Plastics & Packaging in the Retail Industry

ESG Tool Kit: Chapter 9

You are reading part 9 of the 10-part ESG Factsheet Series. Explore all the chapters here.

ESG FAQs  |  What is ESG  |  ESG Ratings  |  ESG Reporting  |  ESG Climate and Risk  |  ESG Human Capital Management  |  Supply Chain and ESG  |  Real Estate and ESG  |  Plastics and Packaging and ESG ESG Glossary of Terms

While plastic is a useful material for product safety and distribution, plastic pollution poses a serious threat to the environment. Nearly 80 percent of plastic waste in the oceans originated on land, and it is mostly from packaging materials like styrofoam and plastic bags and bottles. Recent research from the Pew Trusts shows that without action, the annual flow of plastic into the ocean could triple by 2040. Plastic clogs waterways, kills wildlife and is even found in human tissue. Single-use plastics are a main concern; these are products made primarily through fossil-fuel based chemicals that are only used once or for a short period of time before disposal. Single-use plastics include items like bags, bottles and serviceware.

Sustainable packaging, however, is about more than just plastic. By definition it includes recyclable, recycled, biodegradable and compostable materials. However, the many regulations and opportunities that surround recycling create logistical challenges, the absence of clear product labeling and instruction for consumers, and even misleading recycling claims that make it difficult for consumers to properly recycle the packaging, have resulting in a confusing landscape that challenges consumers and manufacturers alike. When combined with problematic narratives surrounding things like compostable and biodegradable packaging options, as these can sometimes be more energy- and emissions-intensive to produce and recycle than plastic counterparts, it is easy to see why this issue tends to show up on nearly every assessment of material concerns for retail businesses.

Consumer behavior

Consumers in all regions are becoming increasingly aware of the impacts of plastics on the environment, and they are expecting retailers to address their plastic usage and packaging pollution. Recent studies find the majority of people are concerned about the environmental impacts of packaging, and most consumers also do not think there are enough plastic-free or recyclable options available for the products they buy.

However, consumers are also expecting increased processing and shipping speed and convenience without sacrificing quality or sustainability benefits. Consumers are willing to pay a bit more for “green” options, but they still want sustainable packaged products to be more accessible and better labeled. These issues are further compounded by global industry trends like ecommerce and digitization that put pressure on existing packaging designs and delivery chains.

Legislation

In the United States, individual states (including California and New York) and other jurisdictions are imposing bans on plastic bags and other types of single-use plastics. Regulators are also introducing bills around reducing plastic waste and increasing recycling. In Europe, the EU Plastic Bags Directive was introduced in 2015 and requires member states to reduce the use of plastic carrier bags by 80 percent by 2025.

The EU is also moving toward a widespread ban on plastic utensils and straws, mirroring a growing movement in the U.S. to ban similar items. It is expected that governments and regulators will direct increasing attention toward plastic waste and will put pressure on companies and retailers to achieve reduction targets.

Solutions

To meet reduction targets and make real progress, retailers are exploring a variety of options for sustainable packaging, which is defined as packaging that has positive sustainability benefits based on a number of criteria, including optimizing the use of recycling materials, designing to increase lifecycle and minimizing the overall environmental footprint. These solutions include:

  • Developing biodegradable and compostable bags and other packaging items (however, as mentioned above, these are not always inherent solutions; retailers can conduct Lifecycle Analysis [LCA] to determine the overall environmental impact of alternative packaging options)
  • Reducing packaging weight
  • Substituting rigid packaging designs with flexible pouches
  • Experimenting with complete packaging redesigns
  • Increasing recycled content and recycling options for packaging
  • Creating separate packaging designs for online orders
  • Rethinking delivery chains to account for ecommerce and digitization
  • Improving product labeling to ensure proper recycling or disposal

When it comes to rethinking delivery chains, circular economy concepts can play a role. A “circular economy” is a model of production and development with the goal of eliminating waste by focusing on regenerative design and promoting actions like reusing and repairing existing materials to reduce the consumption of finite resources (like plastic). Retailers like L’Oréal, Coca-Cola and Unilever have all made statements and/or commitments about promoting a circular economy in their business operations.

What are retailers doing?

While government regulation regarding plastics is sparse, major brands are beginning to self-regulate. In 2020, a group of more than 60 brands and retailers launched the U.S. Plastics Pact, which brings together businesses, nonprofit organizations, government agencies, research institutions and other stakeholders to work collectively toward a common vision of a circular economy for plastics. It outlines several goals and initiatives for 2025.

Major U.S. retailers like Walmart and Target are on the advisory council for the pact. Other companies that are counted as “activators” of the pact include General Mills, Coca-Cola, Clorox, Colgate and more.

Other companies are taking separate actions to address their plastic waste. For example, in 2020, Starbucks made good on its promise to phase out all plastic straws, and the company has pledged to reduce the amount of waste it sends to landfills by 50 percent by 2030. Additionally, Wegmans has been working to replace the plastic in its packaging with renewable and recyclable materials for several years.

There are also organizations working to help retailers implement programs that promote recycling, education about sustainable packaging, and effective product and package labeling. How2Recycle has developed a standardized labeling system that communicates recycling instructions to consumers; it was launched by a coalition of North American brands, including Walgreens, Milk Makeup and Kraft Heinz.

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Last Updated: 4/15/2022