels via readable codes, most of which are still passive. This enables a whole range of new options and added value.
These include, for example, intensive consumer experiences through narration or the direct connection between the gift-giver and the presentee. Or even a whole new level of possible transparency along the supply chain. Last but not least, every action generates data that can be systematically recorded and evaluated for your own competitive advantage - from the optimization of production and logistics to research and development along customer needs to the activation and retention of consumers.
Ultimately, packaging, integrated into the Internet of Packaging, forms its own communication channel, which will gain significant importance if compared to classic advertising and the channels of social media.
Be agile! Who will be served first?
What digital transformation also brings with it are sometimes radically new forms of organizing companies and work. Because the new solutions will often only be achieved with new tools. Agility is the keyword here.
The New Economy has already found answers here out of necessity, which we must adapt for our world. The existing structures and approaches will not be sufficient to prepare and equip us for the changes.
The key question here is: Who will be the first to manage to organize themselves agilely and to build partnerships? After all, the principle "first come, first served" is an essential feature of digital transformation.