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Unwrapping Sustainable Packaging: Redesign for Circularity

Jorge Zuniga Profile Picture
Jorge Zuniga Bio
Rosemarie Downey Profile Picture
Rosemarie Downey Bio

During Global Recycling Awareness Week, celebrated on 18 March, it is worth noting that five Fast Moving Consumer Goods (FMCGs) industries contributed to four trillion retail packaging units in 2023, a figure expected to rise by 2% by 2026, according to Euromonitor International’s packaging data.

In a week that aims to generate awareness around the environmental significance of recycling, it is also important to understand that addressing sustainability is not only a moral requirement but also a business opportunity.

Sustainable products outperformed those without such claims in eight out of 11 industries, based on retail sales 2020-2022 CAGR%

Source: Euromonitor Sustainability Products Claims Tracker

For businesses to thrive in a more stringent regulatory environment, a consumer-focused approach that factors in their environmental impact is vital. By rethinking packaging design to promote circularity and accelerating the shift to sustainable packaging, companies can not only reduce their costs and environmental footprint but also avoid the rising costs associated with inaction, enhance consumer engagement and ensure regulatory compliance.

Reduce and recycle lead consumers’ environmental actions

Global consumers are highly concerned and well-intended around sustainability, as 64% of global respondents are worried about climate change and trying to positively impact the environment through daily actions, according to Euromonitor International’s Voice of the Consumer: Sustainability Survey (fielded January to February 2023, n=40,691.) Yet, almost half of them feel guilty for contributing to the problem, while highlighting affordability and lack of assortment as the main barriers preventing them from shopping more sustainably.

However, they still show high interest in being part of the solution. This is clearly driven by reduce and recycling habits, globally. In 2023, consumers sought value and financial efficacy while maintaining a commitment to sustainability. Thrifty habits, such as prolonging product lifespan and waste reduction, not only saved money but also lessened environmental impact. This commitment extended to actions such as minimising plastic use and opting for recyclable or compostable packaging.Chart showing Top 10 Green Activities to Lead a More Sustainable Life

However, consumers do not want to carry the burden on their own. They expect companies to also be part of the solution and help them to embrace more sustainable lifestyles by providing accessible, trustworthy and recognisable sustainable options, as 28% of global consumers mentioned that unclear labelling hindered their efforts to shop more sustainably, 25% stated unclear labelling made it difficult to know which sustainable features to look for?

Demand for transparency and accountability is rising due to higher scrutiny around greenwashing. Therefore, using substantiated product claims and packaging to communicate sustainability is becoming paramount for companies to reinforce their sustainability commitments while complying with stricter regulations.

Curb costs and reduce footprint by rethinking packaging for efficiency

Consumer brands and retailers are employing packaging design strategies to maximise margins and increase operational efficiencies to offset increased costs while meeting financially pressured consumers. By eliminating unnecessary packaging, reducing components, and altering materials, companies are not only cutting costs but also reducing raw materials used, maximising shipping space and lightweighting, therefore curbing their environmental footprint.

Refill pouches are emerging as a cost-effective, convenient alternative to rigid plastics in various sectors such as food, beverages, beauty, and home care. These reduce plastic use, but their recyclability is a concern, considering their forecasted 4% CAGR from 2022-2027. Innovative solutions such as Henkel's recyclable mono-material Pril pouch and Nescafé's 150g refill pouch, which can be recycled at over 5,000 UK stores and via kerbside collection in Ireland, are noteworthy alternatives addressing this challenge.

Additionally, paper packaging is gaining traction among retailers and consumer brands, with bag-in-box (ships-in-own-box) solutions being popular for their space optimisation, distribution efficiency, and recyclability. Furthermore, concentrated formulations, besides offering convenience, efficiency and waterless attributes, are paving the way for sustainable packaging innovation across FMCGs categories. For example, the new Tide Evo laundry detergent, besides including efficient water-saving fibre tiles, is packed in FSC certified ready-to-recycle paperboard.

Forest Steward Council (FSC) certified is the fastest-growing Sustainable Packaging claim in the Q4 2022-Q4 2023 period, showing an 11% increase in products carrying such a claim across 25 markets and 10 industries

Source: Euromonitor's Sustainability Quarterly SKU Count and Price Tracker

Meanwhile, Amazon is leading the switch from plastic to recyclable paper mailers, investing in machinery in the Ohio fulfilment centre to optimise box sizes and eliminate unnecessary plastic from its operations.

Accelerate sustainable packaging adoption due to rising costs of inaction

Consumer goods packaging is under increasing pressure to reduce environmental impact and greenhouse gas emissions, as part of a global shift towards a circular economy, as consumers, businesses, and policymakers remain strong advocates for sustainable packaging.Chart showing Top Five Stakeholders, Pressure for Climate Action 2023

Packaging regulation will continue to be an influential progress facilitator as it gathers pace. In Europe, the EU's Packaging and Packaging Waste Directive is being updated and expanded into a legally binding regulation, expected to set mandatory rules on packaging design and waste reduction, while promoting reuse and recycling. Furthermore, the EU's Green Claims Directive, coming into effect in 2026, will require proper substantiation of product claims and sustainability communication on packaging, meaning clear, accessible and verifiable information on packaging around sustainability will soon become the new norm.

Corporate commitment to sustainable packaging is rising, as products carrying sustainable packaging claims globally saw a 31% increase from 2021-2022, making it the fastest-growing attribute group, as per the Sustainability Products Claims Tracker. Despite this increase, sustainable packaging claims only constituted 4% of the global digital shelf in 2022, indicating the need for greater efforts to mainstream this practice.

Businesses must accelerate the adoption of sustainable packaging to avoid potential costs, such as non-compliance with upcoming laws like the UK's Plastic Packaging tax, reputational damage, and loss of consumer loyalty. Additionally, the surge in responsible investment, amid regulation and environmental concerns, demands transparency in ESG reporting and sustainable packaging practices, presenting financial risks for those that fail to keep pace with these changes.

Learn more about our Sustainability solutions on our  Sustainability page and further Packaging insights on our Consumer Packaging Strategies: Adapting to Cost Pressures report.

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