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Ship shape: Sustainable packaging makes a difference to consumers

Innovation in packaging is good for the environment and for companies’ bottom lines.

By Michael Walker — September 23, 2020

This article originally appeared as part of the Bloomberg Green + HP partnership.

 

Ordering goods online and having them arrive in perfect condition on our doorstep has become expected, practically second nature. As this trend has accelerated during the pandemic, so too has the amount of packaging needed to facilitate modern commerce. 

US retailers reported a significant surge in online sales during the first quarter of 2020, when the virus-driven lockdown began, with many major retailers, including Walmart, the Home Depot, and Lowe’s, reporting increases of 70% to 80%, and Target seeing digital sales increase 140%. That means more boxes coming to more homes, and higher stacks of corrugated cardboard, polystyrene protective cushions, and plastic bags left outside for recycling or disposal. 

“Packaging does an important job — making sure goods don’t get damaged as they move through the supply chain to the consumer — but it’s also a visible sign of waste,” says Nina Goodrich, director of the nonprofit Sustainable Packaging Coalition. “Companies need to cut out packaging where they can, as long as they don’t compromise product protection.”

Each year, the average American discards nearly 500 pounds of containers and packaging, made up of paper and paperboard, glass, steel, aluminum, plastics, wood, and small amounts of other materials. In 2017, this amounted to 80.1 million tons of US-generated waste, only half of which was recycled; the rest ended up incinerated, in landfills, or in the ocean. Packaging accounted for nearly 30% of the 139 million tons of municipal trash that went to landfills in 2017. While some of it will decompose over time, the process emits the methane equivalent of more than 20 million tons of CO2 into the atmosphere. 

To address this issue, municipalities have begun to restrict certain types of packaging, including single-use plastics, which will reduce the 30 million tons that US and European consumers throw out each year. Yet, as Goodrich points out, these actions are only part of the picture, and, as a society, we all must embrace new ways to support and invest in recycling. 

“We need to build capacity to recycle all materials — paper and plastic — and create value for these undervalued materials,” she says. “It’s going to take all of us to fix this packaging waste problem.”

Leading companies, such as HP and Nestlé, and their suppliers are setting goals to dramatically decrease product packaging waste by switching to recyclable or compostable materials and by reducing the amount of packaging used. Through the growing number of sustainability-focused investment opportunities, the market is increasingly incentivizing innovations that diminish packaging waste and increase sustainability.

Innovating out of the waste problem

For HP, reducing packaging material starts with its products. The company, which currently uses more than a million tons of packing materials each year, is rethinking its manufacturing process to reduce the amount of packaging that gets discarded, while continuing to increase its use of recyclable materials. HP is also reducing paper and cardboard use, and replacing expanded polystyrene packing cushions—the white foam that protects PCs, laptops, and printers in transit — with recyclable molded paper pulp, among other changes. In 2019, HP eliminated 933 tons of hard-to-recycle expanded plastic foam from its product packaging by shipping more than 6.8 million units in molded fiber packaging.

HP laptop with old foam packaging and new molded fiber recyclable packaging.

HP

HP aims to dramatically decrease product packaging waste by switching to recyclable or compostable materials and reducing the amount of packaging used.

HP is on its way to meeting several ambitious waste-reduction targets for packaging. In its most recent annual Sustainable Impact Report, HP announced that, by 2025, the company aims to eliminate 75% of its single-use plastic packaging, compared with 2018. This year, HP also plans to accelerate its reduction of expanded plastic foam cushioning, and ensure that all paper used for packaging comes from recycled or certified sustainable sources.

“The trend for us really is for less packaging in general,” says Erik Troelsen, HP’s Director of Packaging Design and Procurement. “There’s this curve of using just enough packaging to protect the product and to offer the customer a great out-of-box experience, but not using too much. We’ve been reducing and optimizing the equation for the right amount of packaging per product for many years.”

Troelsen has spearheaded HP’s efforts to use sustainable materials, like turning leftover straw from wheat harvests in rural China into reusable shipping pallets that protect products as they’re transported across Asia. (The straw is typically burned, contributing to China’s air pollution.)

An industry-wide effort to reduce packaging waste

Other electronics manufacturers are also working on the problem. Sony no longer uses protective bags for components, and the company has modified packaging containers to make them reusable, and increased their storage capacity. Samsung announced last year that the company will replace plastic packaging with sustainable materials like recycled paper and bioplastics that naturally degrade.

Enterprises of all types are developing new processes and technologies to decrease packaging, and industry watchers have praised leading companies, including Nestlé and Colgate, for creating innovative solutions that reduce packaging waste within their supply chains. 

In 2019, Nestlé launched a packaging research institute to develop sustainable product packaging, like high-performance food-grade barrier paper, using reusable and compostable materials. And in an initiative to make the company’s entire consumer packaging recyclable, Colgate spent five years redesigning its containers and even toothpaste tubes so that they can go into the recycling bin. Taking that effort one step further, Colgate has shared its intellectual property with competitors in order to encourage industry-wide change. 

“Packaging does an important job — making sure goods don’t get damaged as they move through the supply chain to the consumer — but it’s also a visible sign of waste.” 

— Nina Goodrich, Director, Sustainable Packaging Coalition

Large companies like HP, Sony, Nestlé, and Colgate don’t take decisions to change their packaging lightly, and they must balance competing demands from consumers who want their products to arrive with less packaging, but still in perfect condition.

“We’re really paying attention to every aspect of the packaging life cycle, from sourcing and packaging design to utilizing materials that are not harmful for the environment,” Troelsen says. “We’re on a journey to move away from some traditional materials that are used in packaging, like plastics.”

The business case for packaging innovations

These efforts to cut down on packaging waste aren’t solely motivated by a desire to be better corporate citizens; enterprises today have a compelling business case for minimizing packaging and prioritizing sustainability. 

In many scenarios, sustainable innovations lead to cost savings. HP’s sustainability-focused redesign of its LaserJet M1005 printer, for instance, lowered the printer’s packaging weight by 13%, which has eliminated nearly 800 tons of annual emissions from packaging production. More compact packaging also means reduced transport emissions and logistics costs, since more products can be loaded on each pallet and truck. For example, the new design of the LaserJet M1005 means that 20% more units fit on each pallet. And eliminating nonessential product items, such as plastic bags and manuals, lowers costs while increasing sustainability. 

Troelsen says that while fiber-based replacements for plastic are slightly more expensive, designing more sustainable packaging often leads to weight reductions, which means the company is making the packaging switch at nearly cost parity for products like home printers.

This focus on reducing packaging is reverberating throughout the supply chain. Troelsen says that HP’s enterprise customers are setting their own targets for sustainability and plastic waste reduction, highlighting that this isn’t solely a consumer or regulatory issue. 

“When one of our commercial customers buys 100 displays from us and has to deal with so much plastic foam cushioning all at once, they get upset about that,” he says.

Investors are shifting their money to companies pursuing sustainability, as consumers increasingly demand action. Bloomberg Intelligence’s ETF tracker shows that cash flows to funds that include companies pursuing sustainability goals grew to $4.4 billion in 2018, a 119% increase from the previous year. Leading investment manager BlackRock expects sustainability-focused mutual fund and ETF investing to top $1 trillion this year or next. Last year, BlackRock also launched 13 new investment strategies targeting sustainability and ESG goals.

Meanwhile, regulatory incentives for companies to reduce their packaging output continue to multiply worldwide. Governments are cracking down on waste, with more than 60 countries implementing initiatives to lower packaging pollution.

Consumer behavior and government regulations continue to encourage companies to invest in sustainability, and this trend is growing. Surveys show that today’s consumers, especially the millennial and Gen Z demographics, prefer to buy from brands that minimize their environmental impact. A Nielsen survey found that nearly half of US consumers would probably or definitely change their buying habits to decrease their environmental impact, and Nielsen expects this sentiment to grow into a $150 billion sustainable goods market in the United States by next year.

“I have a 24-year-old daughter—she and her friends are paying close attention to this,” Troelsen says. “If they see a lot of plastic and packaging waste, it’s a real downer for them. Businesses will lose customers and revenue if they don’t get on this.”

 

Here are 6 more ways to use your buying power for the good of the planet.
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Manufacturing / Innovation / Corporate / Reinvention / Environment
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Impact

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